California’s Drought Adaptations Ease Economic Impact, UCLA Says

Apr 02, 2014 4:00 am ET

April 2 (Bloomberg) -- California’s experience with recurrent drought has prompted such wide adoption of conservation methods that the current water shortage will have little impact on the state economy, according to a report by the University of California, Los Angeles.

A study of employment and income tax growth found no correlation with rainfall or its lack from 1969 to 2012, according to the UCLA Anderson Forecast.

“While the drought is real, and it will cause economic losses, particularly in certain agricultural quarters, overall the state is not likely to be greatly impacted,” economist Jerry Nickelsburg said in the report.

Three years of little rain prompted Governor Jerry Brown, a 75-year-old Democrat seeking a fourth term, to declare a state of emergency in January and call for a voluntary 20 percent cut in water use. Many areas have set mandatory restrictions. Farmers have idled hundreds of thousands of acres, boosting food prices and reducing farm jobs.

California has a long history of droughts, with one beginning about every 15 years, Nickelsburg said. That has prompted adoption of drip irrigation in agriculture and household use of drought-resistant landscaping and low-flow appliances, he said.

Agriculture consumes about 80 percent of all delivered water in the state, producing about half of all the fruits, nuts and vegetables consumed in the U.S., Nickelsburg said. The economic impact is reduced because farming represents only about 2.5 percent of the state’s jobs and farmers are likely to see higher prices from lower output, he said.