newly planted almond trees
(Photo: Richard Thornton / Shutterstock.com)

By Natalie Willis, Reporter, Valley Ag Voice 

Groundwater makes up roughly a third of California’s freshwater supply used for irrigation — a necessary resource to continue producing three-quarters of the nation’s fruits, nuts, and half of its vegetables. Yet, a new study finds that with the Sustainable Groundwater Management Act imposing higher groundwater pumping costs, farmers may switch to crops that use less water.  

According to a study led by the University of Maryland, California can meet SGMA’s groundwater targets, but doing so will cut fruit and nut production by a quarter and leave 50% more cropland unused.  

“Our study found that farmers will ride out short-term increases in the cost of water, like during a drought, but as cost increases become permanent, they shift away from crops like fruit trees, which are long-term investments,” Louis Preonas, UMD Assistant Professor of Agriculture and Resource Economics and study co-author, said in a release. 

Preonas explained that fruit trees require a lot of water, but as high-value crops, the payoff balances the initial input. However, as irrigation tax increases become permanent and riskier, farmers are more likely to shift away from growing these perennials.  

California produces 18% of the total U.S. crop value with a high percentage of specialty crops — and 80% of almonds on the global market — so large-scale shifts away from these perennial crops could have unintended economic ramifications. 

The UMD study sought to discover how farmers would respond to changes in groundwater pumping costs in both the short- and long-term to evaluate if farmers use less groundwater as costs increase or shift to growing different crops that lower water demand. 

Since electricity powers most groundwater pumps, the researchers used data on electricity use, groundwater levels, and pump efficiency to measure groundwater extraction and pumping costs across the Central Valley. 

GROUNDWATER TAX 

Under SGMA, groundwater users who extract or pump in high- or medium-priority basins not managed by groundwater sustainability agencies or in probationary basins are required to file extraction reports with the State Water Resources Control Board and pay extraction fees. 

Current annual fees for groundwater extractions in required areas generally include a base fee of $300 per well and either $25 per acre-foot in an unmanaged area or $20 per acre-foot extracted in probationary basins, according to the SWB. If a user does not submit reports on time, they are subject to late fees and potentially additional administrative liability or misdemeanor penalties. 

The study found that, in the short term, higher groundwater pumping costs would lead farmers to change how they irrigate but not what they grow, especially since most farmers plant perennials like almonds, grapes, and alfalfa. While these crops are expensive to plant, they are high-value and yield harvests for several years, making farmers less likely to switch crops under short-term pumping increases.  

However, with permanent increases in groundwater costs, as expected under SGMA, farmers do switch to less water-intensive crops or fallow land, the study found. Over the long term, a 10% increase in groundwater costs leads to a 1.4% decrease in fruit and nut crops and a 0.72% increase in fallowing, resulting in a 3.6% reduction in groundwater use.  

Reaching groundwater sustainability by 2042 will require an average reduction in pumping by 19.2%, the study explained. To reach that target, a groundwater tax of about 60% would be needed, significantly impacting land use, with 8.2% of cropland shifting away from fruit and nut perennials. 

“Our dynamic model predicts that the equivalent of a 60% tax on groundwater pumping costs will be required to achieve California’s sustainability goals,” the study stated. “These results imply that California’s Sustainable Groundwater Management Act will alter the landscape of crop production across California by incentivizing large shifts away from fruit and nut perennials and towards exit from agriculture.” 

According to the study, these changes would result in a 24% decline in fruit and nut crops, a 2% decline in hay, a 12% increase in annual crops, and a 50% increase in fallowed land compared to a scenario without the tax. Thus, while SGMA’s goals can be met with a moderate tax, it would lead to significant changes in how California’s 20 million acres of cropland are used. 

According to Congressman John Duarte who represents California’s 13th district in the Central Valley, while high-value, high-protein crops like pistachios and almonds are considered extremely water-intensive, they remain water-efficient, especially with high-tech irrigation systems and sensors. 

Still, the shift away from perennial crops is a likely scenario as the state does not consistently deliver water year to year.  

“I don’t know what years we’re going to deliver water to sustain any crops. We’ve had two very wet years in California… and we’re having drastic cuts to our water deliveries from the Bureau of Reclamation,” Duarte said. “I don’t know what irrigated agriculture is going to exist if after two of the wettest years on record, one of the wettest years on record and followed with a reasonably wet year with many of the reservoirs starting at 80% full, we’re still allocating 40% to our farm water deliveries.” 

As a pistachio farmer, Duarte has witnessed the direct consequences of water management policies and higher irrigation costs in the Central Valley. 

“It’s going to hurt agriculture. It’s going to hurt farmers. It’s going to hurt land values,” Duarte said. 

This impact extends beyond the fields with banks becoming increasingly restrictive with their agricultural portfolios, leading to more stringent lending conditions. This financial tightening is closely tied to the value of land, which is intrinsically linked to water availability, he explained. As SGMA continues to enforce strict water usage regulations, the value of land without water access diminishes significantly. 

“Water and land values are very closely tied, and when we restrict the use of water on land, it becomes worthless. If it has no water, it becomes virtually worthless entirely,” Duarte said.  

Further, the punitive rates being implemented by some water districts under SGMA are arriving with little time for farmers to plan or develop strategies to mitigate the impact, Duarte explained.  

POLICY AND INFRASTRUCTURE PROJECTS 

The impact of SGMA and water management policies on agriculture is personal and far-reaching. Despite significant water use for environmental purposes such as flushing the Delta to address pollution and support endangered species, there has been little success in reviving species like the smelt and salmon, leading to questions about the efficacy and priorities of current water management practices. 

“Generally, in water, you say there’s a beneficial use doctrine. You have to put water towards a beneficial use or you lose the right. Well, we can’t show a beneficial use of water being used in many of the ecological systems right now. We say we’re using tens of millions of acre-feet of water a year to save certain species, the smelt, the salmon, and we can’t recover those species with those water inputs,” Duarte said. “If that was a farmer, using those same types of resources to unsuccessfully farm year after year or a city that was taking those volumes of water and not delivering it to its domestic and industrial users, it could be a challenge to the beneficial use doctrine of that water. I think the ecological uses need to suffer the same scrutiny.” 

According to Duarte, current solutions to improve water management include updating reservoir operations with better data and technology, developing new infrastructure projects, and advocating for the Army Corps of Engineers to prioritize water supply.  

Additionally, Duarte’s office is developing a plan to extend the Folsom Canal from where it terminates near Galt, all the way down to the pumps.  

“This would allow us to move, we estimate, up to 800,000 acre-feet a year of water straight to the pumps and available for south of Delta use with no impact on the Delta,” Duarte said. “And then we want to integrate that with some off-stream storage sites that would allow us to surge more water in there and then make even more use of the canal when the water is available and provide long-term groundwater recharge for the Stockton-Lodi area up in San Joaquin County.” 

After presenting the idea to the Army Corps of Engineers, Bureau of Reclamation, and Delta water users, Duarte’s office is in the process of drafting plans to move the project forward. 

FUTURE OUTLOOK 

As California navigates the complexities of implementing SGMA, the future of agriculture and water management remains uncertain. The shift away from water-intensive crops due to rising groundwater costs could reshape the state’s agricultural industry, with significant economic and environmental implications, according to the UMD study.  

“There’s gonna be a human cost to these bad policy decisions. We’re seeing it in agriculture, but we’re seeing it in many realms of California, and that’s why California has gone from being the Golden State to kind of a nationwide joke. We can do better,” Duarte said. 

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