Economic Impacts of the 2020–22 Drought on California Agriculture

California just ended its third consecutive year of drought, resulting in the driest three-year period in the instrumental record. Multi-year deficits in precipitation in the state’s usually wetter northern regions have been compounded by increased crop evaporative demands,
leading to water scarcity impacts to agriculture across the state.

Although 2020 was a dry year, water reserves stored during the wetter years of 2017 and 2019
greatly diminished drought impacts during that year. The water outlook changed rapidly in
2021—the third driest water year on record with the highest evaporative demand. The northern
regions of the state—including the Sacramento Valley, the Scott and Shasta valleys, the Pit River valleys (northern intermountain valleys), and the Russian River—faced unusually dry
conditions. Drought emergency conditions in 2021 were proclaimed first in the Russian River,
Scott River and Shasta River basins, which faced subsequent curtailments. Water curtailments
were extended to the Sacramento Valley later in the season. Water for local agriculture,
ecosystems, exports, and water quality protection in the Sacramento-San Joaquin Delta were
compromised by low water reserves.

Atmospheric rivers in October and December 2021 provided temporary drought relief for a
portion of the state, but record low precipitation from January-September allowed for extreme
drought conditions to reign into the 2022 water year. To overcome persistent precipitation
deficits and below-average storage in major reservoirs, the state again implemented water
rights curtailments and low water deliveries from the State Water Project. The US Bureau of
Reclamation announced reduced Central Valley Project deliveries—including unprecedented
cutbacks to senior contractors in the Sacramento Valley—and local agencies implemented
cutbacks as a first tier of drought response measures. Compared with the 2021 water year,
however, 2022 brought less severe water cutbacks in the San Joaquin Valley.

This report provides estimates of the economic impacts to agriculture for first three years of the current drought, which began in 2020. We use a combination of climate, hydrologic,
agricultural and economic models, supplemented by informal surveys of irrigation districts and
remote sensing data. The study includes nearly 88% of the 8.7 million acres of irrigated crop
area in the state (LandIQ, 2019) excluding idle land. Our preliminary analysis for 2020–21
(Medellín-Azuara et al. 2022), focused on the Central Valley, and also examined the Russian
River basin (North Coast), and northern intermountain valleys in Siskiyou, Shasta, and Modoc
counties. Here, we expanded our spatial coverage to include the Central Coast, South Coast,
and Colorado River.