The California drought will cost the state $2.2 billion and put some 17,000 agricultural workers out of a job this year, according to a new report.
But despite the dire numbers, the situation could be worse for consumers if it wasn't for the increased use of the state's ground water, said one of the report's authors.
"It's saved our bacon when it comes to getting crops to market and keeping food prices in line," said Jay Lund, director of the Center for Watershed Sciences at the University of California, Davis, which released the report this week.
Lund explained that as surface water has dried up from lack of rain, farmers are turning more and more to ground water well supplies in order to irrigate their most profitable crops.
He said there may be new highs in production of crops like almonds this year because of underground water.
Lund also said that, contrary to a lot of thinking, market demand has more of an influence on food prices than the California drought.
However, the underground water is being drained to the point of drying up if the drought continues, the report concludes.
"It's a wake-up call for the state that ground water is not an endless source," said Josué Medellín-Azuara, a researcher and co-author of the study.
Key findings form the report include:
An ominous note in the report said the 2014 drought is responsible for the "greatest absolute reduction to water availability for agriculture" ever seen in California.
It also said that surface water availability in California is expected to be reduced by about one-third this year, putting even more pressure on ground-water use.
Meanwhile, California water regulators on Tuesday approved state-wide fines of up to $500 for washing cars, watering lawns or hosing down sidewalks.
This is the first statewide emergency measure since the severe drought began three years ago.
In an email to CNBC.com, Cal Water, which services some 475,000 customers in the state, said the fine is "an additional mechanism ... to prohibit water uses outlined in the regulation. As a whole, Cal Water customers have collectively reduced their water use by 14 percent from 2007-2013."
But the Center for Watershed's Lund said there's only so much water conservation can do.
He pointed out that agriculture is by far the state's greatest water user, accounting for 75 percent of consumption.
Cities and suburbs use about 20 percent of the state's water.
"California is a dry state," Lund said. "It's hard to drought-proof it."
As for drought conditions in California, the U.S. Drought Monitor said the state had the warmest period and third driest period between July 2013 and June 2014 since 1895.
—By CNBC's Mark Koba.