Since it was signed into law in 2014, ag professionals in California have been debating precisely what effect the Sustainable Groundwater Management Act (SGMA) will have on farmers. The bill requires Groundwater Management Agencies to set out pumping restrictions and groundwater allocations in critically overdrafted basins.
While these efforts are designed to achieve sustainable water supplies by 2040, the Environmental Defense Fund points out that one possible outcome is the fallowing of 500,000 to 750,000 acres of farmland. Even those operations that can maintain their usual water allocations will be subject to rigorous reporting requirements.
In order to stay competitive, ag professionals will need to keep up with SGMA in 2021 and beyond. New GSPs will continue to roll out and updates to current GSPs will be applied. GSPs that are already in place are updated annually.
After the next batch of new GSPs in Jan. 2022, there are annual updates and 5-year milestone reviews that are reviewed, but there would not be a new GSP after that. This is, of course, subject to change if water stress gets much worse.
By being proactive about water use, lenders, investors, and farmers make better decisions that benefit their businesses, communities, water resources, and the environment.
With that in mind, the AQUAOSO team put together this cheat sheet with 8 steps to consider as the California agriculture economy moves into 2021:
8 Steps to Prepare for SGMA California
- Find out which GSAs support water trading
- Assess increases in operating costs
- Organize your data
- Build relationships with other stakeholders
- Understand your data in context
- Create a water security strategy
- Invest in water management practices
- Recognize the financial benefits of water resilience
A Brief Look at SGMA California
SGMA has been a reality in California since 2014, but for many farmers, its impact may not be felt until 2021 and beyond. That’s because critically overdrafted basins were only required to submit their Groundwater Sustainability Plans and annual reports starting in 2020, while high and medium priority GSAs have until 2022 to submit theirs.
Depending on the basin in question, farmers may face cuts to their usual groundwater pumping allocations and may have to report their water use to regulators. This is likely to impact the viability of certain crops in some growing regions and may have related effects on supply chains, crop prices, land values, and more.
Not all of SGMA’s effects will have a negative impact on the agricultural sector. In some basins, farmers are turning to water markets to buy and sell water resources, and are implementing new water technologies and practices that will make their operations more sustainable in the long run. Growers and investors who adapt to SGMA sooner will have an advantage over those who don’t.
As more GSPs come into effect, the ag economy will likely to see:
- More requirements for well data and reports
- Increased digitization of data
- More groundwater recharge projects
- Public input on upcoming GSPs to be released in 2022
It will also be worth looking at the impacts of the GSPs that were released in 2020, and whether or not we’ll see any reductions or increases to restrictions.
SGMA California in 2021
The best way to remain competitive in the age of SGMA is to be proactive and stay on top of pending regulations. The following 8 steps are designed with this in mind.
1. Find out which GSAs support water trading
Water banking and water trading are great ways to reduce costs and mitigate risks, but they may not be available in all basins. AQUAOSO’s Water Security Platform allows users to view the boundaries of specific basins and download their GSPs.
2. Assess increases in operating costs
Farms that are restricted from pumping water may need to purchase it, which can drive up water costs. Predicting these costs in advance can help to ensure the viability of a farming operating and reduce the risk to lenders and investors.
3. Organize your data
SGMA’s reporting and monitoring requirements will make access to accurate data more important than ever. The more granular the data, the better, especially if it’s aggregated into an easy-to-use, organized platform.
4. Build relationships with other stakeholders
Stakeholders at all levels have a role to play in water conservation. Lenders can help growers through the SGMA transition, while growers themselves can provide public input and share their insights with regulators.
5. Understand your data in context
While SGMA’s policies are specific to California, it will impact ag professionals beyond the state’s borders. Understanding weather patterns and other macro water trends will be important too and help to put local and regional data into context.
6. Create a water security strategy
The uncertain impacts of SGMA in California make this the perfect opportunity for ag professionals to develop a water security strategy of their own. Good, un-siloed data must be the foundation for these strategies.
7. Invest in sustainable water management practices
Better water management practices can mitigate the impacts of drought and other water shortages. This could include improved irrigation methods or water storage facilities.
8. Recognize the financial benefits of water resilience
Preparing for SGMA in California isn’t just about adhering to the law. Recent studies have shown a link between sustainable water use and ROI, and increased pressure from the private sector is accelerating the shift toward water-resilient practices.
How AQUAOSO Can Help Ag Professionals Adapt to SGMA
As more ag professionals take the impacts of SGMA into account, the agriculture economy can expect to see a shift toward even more granular water data collection and analysis. From monitoring rainfall and snowpack data to installing smart sensors in the field, making an effort to acquire better data gives growers a competitive advantage.
AQUAOSO’s Water Security Platform was built with SGMA in mind and is the first SaaS platform of its kind built specifically for the agricultural sector. Its interactive, map-based format allows ag professionals to track individual parcels or groups of parcels, making it easy to perform due diligence before approving a loan or land deal, as well as monitor the water risk of a farming operation over time.
In addition, it can help to automate and streamline the SGMA reporting process, which can be tedious and time-consuming without access to digital water data. Stakeholders can share and access real-time data using the Portfolio Connect Tool, ensuring that everyone is on the same page about water security.
The rollout of SGMA means that 2021 is going to bring about new risks and reporting requirements that didn’t exist a few years ago – but with the help of advanced water security tools, ag professionals at all levels can be prepared to meet them.
The Bottom Line
After several years of preparation, Groundwater Sustainability Agencies (GSAs) have begun to roll out their reporting requirements and pumping restrictions under SGMA. While this introduces some uncertainty into the agricultural sector, it also presents opportunities for proactive agricultural professionals to get ahead.
Knowing what SGMA has in store for California in 2021 – and using the right tools to collect and organize water data – can give agriculture professionals a competitive advantage. Better water data helps to mitigate water risk and improve long-term sustainability.