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What did the 2021 drought cost California's economy?

"We are going to see more droughts like this"
Posted: 4:38 PM, Apr 15, 2022
Updated: 2022-04-15 20:22:18-04
Farm Field, Bakersfield (FILE)

BAKERSFIELD, Calif. (KERO) — Aside from farmworkers, the ongoing drought in California is impacting the state's economy in several ways. 23ABC took an in-depth look at a recent study done by the University of California Merced in February and have a look at those impacts.

The report was done by "using surveys, reviews of hydrological information and remote sensing data gathered from those areas and comparing them to average conditions, as well as to the 2012-2016 drought." It also focused on the areas of the Central Valley, including Sacramento, San Joaquin, and Tulare Lake Basins; the Russian River Basin, and valley regions within Lassen, Modoc, Shasta and Siskiyou Counties.

The report did not solely focus on drought but also took into account changes in water demand brought on by irrigation practices and other processes.

First, some facts to know. California’s agriculture industry is the largest in the country, averaging $50 billion in annual revenue. The state's ag industry also employs more than 400,000 people. Mike remained the top revenue generator at $7 billion, followed by almonds at $5.8 billion and grapes at $5.5 billion.

According to UC Merced's report, the 2021 drought directly cost the industry about $1.1 billion in losses. The Central Valley had the highest share of losses at $755 million, followed by the Russian River Basin at $148 million.

Also, nearly 8,8 full- and part-time jobs were lost in just this industry. Overall, when factoring in other industries impacted by the drought 14,634 full- and part-time jobs were lost in total.

Over 390,000 acres of land was idled - roughly 385,000 acres in the Central Valley alone - due to drought-related water cutbacks. Crops most affected by this were rice (Sacramento Valley), cotton (San Joaquin Valley) and grain and field crops statewide.

In regards to the state's biggest revenue generator, milk, some of the economic costs of the drought were mitigated by higher prices caused by increased global demand. And in some cases, using alternatives to hay and grains improved milk production.

Similarly, beef cattle prices were also higher in 2021. California herds increased 1% as opposed to nationally where they dropped 2%. According to the report, it was "hard to find evidence that drought-induced declines in pasturage resulted in lower beef cattle inventories, as might have been expected."

Kern and Tulare counties are some of the areas most affected by the drought.

“In comparison with the 2012-2016 drought, conditions were much worse for the Sacramento Valley and the Russian River Basin, yet the statewide impacts have not been as severe as in 2015 — the deepest point in the last drought,” said School of Engineering Professor Josué Medellín-Azuara, lead author of the report. “Should dry conditions persist throughout 2022, a higher tier of adaptation measures may come into play to reduce economic impacts on agriculture and communities that host thousands of households relying on agriculture for a living."

The study did state that there were some limitations in preparing the report, including issues estimating surface water cutbacks, restrictions to groundwater and pumping, yield impact assumptions, and determining other causes of idled lands other than drought.

“This has been a fast-paced drought and it shows how climate change increases the challenges we face in managing water in California,” said researcher and co-author Alvar Escriva-Bou, an engineering and policy expert at the Public Policy Institute of California. “Sadly, we are going to see more and more droughts like this, so we need better tools to anticipate and minimize the socio-economic impacts.”

2021 Drought Impact Assessment 20210224