Despite what at first glance might seem like a ghastly snapshot, the industry overall remains robust and the agricultural economy continues to grow in this fourth year of severe drought, says the report. This is nearly 25 percent more land than the one that was fallowed in 2014.
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The rating agency forecasts recovery of financial margins in fiscal 2017, even if the severe drought continues.
The loss to California’s agricultural industry alone in 2015 is estimated at $1.84 billion, but when taking account the ripple effects to the entire economy, the total is closer to $2.74 billion, the university said.
Mark Cowin, head of the California Department of Water Resources, said the costly damage has occurred to major canals that deliver water up and down the state. To put that amount into a domestic/urban context, 6 million acre-feet would supply about 12 million California homes and as many as 30 million people. Gradual decline in groundwater pumping capacity and water elevations will add to the incremental costs of a prolonged drought.
The relentless pumping is raising farmers’ costs an estimated $590 million this year, which is included in the estimated impact of $2.7 billion. Most of those jobs, about 5,400, are expected to occur in the Sacramento Valley region, while 3,850 job losses are expected in the Tulare Lake Basin. Farmers will also take 500,000 acres out of production this year.
The report finds the agricultural sector will be hit hardest by the drought, losing almost two billion dollars and more than 10,000 jobs.
“We estimate the corresponding decrease in statewide labor income, which includes salaries and proprietor income, of $720 million” this year, according to the report.
The most affected rural communities that will be out of jobs in 2015 will be the ones in the Tulare Basin.
A record low mountain snowpack has increased pumping of groundwater by farmers and other water users. California was known for a high-quality pima cotton crop, which is planted in fewer than 200,000 acres this year.
The study noted one area of agriculture that is booming despite the drought.
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The biggest chunk of that cost will come from the fallowing of 542,000 acres that lack water for irrigation, the study said. Economists say growing demand from consumers in China for nuts as snack food is driving the almond-orchard boom here.
