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The Economic Impacts of Central Valley Salinity

Josué Medellín-Azuara, Duncan MacEwan, Nancy S. Lee, Douglas Larson, Jonathan Kaplan, Richard Howitt, Gerald Horner | March 20th, 2009


The study team was charged with measuring the economic impacts of increasing salinity in the Central Valley to the year 2030. The study was conducted assuming that there is no change in current policy and, as such, represents the economic impacts associated with taking no action.

Additionally, the study was conducted on an aggregate valley-wide basis that required averaging the effects of salinity and, in some cases, costs. The growth in salinity in the Central Valley was based on two factors. The first factor was the growth of the areas of shallow saline groundwater based on 30 years of historical records. The second factor was increased levels of salts that result indirectly from imported water. Based on increasing salinity stemming from these factors, the direct economic effects on industry, residential, food processing, confined animal operations, and irrigated agricultural production in the Central Valley were measured.

Economic and physical effects were quantified using different physical and economic models. In addition, the team undertook a substantial survey of the population in the Central Valley to establish non-market values for increased salinity and its effect on non-market activities. The study results showed that if salinity increases at the current rate until 2030, the direct annual costs will range from $1 billion to $1.5 billion. Total annual income impacts to California will range between $1.7 billion to $3 billion by 2030. The income impacts to the Central Valley will range between $1.2 billion and $2.2 billion.  The production of goods and services in California could be reduced from $5 billion to $8.7 billion a year. The Central Valley output reduction would range between $2.8 billion to $5.3 billion. Furthermore, there is $145 million per year of non-market costs.

In terms of job losses the increase in salinity by 2030 could cost the Central Valley economy 27,000 to 53,000 jobs. California could lose 34,000 to 64,000 jobs. In short, the problem is substantial and growing steadily. The magnitude of the economic and employment losses justifies a more detailed study of remedial action and correction policies.

Keywords

economic analysis, salinity