By Scott Hamilton, President, Hamilton Resource Economics
Talk to folks in the biggest cities in California, and the answer to the California’s water shortage problem is simple—remove 500,000 acres of almonds in the San Joaquin Valley. But how much sense does that make?
With a growing population, the world needs food—better quality food, high in protein. And people want that food produced locally, safely, and delivered fresh. That is what California agriculture does! When considering the variety of crop and livestock products and the efficiency of production, the agricultural industry in California has no equal in the world. The Central Valley of California is not just a national asset, it is one of the world’s most unique resources.
The Valley is a food producing powerhouse, but it is more than that. It is a place where people live and work, and where people have come for generations to find a better life for themselves and their families. Of the more than 7,500 almond farms in California, more than 90% are owned and operated by family growers who live on their land and plan to pass it on to their children. Nearly 70% of California almond farms are 100 acres or less. The removal of 500,000 acres of almonds would result in the loss of many small family farms. Beyond the farm gate, the communities of the Valley depend on agriculture to sustain the local economy, to generate jobs, and to provide tax revenues. 110,000 people are employed directly and indirectly in the almond industry. A loss of 500,000 acres is a loss of 44,000 jobs.
Many Californians are concerned about climate change. The basics tell us that more photosynthesizing plants equals eliminating more CO2. The idea of eliminating 120 million almond trees would be counterintuitive. The fight against climate involves multiple strategies, and agriculture has a role in that fight.
There is a tendency to dismiss the importance of almond exports. The Central Valley has an incredibly unique combination of climate, soils, and water resources. Very few other places in the world are suitable for growing almonds, and as a result, California produces 80% of the world’s supply. The thought that the United States has enough, and there is no need to supply others, depicts a very entitled perspective. Fortunately, the coffee producers of the world do not have the same perspective. But of course, there is no ban on exports – if almond acreage is reduced, almond prices will increase, affecting all consumers.
The economic reality is that America has a balance of trade problem. Since the 1990s, the United States has been importing more than it has been exporting. Deficits in the balance of trade can lead to a fall in the value of the exchange rate; meaning that foreign good become more expensive. It can also cause the Federal Reserve to raise interest rates leading to reduced investment, output and employment. America should be encouraging exports.
The free market is an extraordinarily efficient way of allocating resources to produce the goods that people want and need. However, poorly informed government regulations can get in the way. The problem is not that there are too many almonds in California, but that the water supplies are not being regulated appropriately. The Public Policy Institute of California estimated that, on average, an average of 10-million-acre feet, surplus to all other needs, flows out the Golden Gate Bridge to the Pacific Ocean. That water is surplus to the in-Delta farm and community needs, environmental needs, and to the need to maintain in-Delta water quality. One fifth of that surplus water would solve the Valley’s water shortages, sustain local economies, replenish ecosystems, keep farmers in business, and keep Valley communities strong. There is no intention of degrading the sensitive Delta ecosystem – no need to take more water from the Delta in dry years. What is needed is the ability to capture a small portion of the surplus water during wet years.
What is at stake is not 500,000 acres of almonds, per se, but rather 500,000 acres of the most unique farmland in the world. While it may grow almonds now, it has the ability to grow an amazing variety of crops. With the world population increasing along with a demand for plant-based protein, why would a nation squander this resource simply because it can’t put surplus water to its best use?
These are the questions Californians need to ask to ensure those who create the policies are held accountable for the inevitable consequences.