Golden State Drought Causes

Source: CNBC

Article Link: http://www.cnbc.com/2015/07/09/revenue-loss-due-to-california-drought-to-top-1-billion.html

Author: Heesun Wee

Date: 7-9-2015

 The issue discussed in this article is how California’s current, seemingly endless, drought is negatively impacting revenue and agricultural employment. About 564,000 acres of farmland will soon be vegetated to amassing moisture. Of course, the inevitable result of less agricultural production will be income losses and staggering unemployment figures. While the article doesn’t argue for a direct action that must be taken to change the fate of California, it does sympathize with the farm industry in such a hard time.

 The supporting evidence for this article consists of various numerical estimations in regards to the losses that will be felt by those dependent on agricultural output. A loss in farm earnings is estimated to be a minimum of $1.8 billion and a loss of jobs, 8,550. The economic impact of drought also carries over to those who are indirectly involved with the farming business, such as flatbed drivers. Profit losses across the state could total up to $2.7 billion with 18,600 less employment opportunities. Usable principal crops that formerly accumulated to 4,000,000 acres now only total to 900,000. An enforced 25% less water consumption rule helps to portray the severity of the issue. Outwardly stated, are claims of how this issue will affect the economy: through profit losses, increased unemployment, and an overall downward trend of the agricultural industry.

 Drought has a direct and indirect impact on economic aspects of life because all agricultural sectors are dependent on groundwater for sustainment, and currently, groundwater replacement isn’t countering the amount being used. The direct influence drought has on the economy is readily observed. This includes less agricultural output and less fertile land. The indirect impact of drought is stimulated by the direct impact. This entails reduced income, unemployment, and less tax earnings. While the United State’s unemployment percentage has been able to remain steady, this huge devastation could cause future numbers to skyrocket. Farm owners have tough decisions to make in regards to their workforce. Those who work with land-owners by supplying them with goods will also face unemployment when they receive less business. When billions of dollars are being lost, something has got to give.

 Inflation can also result from this drought. In order to offset water shortages, less acreage for principal crops, and higher costs for production, farm owners may raise their prices. Depending on how long it takes for climate change to affect crop production, hikes in prices may not be seen for a while; however, repercussions will definitely be felt one way or another. Price increases can correspondingly raise the consumer price index and give us quantitative data on inflation rates. 

 These upcoming months are shaping up to be disastrous for California. The huge issue of drought acts like a chain reaction and destroys everything in the agriculture industry. Drought leads to fallowed land, which decreases production, leading to a loss in revenue and, lastly, unemployment. The imbalance of groundwater replenished versus groundwater used by farmers only worsens the fate of specific areas of agriculture. I’m hoping that the severity of this issue will open America’s eyes to how necessary water conservation efforts are. Even the smallest attempts can push California through such a tough time. Climate is such an uncontrollable thing, though. I for myself have witnessed it fluctuate within moments, but this drought doesn’t seem to be disappearing anytime soon.