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• Assessment of the Economic Impacts of California’s Drought on Urban Areas

By Nancy Y. Moore, Ellen M. Pint and Lloyd S. Dixon


Figure 3.1---Personal Income and Non-Agricultural Employment in California In the late 1970s and early 1980s, California agriculture was also doing very well. As evidenced by Figure 3.2, net farm income was rising. Land prices were also rising, and farmers took on debt to finance often speculative land purchases (see Figure 3.3). Falling farm prices and escalating debt, however, pulled agriculture down with the rest of the economy in 1982 and 1983. California agriculture did recover during the second half of the 1980s, and farmers were able to reduce their debt burden. Several good years and declining debt meant that the farm economy was in relatively good shape when both water reductions and the economic downturn hit in the beginning of the 1990s. RANDMR552-3.2 1978 1992 1976 1990 1988 1986 1984 1982 1980 140 0 20 40 60 80 100 120 Index (1976 = 100) SOURCE: California Statistical Abstract, 1993 Figure 3.2---Net Farm Income in California (adjusted for inflation and indexed to 1976) RANDMR552-3.3 1978 1992 1976 1990 1988 1986 1984 1982 1980 160 0 20 40 60 80 100 120 140 Value of farm debt (1975 = 100) United States California SOURCE: Klonsky et al., 1994. - 27 - Figure 3.3--- ---Farm Debt for the United States and California The drought took place in the midst of a steady change in the relative prices of fruit, vegetable, and field crops. As shown in Figure 3.4, prices of such field crops as feed grain, hay, and cotton have steadily declined relative to those of fruits and vegetables since the mid1970s. These changes presumably induce shift from field crops to fruits and vegetables--- independent of any change in water supplies. RANDMR552-3.4 1978 1992 1976 1990 1988 1986 1984 1982 1980 300 0 50 100 150 200 250 1977 = Feed grain and hay Fruit Cotton ..

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Year: 2007
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