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Agricultural Outlook

California drought persists – includes related article

California drought persists – includes related article – U.S. Dept. of Agriculture, Economic Research Service report

Despite tremendous rains in March, irrigation water supply shortages continue for California growers. Facing a fifth year of drought, producers recognized early in the year that water supplies would be a limiting factor (see the March 1991 AO).

Current agricultural surface water allocations have changed little from early forecasts and are not expected to increase this summer. The California State Water Project (SWP), which normally delivers about 5 percent of the total irrigation water, is not distributing any water to irrigators.

The Central Valley Project (CVP) of the U.S. Bureau of Reclamation, which normally delivers about 30 percent of the total, indicates that deliveries to most contractors will be only 25 percent of normal, with two major expectations. Water-right holders whose claims predate Federal water development (about 40 percent of normal deliveries) will receive 75 percent of normal supplies, as specified in their contracts. And the Friant Unit of the CVP will deliver just over 50 percent of normal supplies to some water districts from Fresno to Bakersfield.

In California, surface water rights are granted on the basis of seniority, with the oldest rights having the greatest assurance of an annual water supply. Some of the producers served by private irrigation districts have rights that are senior to the SWP or the CVP. These producers had water to sell and sold more to the state’s water bank than producers served by the SWP or the CVP.

Moving Water Through

California’s “Bank”

To deal with the fift consecutive year of drought, California officials chose a market mechanism as the means to transfer water to meet high-priority needs. The selected market mechanism, called the “water bank,” establishes the California Department of Water Resources as the water broker. The state purchases water from willing sellers, pools it, and distributes it to purchasers to meet their needs.

With one agency serving as broker, water releases from various sources can be coordinated for distribution with less waste than if the same water were moved under individual contracts. The water bank is designed to meet some of the most critical urban, environmental, and agricultural needs, and to increase carryover storage into 1992.

The state paid $125 per acre-foot to water users to forego consumption of about 800,000 acre-feet of surface water this year. Fifty percent of the reduced water consumption came from fallowing or not irrigating agricultural land: 56,500 acres of irrigated corn for grain, 36,000 acres of wheat, 12,600 acres of pasture, 9,200 acres of alfalfa hay, and 9,100 acres of sugar beets.

The other half of the surface water came from substituting pumped groundwater (26 percent) and from purchasing water in storage that would not normally be available for release.

Most of the water sold to the bank came from the Sacramento-San Joaquin River Delta area (46 percent), the Yuba and Feather Rivers (38 percent), and the Sacramento River below the Shasta Dam (10 percent).

Since the bank’s implementation, nine sales have been made totaling about 400,000 acre-feet at $175 per acre-foot. Five of the nine sales (about 75 percent of the water sold) were to water suppliers in urban areas. The four sales to agricultural areas were to the San Joaquin and Tulare basins to help keep orchards and vineyards alive.

At this point in the dry season, the market-based water bank seems to be performing as intended – moving water from those willing to sell to those willing to buy. If all is not sold, carryover and increased flexibility will expand options next year.

The SWP and CVP draw primarily on water in the Sacramento River and its major tributaries, and this area remain seriously short of water available for delivery. The Sacramento River basin runoff forecast is the eighth lowest on record – during the past 50 years, only 1976 and 1977 were lower.

“Miracle” March Rains

Help…Somewhat

With no increase in irrigation water supplies, why has the rainfall in March been called the March “miracle”? The short answer is that California avoided a major catastrophe. The overall water supply would have been much worse except for the three-times-normal March rains through the central portion of the state.

For agriculture, the March rains will prevent 1991 from becoming a disastrously dry year. The rains provided beneficial soil moisture, some groundwater recharge, significantly improved runoff and reservoir conditions in some locations, and increased reservoir storage for 1992.

For example, Millerton Lake on the San Joaquin River increased from 59 percent of normal storage on March 1 to 117 percent on May 1. As a result, the Friant Unit of the CVP, which relies on Millerton Lake and not on imported water from the Sacramento River, is able to deliver about 50 percent of normal.

The improved supply also allowed the CVP to provide 73,000 acre-feet in “hardship” water deliveries for agriculture to supplement the sharply reduced allocations in some cases. Carryover storage in CVP reservoir increased from 7 to 37 percent of target levels, thanks to the rains.

Local Ag Impacts

Likely To Be Severe

The drought is serious enough so that agricultural production, net income, and farm-related business will all suffer as a result. Net returns are expected to decline due to lower production and higher water costs (see following article.)

Some local areas will be especially hard hit, although the effects are not likely to be felt much outside these local areas. Near-normal production of fruits and vegetables and higher commodity prices for some crops will mitigate the impacts of lost production.

In response to the reduced surface water supplies, producers who normally rely on irrigation are increasing groundwater use, idling some land, seeking to minimize waste, and shifting water to produce higher value crops. Despite these efforts, reduced production is expected for cotton, rice, corn, and most other irrigated crops to some extent.

According to the March Prospective Plantings, California’s cotton area likely will be down 14 percent from last year and rice down 23 percent (see map, page 27). USDA’s new acreage estimates were released on June 27, after this report went to press.

Future income potential from permanent crops will not be reduced as first feared. In almost all cases, the orchards and vineyards in jeopardy earlier in the year will have enough water to survive, due to the “miracle March” rains and CVP hardship water, together with efforts by producers to find alternative water sources, and purchases from the state water bank.

Some local areas will experience a significant reduction in agricultural and agriculture-related incomes. Kern County, at the southern end of the Central Valley, uses both ground-and surface water in a “normal” year. This year Kern County is experience a 56-percent shortfall in surface water supplies. The State Water Project that normally delivers 47 percent (1 million acre-feet) of the country’s surface water is delivering none.

Yet Kern County was one of the bright spots benefiting from the “miracle” March rains, with local surface water sources (privately developed and the Friant Unit of the CVP) able to supply over half of their normal deliveries. The county is also purchasing water from the water bank and pumping emergency groundwater supplies to help fill the gap.

Despite these efforts, no water supplies are available for production on about 130,000 acres of the country’s annual and forage crops, primarily cotton. These lands account for about 25 percent of all non-orchard irrigated acres in the county and about a third of the county’s cotton acres.

The major rice-growing region is another area experiencing serious reductions in production and probably net income. Most of California’s rice is grown in the Sacramento River basin, and this area will experience the greatest production loss.

Two major rice-growing region is another area experiencing serious reductions in production and probably net income. Most of California’s rice is grown in the Sacramento River basin, and this area will experience the greatest production loss.

Two rice areas are expecting even further planting reductions. The acreage served by Feather River water in Yuba and Butte Counties is one area, located in the Sacramento basin. The other is the relatively smaller rice production area in the San Joaquin River basin, which planted only a few acres this year.

The Future – Uncertain

But Not Business as Usual

Continued water shortages are likely. CVP reservoir carryover into next year is forecast at 25 percent less than this year, and this year was only 50 percent of target. While not guaranteeing water shortages next year, declining reservoir levels reduce the flexibility of the water delivery system for all users.

May 1 storage levels have declined to 64 percent of normal, continuing a trend of reduced water in storage since the start of this drought. Two to three years of average to above-average precipitation would be needed to bring California’s reservoirs back to normal levels.

Although the emphasis here is on agriculture, serious water shortages affect the entire California economy and the environment through complex linkages. Limited runoff and reduced reservoir levels mean less water for hydroelectric power generation, smaller lakes for recreational activities, and greater difficulty in providing instream flows for fish, wildlife habitat, and river-related recreation.

Perversely, the March rains increased the already-high chances for forest and range fires this summer. The long, severe drought has killed many standing trees. But the March rains stimulated the growth of underbrush. Now, that underbrush is very dry and needs only a spark to serve as kindling for the dead trees. Thousands of acres of woodlands in Orange County have been closed to the public. The U.S. Forest Service has imposed campfire and smoking restrictions on most forests in southern California.

Last year, wildfires burned over 200,000 acres and damaged or destroyed about 850 homes. Adequate water to fight fires has been a concern of state officials since early spring.

The higher cost of generating electricity will affect everyone in the state but especially those pumping groundwater for irrigation. Reduced recreational opportunities will affect the livelihood of many and the quality of life for many more.

Stress on water supplies due to the continuing drought has reduced the populations of several cold-water fish species. Listing the Winter Run Chinook Salmon as a “threatened” species from the effects of this drought will influence the way reservoirs are operated. If other species are listed as “endangered,” significant changes in water management patterns are likely.

The drought has intensified pressure to modify policies on historical priorities, pricing, and transferability of water resources developed by the Bureau of Reclamation – the largest single supplier of irrigation water in California.

At least six bills are now before Congress authorizing one or more temporary changes in existing water policy to alleviate drought impacts, as well as long-term drought planning, water transfer provisions, water pricing, and flows for instream uses. While most of the bills emphasize shortrun provisions, a number of long-term institutional changes are proposed.

Five Dry Years, But

California Is Coping

Even in this fifth year of drought, California is coping. Thanks to March rains – as well as a new water transfer procedure called the water bank, groundwater resources, and sophisticated statewide water storage, transfer, and delivery system -the impact on the state and nation will be relatively small.

Irrigators and household continue to find ways of reducing waste and increasing efficiency. The improvements in water management at the state and household level, as a result of the drought, will continue to keep down water demand for years to come.

The next opportunity for relief from the drought could begin in early October. But an early wet fall, while much needed for drought relief, is not a good prescription for California’s field crops. With a cool, wet March and cool, dry April, field crops are off to a slow start. A long dry fall would boost crop yields, but not reservoir levels.

COPYRIGHT 1991 U.S. Department of Agriculture

COPYRIGHT 2004 Gale Group