Original article

Posted on August 28, 2022

Graph of cumulative job and revenue data for California (Josue Medellín-Azuara, 2015)

by Jay Lund

[This is a reposting of a CaliforniaWaterBlog.com post from February 2016, near the end of the previous drought.  For human uses, conditions seem somewhat similar to this point in the previous drought, so this perspective might be useful. A couple of more recent readings are added to this post.]

“You can’t always get what you want
But if you try sometimes you just might find
You get what you need,” Rolling Stones (1969, Let It Bleed album)

The ongoing California drought has many lessons for water managers and policy-makers. Perhaps the greatest lesson is how unimportant a drought can be if we manage water well.

For the last two years, California lost about 33% of its normal water supply due to drought, but from a statewide perspective saw statistically undetectable losses of jobs and economic production, despite often severe local effects. Agricultural production, about 2% of California’s economy, was harder hit, fallowing about 6% of irrigated land, and reducing net revenues by 3% and employment by 10,000 jobs from what it would have been without drought. Yet, high commodity prices and continued shifts to higher valued crops (such as almonds, with more jobs per acre) raised statewide agricultural employment slightly and raised overall revenues for agriculture to record levels in 2014 (the latest year with state statistics).

Cities, responsible for the vast majority of California’s economy, were required to reduce water use by an average of 25% in 2015. These conservation targets were generally well achieved on quite short notice.   Most remarkably, there has been little discernible statewide economic impact from this 25% reduction in urban water use, although many local water districts are suffering financially.

More groundwater pumping greatly reduced drought impacts. Picture courtesy of DWR.

How could such a severe drought cause so little economic damage? Much of the lost water supply from drought was made up for by withdrawals of water from storage, particularly groundwater. But the substantial amount of water shortage that remained was largely well-allocated. Farmers of low-valued crops commonly sold water to farmers of higher-valued crops and to cities, greatly reducing economic losses. Within each sector, moreover, utilities, farmers, and individual water users allocated available water for higher-valued uses and shorted generally lower-valued uses and crops.

If shortages are well-allocated, California has tremendous potential to absorb drought-related shortages with relatively little economic impact. This economic robustness to drought arises from several characteristics of California’s economic structure and its uses of water.

First, the most water-intensive part of California’s economy, agriculture, accounts for about 80% of all human water use, but is about 2% of California’s economy. So long as water deliveries are preserved for the bulk of the economy, in cities, California’s economy can withstand considerable drought (Harou et al. 2010). And the large strong parts of the economy can aid those more affected by drought.

Gross annual revenue for California crops ($ millions). (using California Department of Water Resources irrigated crop acres and water use data)

Second, within agriculture, roughly 80-90% of employment and revenues are from higher-valued crops (such as vegetable and tree crops) which occupy about 50% of California’s irrigated land and are about 50% of California’s agricultural water use. If available water is allocated to these crops, a very large water shortage can be accommodated with a much smaller (but still substantial and unprecedented) economic loss.  Water markets have made these allocations flexibly, with some room for improvement.

Global food markets have fundamentally changed the nature of drought for humans. Throughout history, disruptions of regional food production due to drought would lead to famine and pestilence. This is no longer the case for California and other globally-connected economies, where food is readily available at more stable global prices. California continued to export high-valued fruits and nuts, even as corn and wheat production decreased, with almost no effects on local or global prices. Food insecurity due to drought is largely eliminated in globalized economies (poverty is another matter). Subsistence agriculture remains more vulnerable from drought.

Third, cities also concentrate much of their water use in lower-valued activities. Roughly half of California’s urban water use is for landscape irrigation. By concentrating water use reductions on such less-productive uses, utilities and individual water users greatly lowered the costs of drought. If cities had shut down 25% of businesses to implement 25% cuts in water use, the drought and California’s drought management would have been truly catastrophic.

Fourth, although California’s climate is very susceptible to drought, California’s geology provides abundant  drought water storage in the form of groundwater, if managed well.  The availability of groundwater allowed expanded pumping which made up for over 70% of agriculture’s loss of surface water during the drought and provided a buffer for many cities as well. If we replenish groundwater in wetter years, as envisioned in the 2014 groundwater legislation, California’s geologic advantage for withstanding drought should continue.

All of this leads to what we might call a Mick Jagger theory of drought management. Yes, droughts can be terrible in preventing us from getting all that we want, and will cause severe local impacts. But if we manage droughts and water well and responsibly, then we can usually get the water that the economy and society really needs. This overall economic strength also allows for aid to those more severely affected by drought. This is an optimistic and pragmatic lesson for dry drought-prone places with strong globalized economies, such as California.

California’s ecosystems should have similar robustness of ecosystem health with water use, and naturally persisted through substantial droughts long ago.  But today, California’s ecosystems entered this drought in an already severely depleted and disrupted state.   (The Mick Jagger characterization of California’s ecosystems might be “Gimme Shelter,” from the same album.)  If we can sufficiently improve our management of California’s ecosystems before and during droughts, perhaps they will be more robust to drought. Reconciling native ecosystems with land and water development is an important challenge.

“If I don’t get some shelter
Oh yeah, I’m gonna fade away” Rolling Stones (1969, Let It Bleed album)

The drought reminds us that California is a dry place where water will always cause controversy and some dissatisfaction.  However, despite the many apocalyptic statements on California’s drought, the state has done quite well economically, so far, overall. But, the drought has identified areas needing improvement, so that we can continue to get most of what we really need from water in California, even in future droughts.  We should neither panic, nor be complacent, but focus on the real challenges identified by the drought.

Jay Lund is Co-Director of the Center for Watershed Sciences and Professor of Civil and Environmental Engineering at the University of California – Davis.

Further reading

Lund, J.,  Follow the Water! Who uses how much water where?, CaliforniaWaterBlog.com, Posted on July 24, 2022.

Hanak, E., J. Mount, C. Chappelle, J. Lund, J. Medellín-Azuara, P. Moyle, and N. Seavy, What If California’s Drought Continues?, 20 pp., PPIC Water Policy Center, San Francisco, CA, August 2015.

Harou, J.J., J. Medellin-Azuara, T. Zhu, S.K. Tanaka, J.R. Lund, S. Stine, M.A. Olivares, and M.W. Jenkins, “Economic consequences of optimized water management for a prolonged, severe drought in California,” Water Resources Research, doi:10.1029/2008WR007681, Vol. 46, 2010

Howitt R, Medellín-Azuara J, MacEwan D, Lund J and Sumner D., “Economic Analysis of the 2015 Drought for California Agriculture.” Center for Watershed Sciences, UC Davis. 16 pp, August, 2015.

Medellín-Azuara J., R. Howitt, D. MacEwan, D. Sumner and J. Lund, “Drought killing farm jobs even as they grow,” CaliforniaWaterBlog.com, June 8, 2015.

Wikipedia, “You Can’t Always Get What You Want”, https://en.wikipedia.org/wiki/You_Can’t_Always_Get_What_You_Want

Wikipedia, “Gimme Shelter”, https://en.wikipedia.org/wiki/Gimme_Shelter