The future will present new challenges in climate variability and adaptation. Today we see new regulatory and management practices to comply with that require assessment of risks and a strategy to boost water security. The GSPs provide insight into risks associated with limits on groundwater pumping on some agricultural operations. However, there are also efforts to implement management practices and develop existing water supplies that may mitigate some of the risks.

You can’t track what you don’t measure. Many in the ag industry find themselves barely treading water when it comes to due diligence research that incorporates changes from both climate and regulation. Locating the right data to track changes in water risk is a key component to fulfilling modern due diligence research requirements and provides an opportunity to compare different regions. Without comparing the right trended datasets, due diligence becomes a dangerous guessing game.

 

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SGMA and the Megadrought

Several scientific reports sent a warning to the western U.S. this past April: the megadrought has begun. Something that was often referenced as a potential future event has arrived and it is now a question of how do we adapt? But first, what is a “megadrought”?

California Water Risk Trends 1

Drought

No exact definition exists for megadrought, but a drought of this magnitude is one that lasts decades and has not occurred since the Middle Ages. An increase in megadrought conditions will magnify the negative consequences observed in California’s most recent critically dry years that will lead to increases in subsidence, curtailment of surface water, and an unsustainable reliance on groundwater. SGMA attempts to mitigate some of the worst impacts from the continued dry conditions over the next 20 years.

As climate change increases the average temperatures, the odds we will roll a severe drought are consistently getting worse for agricultural operations. One expert, using the analogy of tossing dice, likened the future scenario to chances of rolling a drought will continue to increase.

With the enactment of the Sustainable Groundwater Management Act (SGMA), groundwater is no longer a reliable resource for the agricultural industry to count on without innovations in water management and data analysis.

SGMA and Curtailment

The State of California’s response to unsustainable reliance on groundwater is manifested in the 2014 enactment of SGMA. As of 2020, we are at the very beginning of implementation. Groundwater Sustainability Agencies (GSAs) in critically overdrafted basins were required to submit Groundwater Sustainability Plans (GSPs) earlier this year.

The emphasis on groundwater is important but is not the only key component of water supply and conditions in California. For example, due to a pair of below-normal to dry water years, Westlands Water District faces a reduced allocation of 20 percent from the Central Valley Project and predicts 160,000 acres of farmland fallowed as of June 2020. While there was a good amount of storage to cover most operations this year, another below normal or worse year could cause additional curtailments and surface water supply reductions. Curtailments are not unheard of but act as the proverbial canary in the coal mine for extended drought. Conditions that include curtailments and dry years are similar to the lead up to the major drought years of 2014 and 2015. SGMA’s implementation may be just in time for drought conditions and water management tactics.

Fires

In 2017 and 2018, California set record destruction related to fire spending over $1.5 billion on fire suppression. In part, the fires were related to the change in water year patterns that feature increased extremes and volatility. In 2017, there was a very wet year which increased vegetation growth only to be followed by a rather dry year in 2018 that reduced the moisture in the vegetation turning it into fire fuel. The threat of fire may impact agricultural economies near fire risk areas and divert dollars away from important downstream water infrastructure projects that would mitigate water supply risk.

Ag Economy

Adding to the competition for water and financial resources are a host of additional impacts from a drying and volatile climate in California. The following is part of a list created by the National Drought Mitigation Center that sums it up nicely:

  • Farmers may lose money if a drought destroys their crops.
  • If a farmer’s water supply is too low, the farmer may have to spend more money on irrigation or to drill new wells.
  • Ranchers may have to spend more money on feed and water for their animals.
  • Businesses that depend on farming, like companies that make tractors and food, may lose business when drought damages crops or livestock.
  • Water companies may have to spend money on new or additional water supplies.

Additionally, the impacts of subsidence on water conveyance infrastructure is already a known problem with very expensive solutions.

As the severity of drought increases and the side-effects of climate change present risk of fire, flood, and economic loss, how does this relate to trends occurring on, and under, the ground in California?

Trends from Recently Released Groundwater Sustainability Plans

AQUAOSO has analyzed over 74 GSAs that recently released GSPs which are just one of many data sources needed for complete water risk due diligence, albeit one of the most complex sources. AQUAOSO put our analyses together to assess the various trends, water risks, and water security highlights in California’s critically overdrafted basins. We took a sample size of 53 GSA analyses and here are the results:

Water Risk Trends

Assessing GSPs that applied to 53 GSAs in critically overdrafted basins we found:

  • 33 out of the 38 distinct water budgets captured in our analysis demonstrate water budget deficits in at least one water year type (87%).
  • The largest water budget deficit out of the plans analyzed is in the Kern Subbasin, where estimated overdraft was equal to -2,225,366 acre-feet in 2015.
  • The most common risk identified by GSPs is continued overdraft due to water budget deficits.

Water Security Trends

From the same sample of GSAs, we found the following trends in improvements to water security:

  • 50% of GSAs plan to conduct or participate in some form of groundwater recharge in order to reach sustainability.
  • 48% of GSPs that specify projects and management actions include a mention of supply augmentation as a strategy to meet sustainability. Supply augmentation projects include: water reuse and recycling, purchased and imported water, stormwater capture, reservoir reapportions etc. and does not include demand reductions or increases in water use efficiency.
  • Only 33% of GSPs with reported projects and management actions mention groundwater pumping restrictions or groundwater allocation as a method to reach sustainability. GSPs tend to focus more on strategies to augment supply as compared to reducing pumping.

How Do the Trends Impact the Future?

The future is difficult to predict in these unprecedented times, but that does not mean data is unable to provide insight to mitigate risk. Important for researching water for due diligence and creating a mitigation strategy is to understand the context of the data you are reviewing to make proper comparisons and assessments, and to connect that data back to the parcel or group of parcels you are researching. For a more detailed look, you can also read our California Water Risk Trends article.

Understanding Context

Data is plentiful in the 21st Century. The challenge is keying in on the data that is meaningful for the task at hand. Commonly referred to as noise, a large amount of irrelevant data can dilute the powerful insight hiding in all the bits and bytes. The signal, often used as a term to indicate the valuable data you seek within the noise, is more easily located when you understand the context of the data.

One example of the importance of context: determining if there is enough water in a specific part of a county that could support permanent crops over the next seven years. There are many variables and datasets that could be used to make a decision. A few of the datasets could be:

  • Soil data
  • Precipitation Forecasting
  • U.S. Drought Monitor Data
  • Mapping which water district(s) or GSA(s) have jurisdiction
  • Surface water deliveries for current and past years
  • Evapotranspiration for the permanent crops

The challenge is that many of the datasets have extra information that is not relevant to the amount of water needed for the crops you are interested in, and other datasets may be missing information that make it difficult to find value in them when looked at on its own.

Don’t look at data in isolation, the data must be connected to the other datasets and put in the context of location. If you are looking only at the average surface water delivery for an area you crucially miss the potential risks of the groundwater situation or that there is a new canal project that will serve part of the area you are researching. Below is a risk assessment on Madera County CVP contract water recipients from Spring 2020 that shows how decision making can benefit.

While the overall risk of some of the Federal Contractors, except Chowchilla Water District, is not of great concern, the water supply risk is higher than expected for water districts with federal contracts. A low risk to reliability and a medium to very-high risk of water supply indicates a heavy water demand, which may mean the water district will have a consistent issue in meeting crop water demand with surface water alone.

Placing the data in the context of location provides a foundation to make important connections between the data and arrive at better estimates.

Connecting Data to Parcels

Using location to put data into context is not new. GIS data has become a required component in properly executing the due diligence process. However, with the only constant being change, knowing how those changes impact a parcel of land is a necessary step in agriculture underwriting, appraisal, and investment.

We are seeing a trend in organizations wanting to connect their data together so they are able to boost the signal, reduce the noise, and improve decision-making at the parcel level. Utilizing best practices in data management and implementing GIS technology is an important step in understanding trends and more importantly, what they mean for your due diligence research goals.

Benefit from the Macro and Micro Views

This is how you take action on the water trends. Look at both macro and micro views of water and land data to put that data into context, and then you can begin to draw conclusions and flag potential concerns.

To keep up on macro and micro trends happening in California and the western US visit our blog or our resources section.

A Water-Resilient Future

Through research and data you can understand water risk on a deep level, and the time to start acting is now. SGMA is in motion, and the world must actively work toward water sustainability. AQUAOSO helps you do this. Our Water Security Platform can help you work toward a water-resilient future.

The AQUAOSO Water Security Platform was built with SGMA in mind.

You can research and map by parcel or portfolio of parcels and get a clear picture of your water risk. Be prepared.

Start by utilizing our free water map. Learn can also about the regions we serve beyond California and take action with your new-found knowledge by forming the plans and partnerships needed. You can get ahead of SGMA and we can help. Get a demo or talk to a water expert today!

 

Put trended water and land data to work for you.

Assessing water risk is made easy through AQUAOSO’s flexible software modules. We support the operating environment of the modern agricultural economy.

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