Sunday, May 1, 2011

Water Won't Wash Away Valley's Recession: Two Years Later

Two years ago, on May 1, 2009, the Sacramento Bee published an op-ed I wrote titled "Water Won't Wash Away Valley's Recession."  The Fresno Bee reprinted it a few days later.  Today, water supplies are very high and unemployment rates throughout the Valley are higher than they were in 2009, suggesting that the title of the piece was correct.

I have never received such a strong reaction to something I have written.  The reaction (mostly positive but occasionaly ugly) changed the economics of water issues from being what I considered a hobby to an ever growing part of my real job.

The article was my response to the Latino Water Coaliton march of April 2009, and the scores of articles in the media at that time which were misrepresenting the facts and distracting our leaders from a much larger economic crisis.  [On a non-water note.  Wouldn't it have been nice if Valley Congressional leaders banded together to demand stronger foreclosure prevention programs from the Obama administration back in Jan-Apr 2009 when they finalized their economic recovery plan.  Foreclosures were supposed to be the third "prong" of their recovery program, and we got relatvely strong programs to support the other two areas, 1) banks, and 2) stimulus; and weak, underfunded, ineffective foreclosure prevention programs.  Too bad the foreclosure prevention component didn't have stronger advocates back then.]

I have reposted the original op-ed below.  I think it is interesting to read again after everything that has happened over the past 2 years, and the points are still relevant.  It is the first part that received most of the attention, but I have always been equally if not more concerned about the last part. 

Water Won't Wash Away Valley Recession 
(originally pubished, May 1, 2009 in Sacramento Bee)

What is causing unemployment in the San Joaquin Valley? According to water contractors and their political supporters, a "regulatory drought" has eliminated water-dependent farm jobs, and they point to high unemployment rates in farming communities as proof. Their solution is to suspend the Endangered Species Act and build a multibillion-dollar peripheral canal around the Delta.

However, the facts don't support the water contractors' view. The latest payroll data through March finds that farm jobs have grown faster than any other sector of the economy in the past 12 months, even outpacing health care. In fact, farm jobs have been growing throughout the three-year drought. Compared with 2006, farm jobs have increased 5 percent in California, while private nonfarm jobs have decreased 5 percent.

The same is true in Fresno County, home to communities such as Mendota that have been the focus of water exporters' news releases.

In Fresno County, farm payrolls increased 3.2 percent in the past 12 months, compared with a 3.4 percent decrease in private, nonfarm payrolls.

Since the drought began three years ago, Fresno County farm payrolls have increased by 12 percent, while nonfarm employment has crashed, led by a loss of more than 7,000 construction jobs.

In light of these statistics, how can water exporters, politicians and others claim that rising unemployment in the Valley is a result of water shortages for farms rather than the broader recession? The foreclosure crisis is at the heart of the recession, and the Central Valley has the highest foreclosure rates in the United States. Homebuilding has shut down, and service sectors have cratered, costing many former farmworkers their higher paying, nonseasonal jobs.

Water contractors point to 40 percent unemployment in Mendota as evidence of the water crisis. These unemployment estimates for towns aren't a current survey, but are crude extrapolations from the 2000 Census, the last time any real data were compiled for these areas.

The 2000 census gives a good picture of the prosperity that increased water pumping would bring to Mendota's hard-working residents. Delta water exports were above average in 2000, and local farm employment was at a nine-year peak. Despite this, the 2000 census found unemployment in Mendota exceeded 32 percent, highest of the state's 494 towns.

Per-capita income was below $8,000, the lowest level in the state, nearly 20 percent lower than Mexico and many developing nations in Africa, Eastern Europe and South America. Not surprisingly, water contractors don't issue news releases about unemployment when they have water.

In fact, growers have been complaining about shortages in recent years, even as Mendota's unemployment estimate was 25 to 30 percent.

There will be substantially fewer seasonal farm jobs this year as thousands of acres are idled, and this will further increase the pain of the recession in farming areas south of the Delta water pumps. As these impacts appear, it is important to consider them over the entire three-year span of the drought, rather than treat agriculture's recent unsustainable peak as normal.

In the early years of the drought, agriculture expanded in response to a commodity bubble that more than doubled crop prices, farm profits, and farmland values in a span of a few years. Much of the increase is attributed to permanent crops in desert regions with interruptible junior water rights. Between 2006 and 2008, more than 50,000 acres of new almond orchards were planted, mostly south of the Delta pumps, while a nut glut led to a price collapse for all growers. Similarly, California's enormous dairy industry expanded rapidly, and now taxpayers are spending millions to buy surplus milk and prop up prices in an oversupplied market.

Taxpayers are the forgotten stakeholders in the various Delta planning processes. With no one protecting taxpayer interests, it's no surprise that Delta Vision recommended the most costly options to the governor. The Bay Delta Conservation Plan does not plan to make a cost estimate of their plan until after it is complete.

Recent state tax increases are hurting families, businesses and private sector job creation, while California has the lowest bond rating of any state. Water contractors think the state should borrow billions for their cause, crowding out investments in education, energy, transportation and other critical areas that will support the high-paying jobs of the future.

Their plan would also have adverse impacts on Delta agriculture, recreation and tourism, commercial fishing and the jobs supported by these industries.

Delta Vision, water contractors and now the Bay Delta Conservation Plan are primarily making economic arguments for their plans. While spending millions on engineering studies and public relations, the state is not sponsoring any serious research to comprehensively evaluate economic effects of the water plan.

California's overburdened taxpayers deserve better.


  1. It's just as good a read as the first time.

  2. Jeff...Individuals, including yourself, continued to insist that the success of California agriculture in increased revenue disproves the effects claimed by farm water interests that water delivery cutbacks resulted in employment and revenue drop. You are a co-author of “A Retrospective Estimate of the Economic Impacts of Reduced Water Supplies to the San Joaquin Valley in 2009” (September 28, 2010). This report acknowledges that certain segments of the valley suffered more than others---“There was also significant variation within Counties, for example, within Fresno County, east-side regions saw little change in harvested acres compared to west-side regions. This is a reflection of both the localized effects of drought and pumping restrictions on regions dependent on State and Federal Project deliveries and/or groundwater pumping.”

    Current comments that tout record markets for individual crops or an increase in statewide ag values fail to mention the impacts suffered by west side farmers. It’s as if those who lost their jobs don’t exist. Wouldn’t it better serve the general public to fully inform them that there were losses?

    You have “hinted” in your blog that I use numbers that are inflated and not true. In truth, numbers I have used in relation to the recent water cutbacks caused by environmental regulations on moving water through the Delta and the drought have originated from UC Davis. Each time these numbers have been revised downward, my numbers are also revised.

    You may recall that the first estimate from UC Davis cited 80,000+ jobs lost on San Joaquin Valley farms because of the water cutbacks. What you may not know is that several farm water representatives met with the study’s author and suggested that the estimate may be too high and offered alternative information. The result was the beginning of several revisions from UC Davis.

    The September 2010 report provides the most recent numbers related to job losses and the economic impact on west side farms and it is these numbers that I currently reference. Even so, this report lacks agreement between you and the other authors. As noted, “”Model results and survey data now closely coincide and provide conclusive evidence on the final effects of reduced water supplies in 2009.”

    Here are the latest crop production numbers from the California Department of Food and Agriculture for statewide agriculture for those years during the greatest water cutbacks, proving that statewide agriculture did suffer---

    2009 --- $34.8 billion
    2008 --- $36.2 billion
    2007 --- $36.4 billion (record high)

    I realize this is a long response to your posted comments but it becomes frustrating to read comments that discount the losses experienced on west side farms, both in jobs and income.

    Mike Wade
    California Farm Water Coalition

  3. Mike,

    This is an excellent comment. I learned something from it.

    I don't think I have ever said that there was no harm from water cutbacks. Even in this column from 2 years ago, I predicted that there would be job losses even though there was no data indicating that at the time.

    My intention has been to put the problem in perspective relative to the larger economy, long-run trends, and the impacts on those on other ends of the water issues.


  4. Jeff...We all learn as we move through the complex issues involved in California water. Unfortunately, the general public is not fully aware and does not have all the background related to these issues. Placing the issue in context related to the larger economy tends to hide the real impacts felt by real people. It’s as if they don’t matter.

    Mike Wade
    California Farm Water Coalition