Weather & Natural Disasters

Billions in losses for drought-stricken farmers this year

The California drought will cost more in 2015 than it did in 2014, and while projected losses won't be as bad as earlier forecasts, the use of groundwater as a temporary fix may cause its own, longer-term problems.

The unyielding drought will likely have harsh effects on the state's agriculture this year, with total losses climbing as high as nearly $3 billion or worse if conditions continue into 2016, according to a new report from a team of California researchers. (Tweet This)

California's drought drama and how we got here

California farmers will lose about 33 percent of their normal water supply in 2015, and though they will offset much of that by aggressively pumping groundwater, the agricultural sector will still lose revenue that comes to about 4 percent of its $45 billion total, according to a study from researchers at the University of California, Davis, and a Davis-based consultancy called ERA Economics.

About half a million acres of farmland will have to be "fallowed" or left unused, which is a 33 percent increase over 2014. That will result in $856 million in gross crop revenue losses, according to the report. Livestock and dairy farms will could see $350 million in revenue disappear as well. Direct revenue losses, therefore, will total about $1.2 billion, and additional costs—from the expense of pumping groundwater to other spillover effects—will bring the total to about $2.7 billion.

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Almost 19,000 jobs will be lost—affecting full-time, part-time and seasonal workers. Owners and workers could lose more than $700 million in income.

Despite all that, the drought will not be as bad for agriculture in 2015 as forecasters had anticipated, the researchers said. But it will be worse for the economy and the water supply than 2014.

Drilling for water at a farm near Mendota, Calif.
Getty Images

Groundwater—water from underground wells pumped to the surface—will likely offset more than 70 percent of the lost surface water (water obtained from snow, rain and irrigation) researchers noted.

Water users will draw 67 percent more groundwater this year than they did in 2014, and they will spend 30 percent more money doing it.

That alone will cost nearly $600 million, and could have far-reaching effects on the state's future groundwater supply, which is a crucial source of water during dry periods.

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Researchers say groundwater use still isn't monitored closely enough, and they're concerned that overdrawing may make it difficult to replenish, or have other unexpected effects, such as creating long-term geological changes.

In the meantime, using groundwater is the equivalent of living on credit, said Richard Howitt, a professor emeritus of agricultural and resource economics at UC Davis.

"The impact is nowhere near what you would expect because of groundwater, which is covering most of the surface water lost," Howitt told CNBC. "What I would say is it is like someone who got laid off living off of a good line on a credit card. You have something to fall back on, but you are racking up debt."

Improved understanding of the state's groundwater supply will let researchers better determine when—and how far—levels will drop, Howitt said.

Furthermore, groundwater supplies are not evenly distributed across the state's agricultural regions. Double-digit unemployment is already afflicting farming towns that do not sit above plentiful groundwater. Howitt said food banks in some areas are already seeing greater demand.

The drought, now in its fourth year, has already affected many of the state's crops, including almonds, citrus trees, wine and others.

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