California’s drought will cost $2.2 billion in agriculture losses E-mail Tweet Facebook Google Plus Linkedin Share icons by Laura Lorenzetti @FortuneMagazine July 16, 2014, 9:14 AM EDT California’s drought has been dragging on for three years now, and the lack of water is draining more than aquifers. The state coffers will take a hit as drought costs this year are expected to reach $2.2 billion in losses and added expenses for its acreage of agriculture, according to a report released Tuesday. The study by the Center for Watershed Sciences at University of California at Davis zeroed in on the drought’s effect on Central Valley farm production. California ranks as the largest producer of agriculture in the nation: The Central Valley alone accounts for nearly 25% of the nation’s table food, according to U.S. estimates. This drought is the third-most severe on record. River water feeding into Central Valley farms has been reduced by about one-third — one of the greatest water losses ever seen in California agriculture. Farms will replace the lost water reserves by pumping groundwater. Some areas will more than double their pumping rate over the previous year, adding to additional costs, the study found. “California’s agricultural economy overall is doing remarkably well, thanks mostly to groundwater reserves,” said Jay Lund, a co-author of the study and director of the Center for Watershed Sciences. “But we expect substantial local and regional economic and employment impacts.” Direct costs to agriculture are expected to reach $1.5 billion, including revenue losses of $1 billion and $500 million in additional water-pumping costs. This net loss totals about 3% of the state’s total agricultural value. The costs are not expected to hit consumers, since market prices are largely driven by market demand, not by drought, researchers said. The drought may continue through 2015 and groundwater will continue to be strained by farmers, only adding to the costs and dangerous water depletion. California is the only state without a plan for groundwater management, and officials have been scrambling to pass measures to preserver water. The State Water Resources Control Board approved mandatory water cutbacks across the state last week, expanding restrictions beyond the handful of cities prior.