Economic Impact of the 2015 Drought on Farm Revenue and Employment

Richard E. Howitt, Josué Medellín-Azuara, Duncan MacEwan, Jay R. Lund, and Daniel A. Sumner

from ARE Update Vol. 18, No. 5, May/Jun, 2015 Special Issue: The Economics of the Drought for California Food and Agriculture

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Abstract

We estimate that a net water shortage of 2.6 million-acre feet could cause 564,000 acres to be fallowed and result in a loss of $850 million in crop production value. The surface water shortage of 8.8 million acre-feet will be replaced by about 6.2 million acre-feet of increased groundwater pumping, at a cost of about $600 million. We estimate the dairy and cattle industries will lose $350 million in revenues. We estimate the direct economic cost of the 2015 drought will be $1.8 billion, with a loss of 8,550 direct farm jobs. Including spillover effects, statewide losses are close to $2.7 billion in output and 18,600 full-time and part-time jobs.

Keywords

agricultural revenue, job losses, Central Valley, fallowing land

Citation

Richard E. Howitt, Josué Medellín-Azuara, Duncan MacEwan, Jay R. Lund, and Daniel A. Sumner. "Economic Impact of the 2015 Drought on Farm Revenue and Employment." ARE Update 18(5)(2015):9-11. University of California Giannini Foundation of Agricultural Economics.
https://giannini.ucop.edu/publications/are-update/issues/2015/18/5/economic-impact-of-the-20/