Impacts of the California Drought from 2007 to 2009: Surprising Outcomes for California’s Agriculture, Energy, and Environment

Pacific Institute | June 16th, 2011

California’s three-year drought, which ended with this season’s cool and wet weather, had complicated and serious impacts that have been poorly understood and reporte

California’s three-year drought, which ended with this season’s cool and wet weather, had complicated and serious impacts that have been poorly understood and reported. Some of the impacts were expected; others were surprising. The Pacific Institute has just completed a nine-month assessment of new data from California’s agricultural, energy, and environmental sectors to evaluate actual consequences of the drought for the state. Analysis of state and federal data released over the past year finds that contrary to much of the media reporting, California’s agricultural community proved flexible and resilient, generating agri­cultural revenues in 2007, 2008, and 2009 that were the highest on record. And agriculture-related occupations remained a stable portion of total jobs available in areas directly impacted by water supply restrictions. Less frequently reported were the substantial impacts on energy production and aquatic ecosystems during the drought, which were economically and environmentally significant. “More severe drought is inevitable, and the U.S. – and California in particular – has not reformed drought monitoring, evaluation, planning, and response strategies the way other countries and regions have,” said Juliet Christian-Smith, senior research associate at the Pacific Institute and lead author of the report. “To become more resilient to future droughts, it will be critical to shift from crisis-driven responses to long-term mitigation strategies.” The Pacific Institute analysis, Impacts of the California Drought from 2007-2009, focused on three drought-sensitive sectors: agricultural production, energy production, and ecosystem health.  

Inaction’s Economic Cost for California’s Water Supply Challenges

University of California, Davis (UC Davis) | May 14th, 2025

California’s water system is in for challenges in coming decades as climate, groundwater policy, and environmental regulations reduce availability and increase variabil

California’s water system is in for challenges in coming decades as climate, groundwater policy, and environmental regulations reduce availability and increase variability in water supplies for agricultural and urban uses. A previous report estimated 4 to 9 million acre-feet (maf) per year of unavoidable reductions in existing water supplies, 12% to 25% of today’s water use (Lund et al. 2024). This report estimates the economic costs of not responding to these reductions in water availability.

Innovative Ideas to Finance Resiliency in the Water Sector

Stanford University | June 3rd, 2019

Distributed, or decentralized, water systems have the potential to increase the resiliency and flexibility of freshwater supply networks by reducing the load on aging

Distributed, or decentralized, water systems have the potential to increase the resiliency and flexibility of freshwater supply networks by reducing the load on aging infrastructure, eliminating or postponing the need to replace, expand or build centralized systems, decreasing energy requirements for conveyance, and offering alternative solutions if centralized infrastructure fails. Despite these and other potential benefits, financing distributed systems remains a key barrier. To overcome this challenge, Stanford researchers have examined innovative financing models in the electricity sector, which started the transition nearly twenty years ago from a purely centralized system to a hybrid model that includes distributed energy such as wind and solar, to draw applicable lessons for the water sector.

Instream Flow Studies for the Protection of Public Trust Resources: A Prioritized Schedule and Estimate of Costs

California State Water Resources Control Board (SWRCB) | February 18th, 2011

Chapter 5 of the 2009-10 Seventh Extraordinary Session (SB X7 1, Simitian) directs the State Water Resources Control Board (State Water Board) to submit to the Legislatur

Chapter 5 of the 2009-10 Seventh Extraordinary Session (SB X7 1, Simitian) directs the State Water Resources Control Board (State Water Board) to submit to the Legislature, by December 31, 2010, a prioritized schedule and estimate of costs to complete instream flow studies for two categories of rivers and streams, by two specific deadlines: 1) high priority rivers and streams in the Delta watershed that were not covered in the Board’s “Final Report on Development of Flow Criteria for the Sacramento-San Joaquin Delta Ecosystem” by 2012; and 2) all major rivers and streams outside the Sacramento River watershed by 2018. The definition of the two stream categories is ambiguous. There are a number of tributaries that are both in the Delta watershed and outside the Sacramento River watershed, including the San Joaquin, Calaveras, Cosumnes, and Mokelumne Rivers. The State Water Board interprets the first category to mean all Delta and Sacramento River tributaries not covered under the Board’s “Final Report on Development of Flow Criteria for the Sacramento-San Joaquin Delta Ecosystem.” Two additional schedules are prioritized for “all major rivers and streams outside the Sacramento River watershed.” This report identifies 138 rivers and streams for instream flow studies. The total estimated cost to conduct scientific instream flow studies for the high priority rivers and streams tributary to the Delta is $32.46 million. The total estimated cost to conduct scientific instream flow studies for the high priority rivers and streams outside the Delta watershed is $107.25 million. The detailed schedules and costs are preceded with a few short discussions on the timelines given in the directive, the organization of schedules, the cost estimates for instream flow studies, and cost estimates for the next logical step: setting instream flow objectives.

Irrigated agricultural adaptation to water and climate variability: The economic value of a water portfolio

Journal of Agricultural Economics (Wiley) | December 1st, 2014

Increasing aridity, more frequent and intense drought, and greater degrees of water scarcity create unique challenges for agriculture. In response to these challenges, wh

Increasing aridity, more frequent and intense drought, and greater degrees of water scarcity create unique challenges for agriculture. In response to these challenges, which often manifest themselves as lower and more variable surface water supplies, as well as depleted and degraded ground water supplies, growers tend to seek opportunities to adapt. One option for growers to reduce their exposure to water scarcity and heightened uncertainty is to diversify. Indeed, access to a portfolio of supplies is one way in which water and irrigation districts, as well as individual growers, are responding to the changing landscape of water resource availability. This article evaluates the benefits to irrigated agriculture from having access to multiple sources of water. With farm-level information on 1,900 agricultural parcels across California, we use the hedonic property value method to investigate the extent that growers benefit from having access to multiple sources of water (i.e., a water portfolio). Our results suggest that while lower quality waters, less reliable water, and less water all negatively impact agricultural land values, holding a water portfolio has a positive impact on land values through its role in mitigating the negative aspects of these factors and reducing the sensitivity of agriculture to climate-related factors. From a policy perspective, such results identify a valuable adaptation tool that irrigation districts may consider to help offset the negative impacts of climate change, drought, and population increases on water supply availability and reliability.

It’s Time for States to Invest in Infrastructure

Center on Budget and Policy Priorities | August 10th, 2017

State investment in transportation, public buildings, water treatment systems, and other forms of vital infrastructure is key to creating good jobs and promoting

State investment in transportation, public buildings, water treatment systems, and other forms of vital infrastructure is key to creating good jobs and promoting full economic recovery. States should reject the flawed economic growth strategy of cutting taxes and offering corporate giveaways, and instead identify and make investments in infrastructure that provide the foundation for a strong economy. It’s a good time for states to make those investments.

Joining Forces: Innovative Co-Funding to Enhance Corporate Water Stewardship Impact in the Colorado River Basin

Pacific Institute | May 16th, 2023

The premise of this paper is that co-funding with existing and emerging funding mechanisms can help corporations tackle more complex problems at more meaningful scales in

The premise of this paper is that co-funding with existing and emerging funding mechanisms can help corporations tackle more complex problems at more meaningful scales in the Colorado River Basin and beyond. Corporations often have more flexibility than other funders, particularly federal and state agencies, in deciding how to spend their water stewardship budgets. This flexibility is an important asset, allowing funding to be deployed strategically. This white paper defines innovative co-funding as the intentional and focused use of corporate water stewardship funding alongside other funders and funding sources in new ways that expand the impact of corporate spending.

Lessons from California’s 2012–2016 Drought

American Society of Civil Engineers (ASCE) | October 1st, 2018

California’s 5-year drought has ended, even as its aftermath lingers. From 2012–2016 much or all of California was under severe drought conditions, with gre

California’s 5-year drought has ended, even as its aftermath lingers. From 2012–2016 much or all of California was under severe drought conditions, with greatly diminished precipitation, snowpack, and streamflow and higher temperatures. Water shortages to forests, aquatic ecosystems, hydroelectric power plants, rural drinking water supplies, agriculture, and cities caused billions of dollars in economic losses, killed millions of forest trees, brought several fish species closer to extinction, and caused inconvenience and some expense to millions of households and businesses. The drought also brought innovations and improvements in water management, some of which will better prepare California for future droughts. This paper summarizes the magnitude and impacts of the 2012–2016 California drought. The paper then reviews innovations arising from the drought in the larger historical context of water management in California. Lessons for California and for modern drought management are then discussed. Droughts in modern, well-managed water systems serving globalized economies need not be economically catastrophic, but will always have impacts and challenges, particularly for native ecosystems. In California and every other water system, droughts usefully expose weaknesses and inadequate preparation in water management. In this regard for California, managers of ecosystems and small rural water supplies had the most to learn.

Levee Decisions and Sustainability for the Sacramento-San Joaquin Delta

University of California, Davis (UC Davis) | August 15th, 2010

Los Angeles Basin Study The Future of Stormwater Conservation: Task 6 – Trade-Off Analysis & Opportunities

U.S. Bureau of Reclamation (USBR) | January 5th, 2016

The Los Angeles Basin Study (LA Basin Study) is a collaborative partnership between the Los Angeles County Flood Control District (LACFCD) and the U.S. Department of the

The Los Angeles Basin Study (LA Basin Study) is a collaborative partnership between the Los Angeles County Flood Control District (LACFCD) and the U.S. Department of the Interior, Bureau of Reclamation (Reclamation). The purpose of the LA Basin Study is to investigate long-range water conservation and flood risk impacts caused by projected changes in climate and population in the Los Angeles region. The LA Basin Study highlights opportunities for potential modifications and changes to both the existing regional stormwater capture system as well as for the development of new facilities and practices, which could help to resolve future water supply and flood risk issues. The stormwater capture concepts and alternatives developed in the Task 5 – Infrastructure & Operations Concepts report are evaluated in the trade-off analysis and opportunities highlighted in this report.  The primary purpose of Task 6 – Trade-Off Analysis & Opportunities is to evaluate the quantifiable and non-quantifiable benefits and costs of the stormwater concepts identified in the Task 5 report and to provide an analysis of the trade-offs among concepts. In most cases, various project concepts would generate benefits for some impact categories but not others, and would also impose various types of costs. The trade-off analysis provides a methodology for comparing different types of benefits and costs that cannot all be quantified in monetary terms. These trade-offs include economic, financial, environmental, and social effects. Economic effects include the benefits associated with different types of goods and services supported by the concepts, the costs of the different concepts, the impacts of the different concepts on the regional economy through changes in the amount and type of spending, and the cost effectiveness of different project concepts. Financial effects reflect the impacts of paying for a project, such as paying off capital debt and covering operation and maintenance expenses. Environmental effects reflect the type and quality of environmental and natural resources that would be potentially influenced by a concept. Environmental effects include items such as water quality, energy consumption, impacts on habitat, and ecosystem function. Social effects reflect how the concepts may alter the social characteristics of a community or region such as impacts to education, environmental justice, and quality of life.  Benefits are quantified for three categories of resource impacts. The first category is additional stormwater conserved or stored, which is measured in terms of acre-feet per year. The second is recreation, which is measured in miles of new trails. The third is increased habitat acreage and additional acquisition of right-of-way acreage that would provide habitat benefits. Stormwater conservation benefits are valued as improved water supply reliability, recreation is valued as a type of general recreation activity similar to outdoor activities at a local park, and habitat acreage is evaluated as an ecosystem improvement. In the case of the Regional Impact Programs concept, right-of-way acreage also produces some ecosystem benefits. Quantified benefits and costs as well as categories of qualitative benefits are summarized in Table ES-1. All benefits and costs are present valued over a 50-year planning period using the current Fiscal Year 2016 federal water project planning rate of 3.125%.  The economic analysis of quantified benefits can be used to evaluate the magnitude of potential benefits of each project group, recognizing that many additional benefits may exist that are not accounted for in a traditional benefit and cost analysis. It is important to note that quantified benefits could only be developed for a subset of the total beneficial effects associated with the concepts identified in the Task 5 report. There are many potential benefits associated with environmental and social improvements, flood risk mitigation, environmental justice, and other effects that could be large but cannot be evaluated quantitatively for this level of analysis. These unquantified benefits may be larger than quantified benefits in some cases and smaller in other cases. The intent of the qualitative assessment is to provide an indication of the potential magnitude of unquantified benefits.