Drought saps state’s econ­omy

Los Angeles Times - - BUSINESS - By Ge­of­frey Mo­han ge­of­frey.mo­han @la­times.com

The pro­longed dry spell is on track to cost the Cal­i­for­nia econ­omy $2.7 bil­lion, a new re­port says.

The drought is on track to dry up $2.7 bil­lion in rev­enue and erase more than 18,600 jobs from the Cal­i­for­nia econ­omy this year, ac­cord­ing to a pre­lim­i­nary re­port.

But that blow has been hard to de­tect be­cause the agri­cul­ture sec­tor is just 2% of the over­all state econ­omy and be­cause farm em­ploy­ment has grown steadily in the last decade, a panel of ex­perts told the state Board of Food and Agri­cul­ture.

De­spite the drought, in fact, statewide agri­cul­tural em­ploy­ment grew by 3,100 jobs last year, with “stronger than ex­pected” gains in the coastal and north­ern farm­ing re­gions over­tak­ing losses cen­tered largely in the San Joaquin Val­ley, ac­cord­ing to the UC Davis re­port.

That trend comes as the state’s non­farm un­em­ploy­ment rate con­tin­ues to fall.

“If drought was sidelin­ing the econ­omy, you’d ex­pect the op­po­site,” said Paul Wessen, an econ­o­mist with the state’s Em­ploy­ment Devel­op­ment Depart­ment. In the past two years, he noted, “farm em­ploy­ment has ba­si­cally been flat, drought or no drought.”

The UC Davis re­port largely chron­i­cles em­ploy­ment and profit that might have gone up if rain had come down.

But it also hints at se­ri­ous suf­fer­ing in re­gions of the state.

“This does not negate the fact that jobs were lost and the nor­mal growth in jobs that we’ve seen over the last five years in agri­cul­ture did not take place in cer­tain ar­eas,” said study coau­thor Richard Howitt, an emer­i­tus pro­fes­sor of agri­cul­tural and re­source eco­nomics at UC Davis. “Th­ese job losses are there.”

The eco­nomic down­side was con­cen­trated in the San Joaquin Val­ley, where cut­backs in wa­ter di­verted from the parched Sierra Ne­vada have caused farm­ers to fal­low sev­eral hun­dred thou­sand acres.

Other ar­eas ap­peared to pros­per. Agri­cul­tural em­ploy­ment rose sharply along the cen­tral coast in the north­ern Sacra­mento River Val­ley and in desert coun­ties of South­ern Cal­i­for­nia that get their wa­ter from the Colorado River, ac­cord­ing to the re­port.

The eight coun­ties of the San Joaquin Val­ley should have posted agri­cul­tural em­ploy­ment gains of about 5,500 to 6,000 jobs, based on a decade-long trend, Wessen said. In­stead, the area lost more than 700 jobs.

“So, if you in­clude the growth for­gone, it comes up with an es­ti­mated job loss of 6,300 to 6,700 jobs due to drought in the San Joaquin Val­ley,” Wessen said. “So, there have been losses; there has been pain.”

The Tu­lare basin alone lost 870 jobs in the third quar­ter of 2014, com­pared with the same quar­ter in 2013, ac­cord­ing to the state em­ploy­ment depart­ment. The basin’s an­nual job growth over the past decade had been about 4,800 jobs.

Con­tract work­ers and those in re­lated ser­vices were hit par­tic­u­larly hard, with a statewide loss of more than 5,000 jobs dur­ing ir­ri­ga­tion sea­son last year, ac­cord­ing to the re­port. Peak em­ploy­ment usu­ally comes in the non-ir­ri­ga­tion sea­son, how­ever.

The re­port’s data are pre­lim­i­nary and will be up­dated in the com­ing months.

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