California agriculture industry growing despite drought losses

California farmers are expected to lose $1.84 billion this year and create 10,100 fewer seasonal jobs due to the drought, according to new study released Tuesday by the UC Davis Center for Watershed Science.

But the state’s agriculture industry isn’t exactly suffering. In fact, it's growing — even after four years of drought.

"We’re getting by remarkably well this year — much better than many had predicted,” lead author Richard Howitt, a UC Davis professor emeritus of agricultural and resource economics, said in a statement.

How is that possible?

Farmers have been drilling for more groundwater, which will offset about 70 percent of the surface water shortage this year, according to the study. There's also been a shift towards higher-value crops like nuts and fruits, which are commanding high prices because of increasing global demand.

So the industry is growing, though it would be growing faster without the drought.

"[Farms] made a lot less money than they would have without the drought," said Jay Lund, Director of the Center for Watershed Sciences

If models showing a wet winter because of El Niño turn out to be correct, it could be a boon for California farmers, but could also cause massive crop losses, says Howitt. Looking at past El Niños, the effects on California agriculture have been decidedly mixed.

“It may solve the problem, or it may not,” said Howitt.

The UC Davis study says some areas of the state will be hard hit because of the drought, like the parched southern San Joaquin Valley, but overall, the state’s farm employment is going up; the number of workers in the state's agriculture industry has risen to its highest level in nearly a quarter-century, according to a Sacramento Bee analysis of state and federal labor numbers in May.

Here are some other key findings from the UC Davis study:

• The direct costs of drought to agriculture will be $1.84 billion for 2015. The total impact to all economic sectors is an estimated $2.74 billion, compared with $2.2 billion in 2014. The state’s farmers and ranchers currently receive more than $46 billion annually in gross revenues, a small fraction of California’s $1.9 trillion-a-year economy.
• The loss of about 10,100 seasonal jobs directly related to farm production, compared with the researchers’ 2014 drought estimate of 7,500 jobs. When considering the spillover effects of the farm losses on all other economic sectors, the employment impact of the 2015 drought more than doubles to 21,000 lost jobs.
• Surface water shortages will reach nearly 8.7 million acre-feet, which will be offset mostly by increased groundwater pumping of 6 million acre-feet.
• Net water shortages of 2.7 million acre-feet will cause roughly 542,000 acres to be idled — 114,000 more acres than the researchers’ 2014 drought estimate. Most idled land is in the Tulare Basin.
• The effects of continued drought through 2017 (assuming continued 2014 water supplies) will likely be 6 percent worse than in 2015, with the net water shortage increasing to 2.9 million acre-feet a year. Gradual decline in groundwater pumping capacity and water elevations will add to the incremental costs of a prolonged drought.