California drought will cost agriculture sector $1.8bn this year, study finds

The California drought, now in its fourth year, is set to cost the agriculture sector $1.8bn in direct losses this year, researchers at the University of California, Davis found in a study released on Tuesday.

The loss represents around 4% of the state’s massive $45bn agriculture economy.

When indirect losses are included on top of direct ones to the agriculture industry, the same study found that this year’s ongoing drought is set to cost the California economy a total of $2.7bn.

The UC Davis study, authored by Richard Howitt, Jay Lund, Josue Medellin-Azuara, Duncan MacEwan and Daniel Summer, estimated that around 564,000 acres of previously farmable land would be made fallow this year, resulting in around half of the direct loss in revenue.

Droughts affect farming because of the reduction in available surface water. Dwindling bodies of surface water – a term used to refer to waters above the ground, like streams and lakes – lead farmers to turn to groundwater pumping, using water found below the ground.

When farmers have no access to groundwater or do not have the means to pump, they may choose to either sell their land or leave it to fallow, Jay Lund, a professor of civil and environmental engineering at UC Davis and one of the study’s authors, explained.

Pumping for groundwater alone is set to cost the industry $600m this year.

Full- and part-time job losses in the agriculture sector caused by the drought are estimated at 8,650, with total job losses estimated at 18,600 when spillover effects are taken into consideration.

But year-to-year jobs are actually set to increase in the state’s agriculture industry overall, despite these estimated losses, the authors said.

Losses of jobs described in the study are based on analyses of the California economy over the last few years and expectations for continued growth.

The bulk of those jobs lost as a consequence of the drought would have been of the temporary, seasonal kind. The number of jobs lost includes jobs that would have gone to undocumented workers, the authors confirmed in a presentation before the California State Board of Food and Agriculture on Tuesday.

In an independent analysis, Paul Wessen, an economist with California’s Employment Development Department, said jobs in the California agriculture industry were down this April compared to the same month the previous year.

In the absolute, California’s economy is actually doing well, Paul Wessen, an economist with California’s employment development department, said.

California’s non-farm economy does not appear to be affected by the drought, he said.

The state entered its fourth year of drought this year.

On 1 April, California governor Jerry Brown announced the state’s first ever mandatory water restrictions.

The executive order’s aim is to reduce water used statewide in urban areas by 25% compared to 2013. Agriculture, which accounts for around three-quarters of the state’s water usage, was largely exempt.

“Water is always going to be controversial in California. Water is a scarce resource here,” Lund at UC Davis said.

“But California has a large economy and a large agricultural sector. It’s rich enough that we can keep these ecosystems around and find solutions to manage them,” Lund said.