NewsWatch: 2009: Farm Economy

[Narrator:] From the University of California at Davis, this is NewsWatch.

[Paul Pfotenhauer:] Even with recent rains, California faces its third consecutive year of drought. And economists are forecasting hard times for farmers.

[Richard Howitt, UC Davis Resource Economist:] My models predict that even with the recent rains we're going to get an additional 25,000 people out of work in the San Joaquin and Tulare valleys this year.

[Paul Pfotenhauer:] Howitt, a professor and chair of the Agricultural and Resource Economics department at UC Davis, is an expert on how the Central Valley would be impacted by reductions in water exports from the Delta.

[Richard Howitt:] Howitt, a professor and chair of the Agricultural and Resource Economics department at UC Davis, is an expert on how the Central Valley would be impacted by reductions in water exports from the Delta.

[Richard Howitt:] It forces the value and shortage of water to go up tremendously and then the farmers have to reorganize their cropping patterns accordingly. One of the problems is that they have increasingly planted perennial crops which really doesn't give them much leeway as they used to have and so we see the effects of some quite valuable annual crops such as melons or tomatoes being taken out of production."

[Paul Pfotenhauer:] The good news is that farmers have been responsive to water supply issues.

[Richard Howitt:] Actually the ag community has always been smart about how to use water because in those places where water has been either scarce or expensive, they adopted technologies pretty early on and so as an economist I see farmers being quite clever in responding to prices.

[Paul Pfotenhauer:] He does predict that if the drought continues, many irrigated pastures would disappear, more fruits and nuts would be grown and farmers would have to sell their water rights to others. Paul Pfotenhauer, reporting from UC Davis.

[Narrator:] For more information please log on to broadcast.ucdavis.edu.