“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 recent California drought has many lessons for water managers and policy-makers regarding drought management. Perhaps the greatest lesson is on the possibility of economic resilience when water is well managed.
For the last few years, California essentially lost about 33% of its normal water supply due to drought. Yet in spite of often several local impacts, the state overall saw an undetectable loss of jobs and economic production. During this period, agricultural production, about 2% of California’s economy, saw net revenues reduced by 3% along with the loss of 10,000 jobs in the face of leaving over 6,000 acres of irrigable farm land fallow. Yet, high commodity prices and continued shifts to higher valued crops (such as almonds, with more jobs per acre) raised total 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 economic activity, were required to reduce water use by an average of 25% in 2015 when compared with 2013 levels. These conservation targets were generally well achieved on quite short notice. Most remarkably, there has been little discernable statewide economic impact from this 25% reduction in water use, although many local water districts are suffering financially from reduced water sales.
How is it that such a severe drought causes so little economic damage? Much of the lost water supply from drought is made up for by withdrawals of water from storage, particularly groundwater. In addition, remaining water supplies were 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 used the water they had for the higher uses and shorted generally lower-valued uses and crops.
When limited water supplies are well allocated, California has demonstrated tremendous potential to absorb drought-related shortages with relatively little economic impact. This economic robustness to drought is a result of the structure of California’s economy.
First, the most water-intensive part of California’s economy, agriculture, accounts for about 80% of all human water use, but only about 2% of California’s economic activity. So long as we can preserve deliveries of water for the bulk of the economy, in cities, California’s economy can withstand considerable drought. And the strong areas of the economy can aid those more affected by drought.
Second, within agriculture, roughly 80-90% of employment and revenues are from higher-valued crops (such as vegetable and tree crops), which accounts for about half of California’s irrigated land and about 50% of California’s agricultural water use. If available water is allocated to these crops, a large water shortage can be accommodated with relatively small economic loss. Water markets have generally 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 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. Subsistence economies, however, remain more vulnerable from drought.
Third, cities tend to concentrate much of their water use in lower-valued activities. In California, roughly half of urban water use is for landscape irrigation. By concentrating water use reductions on such low-value applications, utilities and individual water users greatly lower the costs of drought. Conversely, if cities were to shut down 25% of businesses (and the associated economic activity) to implement 25% cuts in water use, the impacts would have been truly catastrophic.
Fourth, although California’s climate is very susceptible to drought, California’s geology provides an abundant amount of drought water storage in the form of groundwater. The availability of groundwater has 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 the Mick Jagger theory of drought management. Yes, droughts can be terrible in preventing us from getting all that we want, and might cause severe local impacts. But if we manage water shortages responsibly, we can usually get the water that the economy and society needs overall. This overall economic strength allows for aid to those most severely affected by drought. This is an optimistic and pragmatic lesson for arid, drought-prone locales such as California.
The drought has reminded us that California remains a dry place where there will always be controversy and disagreements over water. However, despite the many apocalyptic statements on California’s drought, the state has done quite well with drought management in recent years. Overall, water stress has forced us to identify areas needing improvement to allow us to get most of what we really need from water in California.
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