Transcript Water the environment and California’s agriculture

Water, the Environment,
and California’s Agriculture
David Zilberman
UC Berkeley
Presented at the
Cal-Med Sonoma Workshop
October 25, 2007
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
Heterogeneity Revenues Vary by Crop
 High value crops-keepers
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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
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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
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.
Animal, Ag, and Water
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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.
Conflicting Visions—Vulnerable
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
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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
Physical Reality Is Less of a Problem than
Water and Other Policies
1. Prior appropriation and other water rights that
restrict water trading
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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
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 irrigationResult- 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
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
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
Pest Control
 Relatively, Cal ag does not suffer much from pest
 That make organics appealing
 Relatively high rates of adoption of IPM and biocontrol 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 - Pierce’s 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
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.
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