The worsening drought in California could cause the economy of the state to lose as much as $2.74 billion and almost 21,000 jobs in 2015, with the ripple effects of the four-year drought likely to continue until at least 2017, according to a study released by the Center for Watershed Sciences of the University of California, Davis.
The report also indicated that the drought's impact on the agriculture economy of California includes losses of $1.84 billion and over 10,000 direct seasonal jobs. The figure of $2.74 billion includes costs to all sectors of the state's economy and considers multiple effects.
However, the higher prices for crops will provide a boost to certain farmers that are operating in areas where the effects of the drought are felt less and which have access to a source of groundwater. Specifically, these areas are the Central Coast and Southern California, which are benefiting from the lower production levels in other areas in California.
The report added that the drought will lead to the fallowing of 542,000 irrigated acres this year, most of which are located in the Central Valley, a slightly lower figure compares to the 564,000 acres expected by another UC Davis study released back in May.
The study expects the economic impacts to last until 2017, assuming that the water conditions experienced this year will continue in the next two years along with a slow decrease in water tables. Fallowed acres is projected to reach almost 550,000 acres by 2017.
Expected losses from crop revenues for this year are at $902 million, with the total gross revenue losses projected to reach almost $940 million by 2017. In addition, losses related to the drought for the dairy industry of California are projected to reach $250 million in 2015, along with $100 million from the livestock industry.
Higher pumping costs reaching around $587 million will take away from the incomes of farms this year. The pumping of groundwater has led to the offset of about 70 percent of the water shortage due to the drought, but upcoming new regulations will decrease how much farmers can rely on the reserves of groundwater.
"We're getting by remarkably well this year - much better than many had predicted - but it's not a free lunch," said Richard Howitt, the lead author of the study and a UC Davis professor emeritus of agricultural and resource economics.
