# Economic Impacts of Reductions in Delta Exports on Central Valley Agriculture

Update Summary

Richard E. Howitt, Duncan MacEwan
, Josué Medellín

‐ Azuara, Steve Hatchett Department of Agricultural & Resource Economics University of California, Davis
May 22, 2009



### Overview

This summary serves as an update to previous reports prepared for DWR and published in ARE Update and reflects current CVP and SWP deliverie s announcements. Additionally, the most recent and updated version of SWAP has been used in th is analysis. All model inputs/data are updated; the most significant change is disaggregated regions for a total of 27 CVPM regions. Regions were disaggregated to more accurately reflect groundwater availability and project water deliveries. The result is an increase in projected impacts in re gions with limited groundwat er availability and/or heavy reliance on project deliveries.

Another important change is groundwater pumping capacities have been updated for the disaggregated regions. The year 2000 DWR data is used as the base groundwater availability by region. DWR completed analysis of groundwater pumping capacity by region for 2009 and these are taken as the maximum groundwater pumping incr eases by region. DWR’s analysis finds that regions 14B, 15B, and 19A have decreased pumpi ng capacity since 2000. As such, these regions were assumed to have no increase in pumping capac ity. More details are pr ovided in table 1 in the following section.

All costs reported are in 2008 dolla rs to be consistent with prev ious reports, groundwater pumping capacity and local supply reductions are consistent with DWR projections. Additional results for groundwater pumping costs are summarized by Sacr amento and San Joaquin Valley regions. This report summarizes results for regions 1-9 and 10-21C . Additionally, employment losses are broken down by income group using REMI multipliers.

Water Availability Scenarios

USBR and DWR May update deliveries forecasts are incorporated in to the model and run for both 90-percent 50-percent exceedence forecasts. Since farmer planting decisions have already been made, acres are held fixed equal to acres planted under the previ ous model run (5/5/09), thus the only change is to groundwater pumping.

The 90-percent exceedence forecast: 10% CVP agricu ltural water service contract supply for south of Delta export regions and 15% for Tehama-Col usa (Region 3B) contract delivery, 100% for all Settlement and Exchange regions, 100% Fria nt Class 1 (Regions 13,16,17,18,20,21), 0% Friant Class 2 and 40% SWP.

### The 50-percent exceedence forecast: 15% CVP agricu ltural water service suppl y for south of Delta export regions and for Tehama-Colusa (Region 3B) contract delivery, 100% for all Settlement and Exchange regions, 100% Friant Class 1 (R egions 13,16,17,18,20,21), 0% Fria nt Class 2 and 40% SWP.

Table 1: Local Supply and Groundwater Data from DWR. Percent decrease/increase over base CVPM Region Percent Local Supply Available Percent GW Increase Capacity

1 n/a 63.2
2 0.58 18.4 3A 0.6 48.6 3B 0.6 48.6
4 n/a 2.9 5 0.67 125.0 6 0.79 21.6
7 0.67 7.8 8 0.74 0.0 9 0.76 47.1 10 0.79 24.8
11 0.71 401.6
12 0.72 29.0 13 0.72 74.1 14A 0.6 75.9 14B 0.6 0.0* 15A 0.43 74.7 15B 0.43 0.0* 16 0.42 457.8
17 0.43 124.8 18 0.43 87.1 19A 0.74 0.0* 19B 0.74 53.3 20 0.73 50.9 21A 0.73 35.6 21B 0.73 25.3 21C 0.73 23.0 

### * Set to zero



### Results Summary

Results are summarized in terms of jobs, revenue , and income losses for the Sacramento and San Joaquin Valley (regions 1-9 and 10-21, respectiv ely). 90-percent and 50-percent exceedence forecasts are summarized and employment losses ar e broken down by income group using a set of REMI multipliers (tables 2 and 3, respectively).

### Table 2: 90 Percent Exceedence Scenario
90 Percent Exceedence Region CVPM Regions Revenue Loss Income Loss Employment Loss

SAC 1-9 $7,123,666 9,624,287 354 SJV 10-21 $703,030,230 949,815,009 34,931 Total 1-21 $710,153,896 959,439,296 35,285

Employment Loss Breakdown Worker Group Annual Wage Rates Employment Loss SAC Employment Loss SJV Total (1st 20%) $16,652 - $19,632 279 27,494 27,772 (2nd 20%) $21,296 - $28,466 29 2,854 2,882 (3rd 20%) $31,372 - $39,076 15 1,482 1,497 (4th 20%) $39,316 - $50,019 18 1,745 1,763 (5th 20%) $50,876 - $75,275 14 1,357 1,371



### Table 3: 50 Percent Exceedence Scenario
50 Percent Exceedence Region CVPM Regions Revenue Loss Income Loss Employment Loss

SAC 1-9 $7,123,666 9,624,287 354 SJV 10-21 $620,358,540 838,123,067 30,824 Total 1-21 $627,482,206 847,747,354 31,178

Employment Loss Breakdown Worker Group Annual Wage Rates Employment Loss SAC Employment Loss SJV Total (1st 20%) $16,652 - $19,632 279 24,261 24,539 (2nd 20%) $21,296 - $28,466 29 2,518 2,547 (3rd 20%) $31,372 - $39,076 15 1,308 1,323 (4th 20%) $39,316 - $50,019 18 1,540 1,558 (5th 20%) $50,876 - $75,275 14 1,197 1,211

### Additional Results Summary

Included is a breakdown of groundwater pumping cost increases (aggregate) over regions 1-9 and 10-21C. Note that this is the increase in gr oundwater pumping cost due to drought, not the total cost of groundwater.

90 Percent Exceedence Additional Groundwater Pumping Costs Region CVPM Regions Increase Groundwater Cost

SAC 1-9 $5,305,000 SJV 10-21C $141,659,000
Total 1-21C $146,964,000

50 Percent Exceedence Additional Groundwater Pumping Costs Region CVPM Regions Increase Groundwater Cost

SAC 1-9 $5,305,000 SJV 10-21C $131,539,000
Total 1-21C $136,844,000