A study released this week presents disturbing findings about the broad impacts the implementation of the Sustainable Groundwater Management Act (SGMA) will likely bring to the San Joaquin Valley over the coming decades.

In the world’s most productive farmland, spanning Fresno, Tulare and Kern Counties, up to a fifth of the overall acres will be fallowed. Hit hardest in the aftermath will be some of California’s lowest income working families, where 75% of the households are already under the poverty line. The indirect losses – up to $2 billion in wages and 85,000 jobs each year – will be permanent.

Yet the state has never performed an economic impact analysis on SGMA. In their research, the authors of the paper even used CalEPA’s own environmental justice screening tool to pinpoint the census tracts with the biggest job losses.

“I feel like we're filling an important gap,” UC Berkeley Professor and lead author David Sunding told Agri-Pulse. “Nobody did this before the legislation got passed.”

In 2014, legislative appropriations committees did estimate that the three SGMA bills would cost the state up to $4 million per year for the Department of Water Resources to review sustainability plans and provide technical support.

In comments opposing the bills at the time, the California Farm Bureau Federation worried about the “huge long-term economic impacts on farms, the state and local economies and county tax rolls” and SGMA’s “very real potential to devalue land and impact farms and businesses viability, and in turn impact jobs.”

Last month, the nonpartisan Legislative Analyst’s Office found the state has so far provided roughly $160 million in total from General Fund dollars for SGMA-related responsibilities, with another $270 million from general obligation bonds to support local efforts. In a January budget hearing, the Department of Finance acknowledged it has not been tracking the potential economic impacts of SGMA and has not factored those into the state’s proposed budget for next year.

Jason Phillips

Friant Water Authority CEO Jason Phillips discusses SGMA study in House hearing.

“That it's not even on their radar is definitely concerning,” said Republican Assemblymember Devon Mathis of Tulare County in an interview, “especially since the numbers from the Berkeley report show a higher amount than what the Department of Finance is putting into the state's rainy-day fund.”

He pointed to the proposed $6 billion for the rainy-day fund and to the report’s estimated $7 billion in lost farm revenue each year. The state will also lose close to $300 million in tax revenues annually from SGMA, while the valley’s city and county governments stand to lose $240 million annually, according to the report.

Sunding does not believe, however, that SGMA will throw the state into a recession, as Mathis feared.

“I wouldn't expect it to be put into a budget projection for next year, or even the next five years,” he said, referring to SGMA’s 20-year timeline for basins to reach sustainability.

Nevertheless, the paper “is definitely getting people's attention,” he said.

In January, Sunding and the coalition of water users, local governments and academics that commissioned the study, known as the Water Blueprint for the San Joaquin Valley, delivered preliminary results from the study to Gov. Gavin Newsom, his cabinet and a handful of legislative and congressional lawmakers.

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“My sense was they were definitely paying attention,” said Sunding. “They had not heard a lot of this information before.”

The following week, Newsom announced at a luncheon for the Public Policy Institute of California that he “cares deeply about the folks in the valley.”

“It’s not just Big Ag,” he added. “There are real human beings whose lives are being torn asunder because of the scarcity of water.”

The report has also gained attention in Congress. After the Newsom meeting, Friant Water Authority CEO Jason Phillips recited the same findings in a House committee hearing on funding water infrastructure projects.

The findings were surprising to Sunding as well.

“To me, this raises really significant land use issues,” he said. “If you’ve got a million acres that can no longer support farming, what are you going to do with that?”

Devon Mathis

Asm. Devon Mathis, R-Visalia

Fallowing as much as one in four acres in some areas could lead to the same stubborn air quality issues now taking place in the Imperial Valley as the Salton Sea continues to recede, he explained.

The report also comes on the heels of another impactful study, released by PPIC a year earlier. Sunding’s report adds to that work while diverging on a few key aspects.

It goes beyond SGMA to also anticipate reductions in surface water deliveries from the state choosing to maintain the original biological opinions governing Delta pumping operations. In this scenario, the administration also fails to sign voluntary agreements with water contractors over those flows. The report adds in water cutbacks as well from implementing the San Joaquin River restoration agreement and from climate change impacts like sea level rise.

Rather than going back 30 years, Sunding also looks at groundwater estimates for the last 15 years, when extraction was significantly higher.

The third distinction is the report only includes the water transfers already happening, rather than exploring various trading scenarios as PPIC did. Sunding plans a follow-up analysis in the coming months to explore that area. But he is already not optimistic about open trading.

“Having worked a lot on groundwater markets, I find that very unlikely to happen,” he said, adding that local governments are already restricting transfers. “Think about it: In a dry year, if you're a county supervisor in Madera County, do you want to see hundreds of thousands of acre-feet of groundwater pumped out of your county and sent down to Bakersfield?”

In response to questions about Sunding’s report, the governor’s office offered a prepared statement from Natural Resources Secretary Wade Crowfoot:

“It’s clear that water supply reliability is important to economic vitality in the Central Valley,” writes Crowfoot. “That’s why the Newsom administration is increasing support to local communities implementing SGMA, proposing new regionally-focused bond investments to diversify water supplies and driving voluntary agreements that improve environmental conditions more quickly and holistically than regulatory requirements, while maintaining water supply certainty to communities, farms and businesses.”