- Summer 1995 "Update" Newsletter Article -

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NEW PUBLICATION PROJECTS WATER SHORTAGE EFFECTS

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From CATI Publication #950701
Copyright © 1995. All rights reserved.

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With all the weather-related concerns the California farm industry faces each growing season, we can be fairly certain that lack of water won't be one of them, at least this year.

But smart planning means looking ahead to the bad years even during the good, and that's what a team of agribusiness researchers at California State University, Fresno's Center for Agricultural Business is doing in publishing a report that projects farm and earnings losses based on water shortages in the central San Joaquin Valley.

Agricultural economics professors James Cothern and Dennis Nef have completed a policymakers' resource guide to aid in foreseeing the effects of water shortages resulting from lack of rainfall, restrictive government water policies, or a combination of the two.

"Agriculture is the major economic engine of the Fresno County region of California, and policies that would restrict the use or delivery of irrigation water would significantly affect the region's economic and social structures," note Cothern and Nef in their report, entitled, "Economic Impact of Surface Water Reduction Alternatives: Westlands Water District and Fresno County."

This is the second of a pair of studies that examine the effects of water shortages in the central San Joaquin Valley. The first, entitled Economics of Crop Production with Surface Water Reduction Alternatives: Westlands Water District, focused on alternative cropping patterns in the Westlands Water District.

The current report projects earnings and income losses based on reduced production. The researchers used computer software technology from the U.S. Department of Commerce to project income losses in farm production and related sectors of the economy. Eight scenarios were analyzed, with water reductions ranging from 25 to 50 percent of "contractual" amounts established through agreements between Westlands and the federal Central Valley Project.

Overall economic losses to Fresno County range between $64 and $137 million annually, depending on the severity of the water reduction policy, the researchers found. Annual employment losses range from 2,270 to as many as 5,400 jobs.

These types of losses actually occurred in 1991, after statewide water shortages prompted federal authorities to cut Westlands water deliveries by 50 percent. Fresno County gross agricultural income dropped that year to $585 million, down $90 million from the year before. The county faced the loss of more than 1,000 jobs.

"Unemployment fallout from decreased district agricultural production is a concern," the researchers said. "Given that water policies are changing, the residents of Fresno County, as well as policymakers representing local, state, and national jurisdictions would benefit from a better understanding of the interrelationship of future policies, Westlands agriculture and the economic well-being of Fresno County."

The study revealed how losses in gross agricultural earnings also would affect other aspects of Fresno County's economy. For example, while agricultural losses might reach $80 million due to reduced plantings, in that same scenario the health related industries would face income losses of $3 to $6 million; retail from $3 to $7 million, wholesale up to $6 million; transportation up to $4 million; and business services up to $4 million.

This type of information would be valuable to state and county-level government and economic officials in preparing policies to deal with such losses in the economy.

Copies of "Economic Impact of Surface Water Reduction Alternatives: Westlands Water District and Fresno County" are available from CATI at no charge. For ordering information see the Publications Available form on Page 7.

For more details on this project, Cothern and Nef can be reached through the Department of Agricultural Economics at (559) 278-2949.



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