Drought will cost California $2.74 billion in 2015

The drought is carving $2.7 billion out of California’s economy, according to a new study by UC Davis. The state’s farmers and ranchers now receive more than $46 billion annually in gross revenues, a small fraction of California’s $1.9 trillion-a-year economy.

Many rice farmers fallowed their land due to lack of water, or fallowed land so they could sell water to farmers growing more lucrative crops like almonds.

“If a drought of this intensity persists beyond 2015, California’s agricultural production and employment will continue to erode”, says co-author Josue Medellin-Azuara, a water economist with the UC Davis Center for Watershed Sciences.

While California lawmakers in 2014 passed the state’s first legislation to try to protect key aquifers from getting pumped dry of useable water, the state’s 27-year timeline for bringing groundwater pumping under regulation is likely too long, the University of California at Davis researchers said. “Agriculture is very resilient because of the underground water”, said Richard Howitt, professor emeritus of agricultural and resource economics and an author of the report.

The estimates come in a report released today by researchers at the university who study water and agricultural economics. Parts of the southern Central Valley have already largely exhausted groundwater reserves and, when it does rain again, “it’s a really slow replenishment”, Howitt said.

The report also says the drought will cost about 10,100 seasonal farm workers their jobs this year.

He says a lot of that has to do with the use of groundwater to offset the shortage in surface water, and the increase in high-value crops.

California is the country’s top agriculture-producing state. Gradual decline in groundwater pumping capacity and water elevations will add to the incremental costs of a prolonged drought.