Water Flows “Up Hills, Over Hills, and Toward Money”

The word drought conjures up desperate images of brown fields and dry, cracked riverbeds; sagging, wilted crops; and farm families staring hopeless at a relentless scorching sun in a cloudless sky, praying for rain. Perhaps it is ironic that these graphic scenes, depicted by Hollywood in films like The Rainmaker and The Grapes of Wrath, are now an all-too-real scenario in its own backyard.

Today, in the Golden State water shortage, the cost of water and everything water-related is foremost in everyone’s mind as citizens and lawmakers cope with the worst drought in more than a century. When the stretch between instances of precipitation increases to months and months, both ranchers whose herds depend on feed and pasture, and farmers whose crops demand water to reach the expected quality and quantity production levels find themselves in a state of perpetual anxiety.

And, it’s equally on the minds of expert agricultural economists, water engineers, and climate scientists who are concerned about how the increase in groundwater pumping, which is forecast to increase from 31% to 53% this year, exerts influence across the market sectors.

As the world’s seventh largest economy, California agriculture supplies the demands of the US and global markets with a vast range of commodities from staples to delicacies. But in the face of dwindling water resources the California Department of Food and Agriculture (CDFA) and the University of California, Davis funded the UC Davis Center for Watershed Sciences to assess the economic impact of drought on the ground, under the ground, as well as the socioeconomic impact on the population. Additional technical help was provided by the California Department of Water Resources Bay Delta Office that assisted in the data collection and analysis process.

The results of their research study, “The Economic Analysis of the 2014 Drought on California Agriculture,” were presented during a July 2014 press conference in Washington DC, with findings discussed by Karen Ross, California Secretary of Agriculture, and two of the study’s lead authors both of UC Davis: Richard Howitt, Professor Emeritus of agricultural and resources economics, and Jay Lund, Professor of Civil and Environmental Engineering.

CALIFORNIA FEEDS THE US AND THE WORLD
Secretary of Agriculture Ross says through the combination of tradition and innovation, California supplies the world with more than 400 commodities.

“We’ve had over an 80% gain in productivity over the last 50 years by using the water we have much more wisely. Fifty percent of our irrigated acreage is now under some sort of precision irrigation technology; that could be drip, micro-sprinkler or drip tape, which has really been responsible for us providing 95% of the processed tomatoes in this country.”

Ross says over 20% of the milk in this country comes from California, making it a significant dairy state. But all this bounty is no accident.

“We have a unique Mediterranean climate, great soils, wonderful institutions and really smart, resilient farmers and ranchers who are constantly diversifying their agricultural portfolio in response to the market,” she says.

Today, nearly 43 million acres devoted to these farm and ranch enterprises use water—a lot of water. And, according to the UC Center for Watershed Studies, California is “enduring its third driest year on record as agricultural, urban, and environmental demands for water are at an all-time high.”

Climate change is further impacting the environment. The National Oceanographic and Atmospheric Administration, (NOAA) reported the winter of 2014 was the warmest in 119 years of record keeping, which reduced the critically important snowpack and contributed to low surface water availability.

Howitt, an agricultural economist, says their study used various models to evaluate how—in the face of all time low levels in surface water—the nearly 43 million acres of farmland is holding up to deliver business as usual. The study also surveyed the ability farmers have to switch supplies from normal surface water to groundwater, and using projections from the severe 2009 drought, predict what 2015 and 2016 might look like.

“We took a model, which is just a computerized version of what we think farmers, prices, and quantities will do, and we linked it at the bottom end to an engineering model of underground water flows. And then at the top end, we linked it to LANDSAT satellite projections, and we have the economic model operating in between them,” says Howitt. “So, we’re going to look at this and say what is likely to happen this year and next year.”

The satellite model gives researchers a real-time snapshot measure for “greenness” of the land from above—in other words, an indicator of what is growing and where it is dry, and this combines with the engineering models on the ground to look at the number of wells that might go dry.

To estimate the economic impact of lost crop and livestock production, the University of California researchers harnessed remote satellite sensing, the Normalized Difference Vegetative Index Data (NDVI), the Statewide Agricultural Production Model (SWAP), pricing of feed crops, and measures of pasture loss. Using the California Central Valley Groundwater-Surface Water Simulation Model (C2VSim), researchers analyzed the groundwater levels with a variety of parameters from river bed conductance, aquifer depths, changes in storage levels, number of pumping heads, and whether the destination of the water is for urban or rural use.

The state of California, Howitt explains, is about 1,000 miles long from top to bottom, but “We run it [water] 660 miles from the top of the state down to where the money is, in the bottom of the state.” He adds that this process “follows the fundamental ecological model of hydrology that water flows up hills, over hills, and towards money.”

THE RUNAWAY CHECKBOOK SYNDROME
So, how is the California cornucopia of plenty affected by the current drought? Two things are happening. First, to compensate for lack of rain and surface water loss, farms have been tapping into what once seemed to be never-ending groundwater reserves. This is not a new practice—they’ve been doing this since the late 1800s. But in severe shortages and increasing dependence on groundwater, this costs money.

Second, when there is less water overall, productivity and land use choices are affected, and both ultimately impact market revenues.

The big concern is that undergroundwater pumping is hard to measure accurately which is the result Howitt says, of California being unique in not measuring groundwater usage. He describes this as “operating with a Daniel Boone economy in terms of water,” and uses the ‘runaway checkbook’ scenario to illustrate.

“The underground water is like the reserve bank account,” he says. “Our attitude is that we’re so rich we don’t have to balance our checkbook. We’re walking around signing checks without balancing the account as though we still think we’re in a groundwater rich era. Every other western state has started to measure groundwater, and we don’t even measure our groundwater.”

Howitt describes the practice akin to Boone, who built his log cabins and, when he moved on, left the wood because it was cheap, but took the nails after he burned down the cabin because they were expensive. Howitt says the similar, but unfortunate, current pervasive attitude of, “just using up what you need, moving on without thought of what you are leaving behind for others, doesn’t make sense any longer.”

Beyond the groundwater pumping factors, the research study reports how water losses—“We’re losing 6.5 million acre-feet,”—are occurring mainly in the Central valley, which he says is the key agricultural area. This region includes the Sacramento Valley, Delta and East of Delta, the San Joaquin Valley, and the Tulare Lake Basin. The coastal areas and the southern part of the state will be less affected, but the majority of crop and dairy losses occur in the San Joaquin Valley.

An acre-foot is 300,000 gallons, Howitt explains, and when multiplied is in the millions, if not billions, of gallons of water. But what does 300,000 gallons really look like? To get an idea, the elaborate Neptune Pool at California’s historic landmark Hearst Castle requires 356,000 gallons to fill to capacity. The 58- x 104-foot pool made headlines recently when pop star Lady Gaga reportedly filled the pool with 300,000 gallons for a music video. While much criticism was leveled at this alleged frivolity, an article appearing April 15, 2014, in the online Daily Mail set the record straight reporting that Richard Stapler, a spokesperson for the State of California, confirmed “she only added a few gallons,” and the water was later “used to water the landscape” on the Hearst grounds. The article also said Gaga filmed a Public Service Announcement encouraging water conservation in California, and that in her agreement to use the historic landmark site for her video, the singer agreed to donate $250,000 to the Hearst Castle for maintenance and repairs.

Land of Tenacity
Since the late 1800s, groundwater has figured prominently in California’s agricultural growth. In their essay “The Evolution of California Agriculture 1850–2000” in California Agriculture: Dimensions and Issues, published in 2003, authors Alan R. Olmstead and Paul W. Rhode submit a fascinating perspective on the evolution of California agriculture between 1850 and 2000 that illustrates the forward-thinking, grassroots entrepreneurial efforts that propelled the state to its current global leadership.The authors describe the California farm operation as very different in technique, innovation, size, and production growth when compared to “their eastern brethren.”

With a low moisture climate, long sunny days, and logistically remote from industrial suppliers, California farmers devised their own cultural practices, reinventing crop mix and tools that best suited their unique fertile soil and climate; ingenuity the authors say “illustrates the cumulative and reinforcing character of the invention and diffusion processes.”

With vast underground water resources coupled with a pioneering spirit, farmers used electricity to expand their access to water and developed what is believed the world’s first electric irrigation pump in the Central Valley at the end of the 1890s, and between 1910–1940 California accounted for an estimated 70% of the entire nation’s agricultural pumps. By 1929, over half of California farms purchased electric power, compared to one-tenth for the rest of the country as a whole.

With a ready supply of farm power, the foundation was laid for local manufacturers to create new developments in machinery that changed the course of farm productivity. As late as the 1950s, only 10% of American farms were mechanized, but more than 50% of California farms had embraced mechanized farm techniques.

The other significant investment was in providing and controlling water for irrigation that grew from a scant 300,000 acres of irrigated land in 1879 to nearly 3.5 million today. In the first half of the 20th century, this was largely started and managed by individuals and partnerships that helped push pumping equipment from “roughly 10,000 units in 1910, to just below 50,000 units by 1930,” and that continued to dominate pumping until the 1950s, accounting for 75,000 units.

Groundwater irrigation had jumped from supplying 10% of farmland in 1902, to over 50% of the acreage in 1950, and pumping capacity had increased threefold.

But by the 1970s, things had changed. Since the 50s, a shift began away from individual- and partnership-dominated pumping, which accounted for 95% of total units and about 80% of capacity, toward the advent of the irrigation district organization. Run by local landowners, these entities were public corporations that could tax and issue bonds to buy, build, maintain, and operate irrigation works.

Although district organizations had been around since 1910, it was not until large-scale state and federal projects began distributing water through these organizations five decades later that they became the leading suppliers of more than half of all irrigated farmland, and, by 1970, supplied more than 55% of all California’s irrigated acreage.

The authors conclude that California’s is a very different history from the rest of American agriculture and deviates from standard paradigms: The settlement process, the worldwide search for appropriate crops and cultural practices, the wholesale shift in crop mixes, and the massive investments in water control and irrigation, along with numerous other measures, are fundamentally stories of biological investment in a labor-scarce, land-abundant environment. These biological investments transformed the state’s agriculture, vastly increasing productivity per acre.

THE BACKSTORY: THE WAY WATER FLOWS
Civil engineer and water resource management expert Lund, says “Water, as precipitation, comes from 20% of the land surface area of California, primarily in the northern portion of the state, and produces two-thirds of the run off,” but the high demands of “agriculture and people are in the south, so water is not where we need it, in both space and time. However, we have a tremendous infrastructure to move water around, which is why there is less impact during drought.”

This huge infrastructure includes huge surface water storage: dams, pipelines, reservoirs, canals, and the water agencies to move it all around. “It’s a very integrated system,” he says. Engineering the ways of water to get it where needed began as early as the 1870s. After years of false starts, the Central Valley Project was approved and funded in 1935 with the US Army Corps of Engineers spearheading the construction of dams and thousands of miles of canals to supply a consistent source of water.

“When we had a drought in the 1860s—when we were primarily an agricultural economy—it basically destroyed the whole economy, because at that time it was a grain fed cattle industry. It’s remarkable to me that we have had so little impact, because we have this remarkable infrastructure, and the water markets, and of course the groundwater,” says Lund.

While droughts are inevitable in California, he cautions you can be prepared, but you can’t be “drought-proof.”

“We have a dry state—we have earthquakes, and we have droughts. On the East Coast, you have hurricanes and thunderstorms, but nobody would ever think to ‘hurricane proof’ the Outer Banks—it’s not possible. It’s the same kind of thing in California—you can be prepared for them, but they are inevitable,” says Lund.

WHEN WILL THE DROUGHT END?
“You don’t know,” says Lund. “One of the interesting things about drought is, you don’t know when it’s going to end. When you have an earthquake or a flood, you know it will end; an earthquake in hopefully a few minutes, [and] a flood in a few days—but with drought, is it going to be a 2-year, a 12-year drought? If you look at tree rings you can see we’ve had 200 year-long drought.”

In terms of predicting the future, Lund explains that there are five models of precipitation conditions from very wet to very dry, and these help forecast the future conditions. “If you are very dry or critically dry, as we are now in one year, statistically, the chances are 29% for drought the following year as dry or critically dry.” According to the numbers, this years’ drought nearly doubles the chances for drought in the coming year.

“We have an amazingly large economy and successful environment, and a lot less problems than other Mediterranean climates,” says Lund, but ultimately, “Water is a scarce commodity, and we have to act that way all the time.”

Although groundwater pumping has nearly doubled to provide agricultural irrigation, a continued drought into 2015 will further affect productivity as wells will dry up. The study says that increased groundwater extraction “beyond diminished recharge during droughts, decreases groundwater levels, reduces groundwater quality, and increases land sinking. And when wells go dry, which the experts are predicting and with no alternative water source for irrigation, farmers will have to let their fields go fallow, adding to the economic deficits.

MEASURING THE LOSSES IN SHRINKING ORCHARDS, SELLING OFF HERDS
The overall balance sheet the researchers found looks like this: The drought results in a 6.6-million-acre-foot (maf) reduction in the surface water available for farming, which is partially replaced from groundwater pumping of 5 maf. So the net loss is 1.6 maf. But this will cause losses across all agricultural sectors with an $810 million loss in crops income, $203 in dairy, and other livestock value. Add in the additional groundwater pumping costs, which Howitt says are another $454 million, and that brings direct cost loss totals to $1.5 billion. He says the total economic loss is $2.2 billion in California revenue.

“We have to look at the value per unit of water. Almonds, walnuts, and pomegranates are very valuable, they are one-third of our permanent crops. Another 20% are our vegetable crops.” But there are losses from drought in these high value permanent crops.

“What we see in the Tulare Lake region are some citrus orchards and some almond orchards which are just going to be dried up,” continues Howitt. “This is a loss of revenue—not just this year, but [also] loss of a permanent capital asset.”

Ranchers have been one of the hardest hit sectors. Secretary Ross says the loss in pasture for beef cattle grazing with higher feed prices has caused ranchers to make the hard choice of whether to keep or disperse their herds.

“This is an emotional decision to sell, because some of these herds take decades to develop, improving genetics to build up, and it takes multiple years to rebuild them,” says Ross.

Fortunately, she says, the Midwestern farmers who are building up their herds that were lost from drought were buying, and the California ranchers were able to sell at a higher price. Ross is confident that rancher resiliency will prevail.

“California farmers and ranchers respond to market signals, and I think we will continue to see tradeoffs,” she adds. “Many farmers are giving up the annual crop and looking at permanent crops. We will continue to see decisions to be flexible, and see farmers giving up crops, like cotton acreage, to free up water you do not have.”

Howitt believes, “The best crops are the crops that make the most money when you add in the multipliers of processing and labor.”

And the steady stream of eager buyers, which he calls the income elasticity of demand, is a plus for California agriculture.

“Fortunately,” he says, “in a growing global market, we are the one agricultural source in this country where we produce crops that people buy more of as they get wealthier. We can expand as markets expand, and there’s advantage in growing nuts and lettuce and fruits; people like salad bars—they like feeding their families safe and healthy foods. As our markets expand, we have to change our crop mix to keep risk within bounds.”

LOSSES BEYOND THE COSTS
Beyond the picture of balance sheet revenues, there is another critical impact. While the study cites a total economic loss of $2.2 billion in direct losses to crops, livestock, dairy, and increased pumping costs, Howitt says what really hurts are the job losses predicted to impact 17,000 agricultural and industry related service providers.

“These are seasonal and full-time jobs, and they are from a sector of the population that is least able to roll with the punches,” he says, adding that while most people can still get fruits, nuts, vegetables, and wine, “there are pockets of deprivation where they are out of food and out of water. “So, on average, it’s not so bad, but in certain parts of the Central Valley, there are pockets of pain.”

What this translates to is a lower standard of nutritional meals and reduced access to food—a paradoxical scenario of what amounts to a food deficit for the economically hardest-hit people, right in the heart of the country’s major food-producing landscape.

It is important to understand this very personal aspect of drought, Ross says, as they were caught by surprise in 2009 by long lines at food banks, which was one of the primary incentives for commissioning the 2014 assessment. To have a clear picture of the socioeconomic factors of drought and its effect on the population, they did an assessment in 2009, because, “we know that droughts will happen again, and we wanted to do this study early to measure the impact of this drought. ”

Ross says, thanks to their early awareness to the socioeconomic effect, they were prepared, and as of mid-July 2014, “we have put hundreds of thousands of food boxes out in the Central Valley and targeted assistance for housing.”

THE SCOPE OF DROUGHT
Considering all drought-related aspects, especially the groundwater availability, the $2.2 billion impact in lost revenue in a $42 billion industry is not expected to influence shelf prices, experts say. While there are 430,000 dry land acres, the good news is that there is no competition for water from the urban sector, whose portfolio approach to water demand management has implemented very successful conservation practices. This helps avert agriculture/urban conflicts in terms of their buying agricultural water. Furthermore, according to the report findings, the severity of this drought is mitigated due to two important resources: the extensive groundwater availability, and a flexible water market to move it around to bring water to the crops with the highest economic value while also compensating selling farmers.

But in continued dry conditions, the energy cost to pump more will increase as water has to be lifted higher, and 2–15% of shallow wells will end up going dry. Howitt says you can be halfway through your growing season and suddenly without water. Although well permits have nearly doubled since 2011, led by Fresno and Tulare Counties whose permits jumped from 400 and 500, respectively, to 739 and 831 by 2013. These days, people can’t get anyone to drill a well.”

MORE ACCURATE MEASURES AND EQUITABLE WATER SHARING
Beyond groundwater management regulations and measurements, other key factors to consider would enhance California’s ability to contend with drought in the future.

Water trading is a key to manage drought, but can adversely impact the environment. A Water Trade Environmental Impact Report (EIRs) would ensure fairness and transparency in water trading and help this practice be predictable and flexible.

Getting water efficiently and in a timely manner where it needs to be through an Independent System Operator (ISO) such as an electricity grid system, would help coordinate the individually run, but interdependent network, of canals, reservoirs, and rivers.

The study also found that the remote sensing of water and its impact on land fallowing, and the attendant management of this “tsunami of data,” needs to be addressed to make information gathered during drought meaningful and useful. Remotely sensed land and water use data “should be able to provide a real time cross-check of the water supply-based estimates of land fallowing and economic outcomes.

The researchers also recommend that new modeling techniques be considered that more closely align the economic motivations of groundwater use better linked to the hydrogeology costs to make it available.

MANAGING THE FUTURE
By commissioning the University study of drought, Ross says her department can look at strategies for mitigation and adaptation, and “put resilience into the systems at the local and regional scale to be able to survive droughts better.”

“Obviously, there is a vigorous discussion at the policy level, and I would say the anxiety of the farmers is very high, and they feel it is only about the drought and that groundwater is doing what its designed to do—get us through a drought.”

But water management policy is not just about this drought, Ross says. “It’s about us securing the future of agriculture through groundwater—it’s like money in the bank.”

“The farm community knows they need to be at the table; they are not happy and are anxious about the repercussions of drought. But at the end of the day, we need to bring acceptable solutions to groundwater management.”

While Ross adds that some groundwater basins are very well managed, “others need tools and authorities. We believe groundwater is best managed locally, and we have too many hydrologic differences, diverse economies, and stakeholders for a one-size-fits-all solution.”

“No single action can help us to better survive drought,” says Ross. “It takes a portfolio approach and requires that Californians must develop an ethic of water conservation; that we improve our urban and farm efficiency; we embrace recycling; that we are capturing stormwater, and investing in storage above or below ground.”

All of these practices, Ross affirms, “will help us to be more resilient.”

From almonds to wild rice and broccoli, to beef cattle, the state’s diverse and plentiful grocery list puts California at the head of the class ranking first as the nation’s largest agricultural producer, and in some cases, as a single-source provider. The value of the state’s top 10 products, which include milk, grapes, almonds, nursery plants, cattle, strawberries, lettuce, walnuts, hay, and tomatoes, weighs in at a staggering annual revenue of $42 billion. And California is the largest exporter of agricultural products to other countries like Canada, the European Union, China, Japan, and others, whose demand for nuts, dairy, and fruits is growing each year with a record-breaking $18 billion in annual export sales.

Barbara L. Hesselgrave writes on water resource management and related topics.

Sources
www.cwemf.org/workshops/C2VSimWrkshp
www.waterplan.water.ca.gov/previous/b160-93/b160-93v1/sgw.cfm
https://watershed.ucdavis.edu
http://giannini.ucop.edu/CalAgbook.htm
www.usbr.gov/history/cvpintro.html
www.farmland.org/documents/AFT-CA-Agricultural-Land-Loss-Basic-Facts_11-23-09.pdf
http://ccwas.ucdavis.edu/files/189286.pdf

About the Author

Barbara Hesselgrave

Barbara Hesselgrave is a writer specializing in environmental topics.

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