In a year that saw a grand coalition come together to support the state water bond, California’s groundwater regulation legislation was considerably more divisive in Sacramento. As Journal of Water noted in September, some hailed the legislation as a necessary and modest step to protect the state’s long-term water security. Others, including agricultural groups and Central Valley lawmakers, argued that the regulations would violate property rights and cause farmers economic hardship.
An analysis from Fitch Ratings finds that some of these economic concerns may be justified, but may not be severe. Fitch predicts that the amount of cultivated land may decrease somewhat, but that agricultural job losses will not be dramatic.
Furthermore, the regulations will also provide meaningful long-term benefits. Municipal water agencies, which will not face the pressures of farmland going out of production, stand to benefit the most. Fitch predicts the law will incentivize supply sources like recycling, recharge, and conservation, boosting debt but providing much improved reliability.
Fitch also notes that the slow pace of the regulations’ rollout means that they will not make a difference during the current drought. According to a report by the UC Davis Center for Watershed Sciences released over the summer, this will likely mean short-term hardship for farmers as groundwater becomes harder to extract and surface deliveries remain scarce. In particular, the direct cost to pump an additional 5 MAF more than an average year is expected to cost Central Valley farmers about $448 million this year and more than $459 million by 2016.
Written by Stratecon Staff
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