California’s drought to cost the state $2.74 billion in 2015: Study

19 Aug 2015


California's ongoing drought is expected to cost the  economy in the most populous US state an estimated $2.74 billion in 2015 and lead to the loss of 10,000 seasonal farm jobs, despite the state's agricultural sector, being in good shape, according to researchers.

According to agricultural economists at the University of California, Davis, the drought, entering its fourth year, would impact the state more in 2015 than in 2014, when the impact to the economy was estimated at $2.2 billion.

"If a drought of this intensity persists beyond 2015, California's agricultural production and employment will continue to erode," said co-author Josue Medellin-Azuara, a water economist with the University of California's Center for Watershed Sciences at Davis.

The report, released yesterday, also projected  that, with dry conditions and difficulty obtaining water for irrigation, farmers would need to let 542,000 acres of land to lie fallow in 2015, about 114,000 more acres than estimated for 2014.

California's agricultural industry alone took a hit of $1.84 billion in 2015, but considering the ripple effects to the entire economy, the total was closer to $2.74 billion, according to the university.

The economists however, pointed out that California's agricultural economy was growing, the drought, notwithstanding.

"We're getting by remarkably well this year – much better than many had predicted – but it's not a free lunch," said lead author Richard Howitt, a University of California's Davis professor emeritus of agricultural and resource economics.

It was the latest in a series of reports by the university's Center for Watershed Sciences since last year into the economic impact on the industry of the drought.

''Feed, grain and field crops have the largest proportional cuts in irrigated acreage under drought conditions, because they hold a lower value per unit of water,'' states the report.

Those crops were particularly important in Tulare County, the top dairy-producing county in the US, where dairies mostly grow their own feed for their cows.

As some are unable to grow feed due to the drought, many had taken on the added expense of buying feed produced from other areas - a major financial burden considering low milk prices paid to producers this year.

''Milk production in California has dropped from 2014, whereas national production outside California has remained high. This partly reflects drought, but also the greater reliance of the California dairy industry on exports to Asia, which [is] depressed as well,'' according to the study.

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