Agricultural Areas at Risk of Drought in the American West

May 28, 2021 | Blog, Drought

Agricultural Areas At Risk of Drought in the American West

Drought in the American West will not impact all regions in the same ways and to the same degree. Some areas at risk of drought may experience changes in their frequency or severity, while others may experience more variability between wet and dry periods.

Water is a local issue, so it’s important for agricultural professionals to stay on top of the specific risks that apply to each region, and implement the best risk mitigation strategies for every parcel of land in their portfolio. 

This article will explore the areas at risk of drought in the American West, and how ag professionals can use data-driven intelligence to reduce portfolio risk.

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Drought in the American West

Drought has been a fixture of agricultural life in the American West for centuries. One NASA study used tree rings and other paleohydrological data to uncover a pattern of droughts going back over 1,000 years. They found evidence of droughts that weren’t necessarily more severe than ordinary droughts but lasted for 30 to 50 years. These kinds of “megadroughts” are expected to become a growing concern in the West.

In fact, projections don’t show merely droughts impacting agriculture, but flooding, extreme weather events, and more seasonal variability as well. Some regions may experience rainfall at the wrong times, reducing snowmelt and streamflow. In other basins, droughts are projected to double in length with less time in between to recharge aquifers.

The most recent drought that hit California between 2012-2016 is a potential preview of what’s to come. That drought cost the state up to $1.84 billion in 2015 alone, and ag professionals need to be prepared for a repeat.

Despite these risks, it’s important not to let worst-case scenarios get in the way of good decision-making. Ag lenders and investors with diverse portfolios need to be especially aware of how drought affects different areas on a granular level. By using data-driven intelligence to understand drought risk, ag professionals can find the right strategy for each parcel of land in order to minimize water stress and reduce material risk.


Agricultural Drought Impacts in Areas at Risk of Drought

The U.S. Drought Monitor is a very useful resource for understanding drought conditions. Its data is updated regularly, usually once per week. It does note, however, that the map “focuses on broad-scale conditions” and that “local conditions may vary.” Ag professionals will benefit immensely from using portfolio-centric GIS tools to collect more granular, parcel-specific data.

According to the U.S. Drought Monitor, here the current areas at risk of drought some western states (as of May 2021). Note these are not all areas in the American West at risk of drought; more will be covered in future articles.



Most of Oregon is currently in Severe drought conditions, with areas of Extreme and Exceptional drought in central parts of the state. Historical impacts include:

  • Conservation measures in irrigation districts
  • Low reservoirs and limited irrigation water
  • Increased well pumping and dry wells



Washington is currently experiencing Moderate to Severe drought in parts of the states, with historical impacts such as:

  • Early harvests
  • Increased wildfires
  • Water theft



Most of California is experiencing Severe to Exceptional drought conditions and can expect to see impacts such as:

  • Fallow fields
  • Low aquifer and well levels
  • Increased water restrictions and transfers



Nevada is facing Extreme to Exceptional drought conditions in many parts of the state, with impacts such as:

  • Reduced yields and crop planting
  • Reduced allocations for irrigation
  • Low reservoirs and groundwater levels



Idaho is mostly in Moderate drought or Abnormally Dry conditions, with only some areas of Extreme drought. Impacts include:

  • Low snowpack and river levels
  • Reduced irrigation allotments
  • Unharvested crops



Montana currently faces Extreme drought in the eastern part of the state, and Moderate to Severe drought elsewhere. Potential impacts include:

  • Reduced soil moisture
  • Crops can’t be harvested
  • Livestock producers must transport water



Utah faces Extreme to Exceptional drought in most of the state, with impacts such as:

  • Low streamflow
  • Reduced irrigation allocations
  • Poor air quality and fire danger



Arizona is experiencing Extreme and Exceptional drought throughout the state, with the following possible impacts:

  • Fire restrictions
  • Insufficient water for livestock
  • Wildlife intruding on populated areas


New Mexico

New Mexico faces a mix of Severe, Extreme, and Exceptional drought conditions, with impacts such as:

  • Dry rivers and limited surface water
  • Stunted crops and reduced yields
  • Federal lands closed due to fire risk



How Lenders Can Use Parcel-Specific Data-Driven Intelligence

Drought risk isn’t static, and the agricultural areas at risk of drought may fluctuate over time. It’s important for ag professionals to stay on top of due diligence around these changes so as to better mitigate risk, as well as to consider how drought impacts not only agriculture but the wider community as well. For example, in many regions, dry conditions can lead to reduced tourism and recreation, or wildlife encroaching on developed areas.

In Washington, droughts can contribute to a rise in water theft. In Nevada, hydropower production is reduced, causing spikes in power prices. And in Oregon, some residents have to truck in their own drinking water.


The choices that ag professionals make during periods of drought can play a role in minimizing or exacerbating these effects.


The California Legislative Analyst’s Office found that “the communities most impacted by drinking water challenges during the last drought were small and rural … [with] high proportions of both lower‑income and Latino residents,” making it imperative to keep equity and resilience in mind as the ag industry prepares for future drought.


Some of the steps that ag professionals can take include:

  1. Factor in viable water sources during the due diligence process. Having a single backup water source is no longer sufficient. Water-resilient farms need to have multiple water sources, which may include surface water rights, wells, and access to transactional water markets. Ag finance institutions can use GIS tools to verify water rights during the water risk assessment process.
  2. Identify which parcels are at risk from wildfires. Water shortages aren’t the only challenges that farmers face during times of drought. Ag professionals can monitor the progress of wildfires to identify the most at-risk parcels.
  3. Be aware of how water allocation affects disadvantaged communities. For local communities, a drought may mean lost jobs and limited access to drinking water. It’s important to factor in the well-being of disadvantaged communities, Tribes, and People of Color, and live up to the criteria outlined in ESG goals, which include Social impact requirements.


The Bottom Line

Much of the American West is at risk of drought and abnormally dry conditions, but the specific impacts of drought vary widely and affect different regions in different ways. Ag lenders and investors can use data-driven intelligence to identify the parcels of land in their portfolios that are most at risk of drought and take steps to mitigate those risks.

Reach out to the team at AQUAOSO for a demo of our solutions, or download the free white paper on how California farmers can prepare for another drought.

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