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Water, the Environment, and California ’ s Agriculture

Water, the Environment, and California ’ s Agriculture. David Zilberman UC Berkeley Presented at the Cal-Med Sonoma Workshop October 25, 2007. Water in California (Rough Numbers). Annual water supply, 32-35 million acres (MA) Surface water supply,18-21 million acre feet (MAF)

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Water, the Environment, and California ’ s Agriculture

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  1. Water, the Environment, and California’s Agriculture David Zilberman UC BerkeleyPresented at the Cal-Med Sonoma Workshop October25, 2007

  2. Water in California (Rough Numbers) • Annual water supply, 32-35 million acres (MA) • Surface water supply,18-21 million acre feet (MAF) • Groundwater,14 MAF • A person consumes 1/3 AF; 36 million people, 12 MHA • Agricultural land, 26 MA • 38% in farming = 9.88 MA • 75% irrigated = 7.41 MA • Water per acre average year, 2.5-2.8 AF • Water use varies by crop • 1.5 AF/A wheat-7AF/A rice alfalfa • Fruits 2.5 MA require 3.2 AF/ac = 8 MAF total • Veggies 2 MA with double cropping 1 MA require 3 AF/ac = 3 MAF

  3. Heterogeneity Revenues Vary by Crop • High value crops-keepers • Flowers $10-30K/AF; golf courses 3-30K • Strawberries $9-20K/AF; fresh tomatoes $3-5/AF • Citrus $2-4/AF • Almond $500-$800/AF • Marginal value crops may be replaced by biofuels ---------------------------------------------------------- • Cotton $200-$400/AF Marginal • Wheat $75-100/AF • Rice &30-40/AF • May be inferior to biofuels • Top ag priority assure 11 MAF for fruits and veggies, then expand those high value crops

  4. Modern Water Technologies • Highest value crops (strawberries, grapes) use advanced irrigation with chemigation • Increase yield • Save some water and much chemicals • Slow adoption of modern irrigation in field crops. • Slow adoption of optimize scheduling. • Studies show there is capital water substitution: • Improved applications over time (better scheduling) during season increase yield and save some water. • Improved application over space (precision) can save much water and chemicals. • Impacts vary by location-land quality slope • Indications that biotech ( a taboo) may provide drought tolerance and water saving.

  5. Animal, Ag, and Water • Meats and milk are large sectors. • Cattle, sheep, etc., are grazed on rain-fed areas. • Poultry relies heavily on imported feed, probably will stay. • Recreational horses will pay their way. • Dairy consumes locally grown feed • Enhances value of alfalfa and other feed products • Water shortage may make make these feed products less competitive and reduce the industry. • Animal waste problems also pose a challenge. • The dimension and design of waste disposal regulation and facilities are research challenge • Need to balance cost of abatement, disposal, environmental damage, and value of production and also design politically feasible policies.

  6. Conflicting Visions—Vulnerable Infrastructure and Incremental Changes • Conflicting visions • Growth to 50 or 60m requiring 5-8 MHA • Desire to restore fisheries and streams • Dynamic farming sector identifying new opportunities • Vulnerable infrastructure • The decaying delta built on peat • Climate change threats (rising sea levels, earlier snowmelt) • Incremental changes allow systems to stumble • Water bank - CVPIA • San Diego - imperial trade • Low prices of water for ag, most of the time • Gradual improvement of water use efficiency on farm

  7. Physical Reality Is Less of a Problem than Water and Other Policies • Prior appropriation and other water rights that restrict water trading • Even with CVPIA, long-term trading is disallowed • Restriction on water movement- there is a potential to transfer water from east to west in addition to north to south Results • Under-investment in water conservation among farmers with prior appropriation cannot sell • Uncertain water rights leading to underinvestment in conservation and high value crops among junior right owners

  8. Physical Reality Is Less of a Problem than Policies 2. Restriction on construction of canals and conveyance facilities- even when they pass benefit cost test The peripheral canal seems doomed Water can not be moved to where it is most valuable 3. Regulation and de-facto ban on use of purified water for drinking and irrigation- Result- reduction of water supply 4. Subsidized electricity rate for farms-for many years No monitoring of aquifers in some areas Results- sea water intrusion- heavy restrictions Under investment in conservation Excessive depletion

  9. Paralyzed Water System • Water regulations are weapons in development wars • Limited water rights: main constraint of development • They may be neglected due to budgetary constraints • They reflect myopia and lack of trust of scientific predictions ( Katrina…), by policymakers, and voters • But crisis triggers change • Droughts of 1977-79 and 1988-92 introduced conservation • The 1988-92 drought led to water bank and CVPIA • New threats: • High energy cost - desalinization is costly • The delta levies will crumble - it is an issue of time • Climate change events are likely to occur

  10. Elements of Reform • Benefit costs-based project assessment (may need new projects) • Set the price right or introduce tradable permits • Price = mar extraction + mar externality + marginal conveyance + user cost • Control pollution - by market-based incentives

  11. Pest Control • Relatively, Cal ag does not suffer much from pest • That make organics appealing • Relatively high rates of adoption of IPM and bio-control and reliance on consultants • Pesticides registration requirements led to introduction of wireless use reporting system and increase in automation- porter is right • Frost in winter barrier to pest movement • Climate change = more pest - Pierce’s disease • How to deal with dying bees - payment for preservation of wild bees • Methyl bromide really valuable - 20/80 rule applies • Should be taxed not banned

  12. Consumers’ Pest-Control Preferences • 20%+ of consumers will pay 15% for pesticide-free food • 30% will pay nothing • But 10% of them will vote for banning pesticides • Food safety pesticides risks are miniscule • Worker safety are much higher • Environmental health is a problem • Organic and other pesticide-free solutions are “purer” not healthier - base for product differentiation. • Med ag is about taste, quality, and value added (not hunger prevention). • We sell lifestyle as well as food; golf is ag.

  13. Environmental Drivers • Endangered species + litigation affect development. • Reduce attempts to build on undeveloped hills; instead replace farmland with housing. • The “taking” provides incentives to kill endangered species not to protect them • Concern about climate change should lead to adaptation = not withdrawn from technology

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