Water, the Environment, and Californias Agriculture

1
Water, the Environment, and Californias
Agriculture

• David Zilberman
• UC BerkeleyPresented at the
• Cal-Med Sonoma Workshop
• October 25, 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 VisionsVulnerable 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 - Pierces 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