Crop Priority

How Big Ag gamed California's drought

‘I’ve been smiling all the way to the bank,” said pistachio farmer John Dean at a conference hosted earlier this month by Paramount Farms, the operation owned by Stewart Resnick.

Resnick is the Beverly Hills billionaire known for his sprawling agricultural holdings, controversial water dealings and millions of dollars in campaign contributions to California politicians including Gov. Jerry Brown, former governors Arnold Schwarzenegger and Gray Davis, and U.S. Sen. Dianne Feinstein.

The record drought has alarmed the public, left some rural communities without drinking water and led Brown last week to impose the first mandatory water restrictions in the state’s history. But the governor’s executive order required cutbacks only from the urban sector that uses roughly 20 percent of California’s developed water; the agricultural sector, which uses 80 percent, was required only to formulate “plans” for coping with future drought.

Responding to criticism about letting agriculture off easy, Brown and his aides pointed out that farmers have already been cut back. In February, U.S. officials announced that agriculture’s allocation of federal water supplies in California would be cut to zero in 2015. State water allocation to agriculture will be only 20 percent in 2015. And these reductions come on top of earlier cutbacks in 2014.Yet despite such cutbacks, large-scale farmers are enjoying record profits—and increasing the acreage planted in almonds and other water-intensive crops—thanks in part to infusions of what experts call dangerously underpriced water.

Agriculture is at the heart of California’s worsening water crisis, and the stakes extend far beyond the state’s borders. Not only is California the world’s eighth largest economy, it is an agricultural superpower. It produces roughly half of all the fruits, nuts and vegetables consumed in the United States—and more than 90 percent of the almonds, tomatoes, strawberries, and other specialty crops—while exporting vast amounts to China.

Agriculture consumes a staggering 80 percent of California’s developed water, even as it accounts for only
2 percent of the state’s gross domestic product. Most crops are produced in the Central Valley, which is, geologically speaking,
a desert. The soil is very fertile,
but can only thrive if massive irrigation water is applied.

Until recently, agriculture’s
80 percent share has rarely been mentioned in political and media discussions of the drought. Instead, coverage concentrates on its implications for people in cities and suburbs, which is where most journalists and their audiences live.

The other great unmentionable is that water is still priced more cheaply than it should be, which encourages overconsumption. “Water in California is still relatively inexpensive,” says Heather Cooley, director of the water program at the Pacific Institute in Oakland.

One reason is that much of the state’s water is provided by federal and state agencies at prices that taxpayers subsidize. A second factor that encourages waste is the “use it or lose it” feature in California’s arcane system of water rights. If a property owner does not use all the water to which he is legally entitled, he relinquishes future rights to the unused water, which may then get allocated to the next farmer in line.


Lawmakers have started to reform the water system, but experts say there’s a long way to go. For years, California was the only state in the arid West that set no limits on how much groundwater a property owner could extract from a private well. Thus nearly everyone in the Central Valley has been drilling deeper wells in recent years, seeking to offset reductions in state and federal water deliveries. This agricultural version of an arms race not only favors big corporate farms, it threatens to collapse the aquifers whose groundwater is keeping California alive during this drought—and will be needed to endure future droughts.

Last fall, Brown signed a bill to regulate groundwater extraction. But the political touchiness of the issue—agricultural interests lobbied hard against it—resulted in a leisurely implementation timetable. Not until the 2040s must sustainable practices be in place.

There are practical solutions
to California’s drought, but the lack of realistic water prices
and other incentives has slowed their adoption. A shift to more efficient irrigation methods could reduce agricultural water use by
22 percent, an amount equivalent to all the surface water Central Valley farmers lacked due to drought last year, according to an analysis that Cooley co-authored.

The Brown administration has endorsed better water efficiency—and put a small amount of money toward those efforts. Conservation is the first priority in Brown’s Water Action Plan, and the drought measures he advanced in 2014 included $10 million to help farmers implement more efficient water management. An additional $10 million was allocated as part of the $1.1 billion drought spending plan Brown and bipartisan legislators unveiled last week. Already more than half of California’s farmers use drip or micro irrigation, says Steve Lyle, director of public affairs at the California Department of Food and Agriculture; the new monies will encourage further adoptions.

Nevertheless, underpriced water has enabled expanded production of such water-intensive crops as alfalfa, by far the largest user of agricultural water in California. Rice, perhaps the thirstiest of major crops, did see its production area decrease by 25 percent in 2014. But pasture grass, which is used to fatten livestock, and many nut and fruit products have seen their acreage increase. Resnick told the Paramount Farms conference that the acreage devoted to pistachios had grown by 118 percent over the last 10 years; for almonds and walnuts, the growth rates were 47 and
30 percent, respectively.

California is caught between the lessons of its history and the habits of its political economy. Droughts of a 10-year or longer duration have been a recurring feature in the region for thousands of years, yet a modern capitalist economy values a given commodity only as much as the price of that commodity in the marketplace. Current pricing structures enrich a handful of interests, but they are ushering the state as a whole toward a parched and perilous future.

The price of water, however, is not determined by inalterable market forces; it is primarily a function of government policies and the social forces that shape them. Elected officials may dodge the question for now, but the proper price of water is destined to become an unavoidable issue in California politics.

“As our water supply gets more variable and scarce in the future, we’re going to have to look at how we price water so it gets used more efficiently,” says Cooley. “In some ways, we’ve come a long way in California’s water policy and practices over the past 20 years. But if you look into a future of climate change and continued [economic] development, we can and need to do much better.”

Mark Hertsgaard has reported on politics, culture and the environment from more than 20 countries and has authored six books, including ‘Hot: Living Through the Next Fifty Years on Earth.’ This article was adapted from a story that first ran in the Daily Beast; 2015 copyright Mark Hertsgaard.