Water Supply Restrictions to Have Billion-Dollar Impact - AgNet West

A new report from the University of California Berkeley illustrates the billion-dollar impact that water supply restrictions will have on California. The study looked at how the San Joaquin Valley will be affected by water policy in the coming decades, incorporating changes in groundwater availability as part of the Sustainable Groundwater Management Act, as well as changes in surface water availability.

“Adding that all up, we found some significant changes in water available to farmers that will result in, by our estimates, fallowing of about one-fifth of all the acres currently under cultivation in the San Joaquin Valley or right around one million acres,” said David Sunding, Professor in the Department of Agricultural Resources and Economics at UC Berkeley and one of the authors of the report. “The direct impacts to agriculture that we calculated were about $7.2 billion per year in lost farm revenues.”

The study found that water supply restrictions will come at the expense of more than 80,000 jobs throughout California and a loss of $2.1 billion in lost employee compensation. The loss of jobs and wages will also have a negative impact on state and local tax revenues collected, with a decline of approximately $535 million per year. The loss of economic activity is projected to have the most substantial effect on communities that are already struggling.

“Those impacts are what we economists call ‘regressive’ in the sense that they fall disproportionately on the lowest income communities in the Valley,” Sunding noted. “It’s one thing to say that you’ll have a certain number of jobs lost, and a certain amount of economic activity curtailed. It’s another thing to say that the impacts are disproportionately large in the poorest communities and that appears to be the case with these water policy changes.”

The study was similar to the report from the Public Policy Institute of California, however, Sunding said that the report from UC Berkeley took “a somewhat more comprehensive approach” which was why the figures were more substantial. The second phase of the study is expected to be released later in the year with suggested actions to mitigate some of the impacts of the water restrictions.

Listen to Sunding’s report below.