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IN THIS ISSUE – “We can all agree California has serious energy needs”
State Senate Leader Mike McGuire as he drafts a bill accelerating solar and wind projects
- Legislators, Governor Quietly Crafting Bills to Speed Up Solar & Wind, Cut Electricity Bills
- Dems & Reps Battle to Protect Vulnerable State Legislature Seats
- California Keeps Losing Taxpayers to Other States
- Chevron Moves HQ to Texas, Ends 150 Years in California
- Golden State Tarnish: Nation’s Most Jobless; $20 Billion Unemployment Insurance Debt
- New State Study Finds Hotter, Flashy Weather Cuts Water Supply By 20+%
- State Water Board May Put Kern County on Groundwater Probation
- CA Farmers Pump Less Groundwater, Grow Less Food When Government Fees Added: U of Chicago Study
Capital News & Notes (CN&N) curates California policy, legislative and regulatory insights from dozens of media and official sources for the past week. Please feel free to forward this unique client service.
FOR THE WEEK ENDING AUG. 2, 2024
Legislators, Governor Quietly Crafting Bills to Speed Up Solar & Wind, Cut Electricity Bills
CalMatters
California lawmakers are crafting a end-of-session package of proposed laws that could streamline the building of solar and offshore wind energy projects, according to people familiar with the discussions.
Democratic legislators, who have shared drafts with environmental groups, industry, lobbyists and other interested parties, are negotiating the details with Gov. Gavin Newsom. The talks among staff in the state Senate and Assembly and Newsom’s office are being held behind closed doors and the proposals are not yet public. California’s legislative session ends Aug. 31.
CalMatters obtained draft copies of five energy measures that Senate President Pro Tem Mike McGuire helped draft. They aim to revamp the way the state approves and supports solar, offshore wind, battery storage and other green energy projects.
McGuire declined to discuss the proposals but he said “we’re looking forward to sharing more details in the coming days.”
“We can all agree that California has serious energy needs,” he said in a statement to CalMatters, noting brownouts, rising utility costs, increasing demand for electricity and climate change. “This is why the Senate will be embarking on a two-year effort to modernize our grid, expand the number of large-scale green energy plants and storage facilities in California, and kick a modernized permitting process into high gear.”
A spokesperson for Assembly Leader Robert Rivas, a Democrat from Salinas, did not immediately respond to requests for comment about the proposals.
Simultaneously, the Newsom administration is working on separate proposed legislation that aims to make electric bills more affordable for Californians, two sources told CalMatters. No details were immediately available and a spokesperson for the governor declined to comment.
Electric rates have nearly doubled over the last decade. The state Public Utilities Commission overhauled the rate structure with a controversial new billing system this year.
The renewable energy proposals — a package internally called the “California Made” package — seek to offer incentives for building projects and their components in California. They would create tax credits, streamline local and state permitting and change how environmental reviews are conducted for some projects.
California is facing twin challenges: Meeting renewable energy targets mandated by law, as well as dealing with some of the highest energy bills in the country.
Under state law, 60% of California electricity must be generated by clean energy sources by 2030 and 100% by 2045 — a mandate critical to the state’s efforts to combat climate change.
One measure in the renewable energy package would provide a tax credit for certain renewable energy projects.
Another would grant “by right” approval to developers building in areas already zoned for them, eliminating the need for local approvals. Such proposals curtailing local control have proven controversial with city and county officials.
Under another proposal, state officials would conduct a “master” environmental review, which would serve as a comprehensive, umbrella analysis addressing large-scale issues like air emissions and cumulative impacts. Developers then would have to conduct more limited reviews of their specific projects.
Two additional proposals — one specifically for offshore wind projects and one for other renewable energy projects — would consolidate the permitting process by creating a “one stop shop” system that would consolidate applications, hearings and decision-making.
Local opposition and environmental reviews have held up large solar projects and transmission projects for years, and permitting reform was taken up earlier this year by the state Assembly Select Committee on Permitting Reform.
Steven R. Bohlen, an energy expert and senior director for government and external affairs at the Lawrence Livermore National Lab, reviewed the proposed legislation obtained by CalMatters. He said the proposals address many concerns and are “headed in the right direction.” But he added that timelines should be added.
“Though the legislative proposals create a path for streamlining, there is still no statutory requirement that each agency respond with a certain period of time, or that the overall process be limited to a certain period of time, provided all the appropriate information were submitted by the applicant,” he wrote to CalMatters in an email.
“As written, the streamlined process could still be slow, even though it is being conducted under the ‘streamlined’ process.”
Permitting reform has become a mantra for California’s newest renewable industry — floating offshore wind. The complexities of creating the new industry are enormous: creating an extensive system of ports and greatly expanding power transmission infrastructure.
Each of the five proposed projects off the coast of California will have to navigate overlapping jurisdictions and duplicative reviews with a thicket of federal, state, tribal and local agencies. The process, especially with an industry that has never operated in the state before, is slow.
Policymakers use the word “urgency” to describe efforts to expedite offshore wind power, since they are critical for meeting California’s goal to decarbonize the electricity grid.
According to the California Energy Commission,“under current federal, state, and local project review processes, the environmental and permit reviews for offshore wind facilities could take more than 10 years to complete.”
Legislators this year already are trying to tackle the rising costs of electricity.
Assemblymember Cottie Petrie-Norris, a Democrat from Irvine and chair of the Assembly standing committee on utilities and energy, amended a bill to direct state officials to “produce an affordability metric” for future electric rate increases.
Petrie-Norris told Politico in June the goal is to shave $10 off consumers’ bills. The bill passed the Assembly and was amended in the Senate, and is now undergoing more debate. A spokesperson for Petrie-Norris’ office declined to comment.
Dems & Reps Battle to Protect Vulnerable State Legislature Seats
Politico California Playbook
Democrats are all-but guaranteed to keep their supermajority in Sacramento next year.
The question is exactly how big that supermajority will be.
Leaders in the Assembly and Senate are prepared to go to battle this year to protect a handful of vulnerable Democrats and vacant seats that could flip to Republicans. The GOP, for its part, is fending off a few potential flips of its own while trying to chip away at Democrats’ overwhelming power in California.
Complicating the equation for Democrats is that their leadership is brand new to the game of protecting incumbents. This year will be the first test for Assembly Speaker Robert Rivas and Senate President pro Tem Mike McGuire. We’re also keeping an eye on what could be some interesting races to fill vacancies left by outgoing Democratic Assemblymember Brian Maienschein and Republican state Sen. Scott Wilk.
Expect campaigning to pick up when session ends in August, but there’s already money pouring in for the top targets. The latest figures, reported this week, reflect cash raised as of June 30, and offer a better picture of the fights to come as we head into the thick of election year.
VULNERABLE DEMOCRATS:
— Assemblymember Pilar Schiavo, Santa Clarita Democrat: This is the marquee race for Democrats this year. Schiavo won her seat in 2022 by just 522 votes after Democrats spent some serious cash to box out Republican incumbent Suzette Martinez Valladares. She’s high on the GOP’s target list this year, and is running against Patrick Gipson, a retired Los Angeles County sheriff’s deputy who came within 521 votes of Schiavo in the March primary.
Schiavo reports raising about $653,600 since the start of the year, bringing her total cash on hand to just over $1 million. Gipson has raised just over $166,800 in the same time period, and has $127,000 cash on hand.
— Assemblymember Esmeralda Soria, Fresno Democrat: Soria for months has been far outraising her Republican opponent, former state tax auditor Joanna Garcia Rose, but that doesn’t put her in the clear. The GOP pick managed to win about 1,000 more votes than the incumbent in the March primary despite having only a fraction of her financial backing.
The latest fundraising figures show that pattern continuing, with Soria raising more than $944,000 in the first half of the year, with about $1.5 million in cash, compared to Garcia Rose’s modest haul of just $92,000 from the same period and $65,000 in cash.
— State Sen. Josh Newman, Fullerton Democrat: After a bit of a candidate shuffle brought on by redistricting and the departure of state Sen. Dave Min, and a crowded primary race that saw a slew of outside spending, Newman is heading into a competitive general election matchup with former Republican state legislator Steven Choi, who lost his Assembly seat to Cottie Petrie-Norris in 2022.
Newman has so far raised more than $1.3 million this year, ending June with about $448,000 in cash compared to Choi, who reported $55,769 on hand.
VULNERABLE REPUBLICANS:
— Assemblymember Laurie Davies, Oceanside Republican:Democrats have a slight edge in voter registration in this district thanks to a large swath of San Diego County residents that are trending blue, and it’s one of their top targets to flip this year. Former San Clemente Mayor Chris Duncan lost to Davies by about 5 points last cycle, and is looking for a rematch this year.
Davies has raised over $362,000 since the start of the year, with many of her fellow Assembly Republicans maxing out to her campaign. She ended June with $714,608 in cash. Duncan is not far behind, due in no small part to the outpouring of support from the Assembly’s Democratic supermajority. He raised $821,453 in the first six months and ended with about $593,000 in cash.
— Assemblymember Greg Wallis, Rancho Mirage Republican:Democrat Christy Holstege is back this year after losing to Wallis by a mere 85 votes in 2022.
The California Democratic Party has sent more than $272,000 to the Holstege campaign since December, state records show. As of June she had raised $733,571 since the start of the year and had $664,706 in cash. Wallis raised about $524,385 in the same time period thanks to help from fellow Republicans and about $6,000 from Netflix CEO Reed Hastings, normally a Democratic mega donor who’s also a staunch charter schools advocate.
— Assemblymember Josh Hoover, Folsom Republican: Democrats dropped some serious cash trying to protect Ken Cooley in 2022, only for Hoover to nab the seat by less than 1 percentage point. This cycle, the Republican is facing a challenge from Citrus Heights Councilmember Porsche Middleton.
Middleton raised $278,249 with $177,950 cash on hand. Hoover goes into the general election with a comparatively heftier warchest of $653,135 having raised more than $433,000.
— State Sen. Rosilicie Ochoa Bogh, Yucaipa Republican: Ochoa Bogh is facing a challenge from Palm Springs City Councilmember Lisa Middleton this year in her competitive, Republican-leaning district.
California Keeps Losing Taxpayers to Other States
Legislative Analyst’s Office
California Continues to Lose Taxpayers to Other States. The number of taxpayers who move out of California each year ticked up in 2020 with the beginning of the pandemic. At the same time, the number of taxpayers who moved to California remained flat. Recently released IRS taxpayer data from 2021 and 2022 shows this trend has continued.
As a result, annual net outmigration to other states nearly doubled—from about 170,000 people (taxpayers and their dependents) in 2019 to closer to 300,000 people—since the pandemic began.
The state has long had annual net domestic outmigration, but the recent migration gap is now as large as the early 1990s gap that occurred when defense and aerospace contractors downsized after the end of the Cold War.
Share of Revenue Lost Due to Outmigration Also Continues to Grow. In the years leading up to the pandemic, foregone state personal income tax (PIT) collections associated with net outmigration reflected about half a percent of total PIT revenue each year.
As of 2022, foregone tax collections due to net outmigration was 1.6 percent of 2022-23 PIT revenue, three times higher (or about 1 percentage point) than pre-pandemic levels.
Foregone revenue increased more (three-fold) than net domestic outmigration of people (two-fold) because, prior to the pandemic, outmigration was concentrated among lower-income households.
Since then, more middle- and higher-income households have moved to other states, meaning the effect on state revenue has been greater because these tax filers tend to make larger income tax payments.
Net Outmigration Only a Small Contributor to 2022-23 Income Tax Revenue Losses… State income tax revenue declined 27 percent in 2022-23. As state officials look to better understand the cause of the large revenue decline, it is reasonable to ask whether taxpayer outmigration was a major contributor.
The most recent IRS migration data suggests it was not. Although outmigration did reduce 2022-23 revenues it likely was only a small contributor to the large revenue losses.
…But Continued Outmigration at This Pace Would Be a Drag on Future PIT Growth. Although net outmigration was only a small contributor to revenue decline seen in 2022-23 and subtracts only a small portion of total revenue in any given year, ongoing outmigration of at this level would be a drag on long-term revenue growth for the state.
Over the last few years, outmigration has been a drag on PIT revenue growth of about 1 percent per year. This is nontrivial when compared to the long-term average growth rate of PIT revenue—7 percent per year. Looking ahead, should the heightened trend of net outmigration continue, it could drag PIT revenue growth below its long-term average.
That being said, migration patterns are extremely difficult to predict. While it is possible the recent shift could represent a “new normal,” there is also a good possibility it will be temporary. In the past, migration has been marked by cyclical ups and downs, with large spikes in outmigration fading after a few years.
Net Outmigration of Taxpayer Income Flows Strongest to Southern and Western States. The IRS tracks the adjusted gross income of taxpayers who move each year. The figure below shows the net flow of taxpayer income from California since 2020. Net outflow of income associated with taxpayers who have moved is concentrated in Southern states – primarily Texas, Florida, and Tennessee – and neighboring Western states.
Blog and charts:
Chevron Moves HQ to Texas, Ends 150 Years in California
NY Times
Chevron, the second-largest U.S. oil company, is moving its headquarters to Houston, from California, formalizing a long-expected breakup with a state that has pushed aggressively to address climate change.
The company’s ties to California date to the 1870s. Chevron said it already had roughly 7,000 employees in the Houston area and around 2,000 at its current headquarters in San Ramon, Calif., near San Francisco.
The State of California sued Chevron and other large oil companies last year, claiming that they misled the public about the risks of fossil fuels, the extraction of use of which are a leading cause of climate change.
Chevron’s chief executive, Mike Wirth, criticized the lawsuit last year, saying in a Bloomberg Television interview that litigation was not the right approach.
“Climate change is a global issue,” Mr. Wirth said. “It calls for a coordinated global policy response, not piecemeal litigation that benefits attorneys and politicians.”
The oil and gas industry has been coalescing in the Houston area in recent years, with Exxon Mobil moving its headquarters from a suburb of Dallas.
Chevron’s announcement came as the company reported second-quarter earnings on Friday that missed the expectations of Wall Street analysts. The company said profit fell 26 percent, to $4.4 billion, from the same period a year ago. Lower profit margins in its oil refining business hurt the company’s bottom line, even as higher oil and gas production lifted revenue overall.
Its rival Exxon Mobil delivered stronger results than analysts were expecting for the April-to-June period. Profit rose 17 percent from a year ago, to $9.2 billion, as the company’s quarterly oil and gas output rose.
Chevron’s stock fell more than 1 percent in early trading, and Exxon’s shares inched higher.
Chevron’s headquarters move will be effective on Jan. 1 and Mr. Wirth will relocate to Texas by the end of this year. The company sold its longtime corporate campus in San Ramon in 2022 and has since been leasing office space.
Golden State Tarnish: Nation’s Most Jobless; $20 Billion Unemployment Insurance Debt
CalMatters commentary from Dan Walters
Gov. Gavin Newsom tirelessly touts the size and strength of California’s economy, often contrasting it with those of other states.
When, for example, the monthly employment report was issued in June, Newsom bragged on X, formerly Twitter, that “California continues to lead the nation’s economy & create good jobs throughout the state. Just this year, the state created over 107,000 jobs — more than doubling … the same time period last year.”
Actually the report, based on May data, was not that positive.
While the state’s 5.2% unemployment rate was slightly lower than April’s rate, it was still the highest of any state. In June it was still unchanged and remains the nation’s highest, albeit tied with Nevada. It also was markedly higher than the jobless rates in Florida (3.3%) and Texas (4%), two red states that Newsom often disparages.
The recent reports on California’s job picture are nothing new. California has consistently had unemployment rates at or near the nation’s highest ever since the COVID-19 pandemic faded away.
About 3 million Californians lost their jobs during the pandemic, thanks largely to Newsom’s orders to shut down businesses. The state’s recovery has been sluggish vis-a-vis those of other states. There are still more than a million California workers without jobs.
California’s mediocre economic recovery has had many effects, one being an immense budget deficit. The Newsom administration’s 2022 projection of a fast recovery and a cornucopia of state revenues turned out to be wildly inaccurate, leading to a wide gap between income and outgo.
Another impact is the truly sorry condition of the unemployment insurance fund, which provides support payments to jobless workers.
When the pandemic hit and unemployment soared, the unemployment insurance fund quickly exhausted its slender reserves and the state borrowed some $20 billion from the federal government to maintain payments.
Not only has California not repaid the loans, but it is one of only two states that have failed to do so (New York still owes about $6 billion). And the unemployment insurance fund’s deficit is growing because the state is still not taking in enough money from payroll taxes to cover its current payments.
Thanks to California’s stubbornly high unemployment rate, the Employment Development Department expects the unemployment insurance fund to receive $4.8 billion in payroll taxes this year but to pay out $6.8 billion in benefits, meaning the fund’s deficit, including federal loans, will reach $21.7 billion by the end of this year and $22 billion in 2025.
The underlying problem predates Newsom’s governorship. Nearly a quarter-century ago, the Legislature and then-Gov. Gray Davis enacted a 50% increase in unemployment insurance benefits, counting on what was then a healthy fund reserve to finance them.
However, when recession struck shortly thereafter, the fund was drained to pay benefits and had only barely regained solvency when the Great Recession hammered the state a half-decade later. The state borrowed about $10 billion to keep benefits flowing, and the feds increased payroll taxes on California employers to repay the debt.
The pandemic hit just after that loan was repaid, and employers are again being taxed to repay the even larger debt incurred. However, it’s not enough to prevent the fund’s deficit from increasing.
The effects of relatively high unemployment are compounded by a decades-long political stalemate over how to make the unemployment insurance fund healthy again, pitting employers against unions over whether payroll taxes should be increased or benefits should be curtailed.
Newsom’s bragging about California’s economy in the face of such negative data not only undermines his credibility but ill-serves the state. The ever-growing unemployment insurance fund deficit is a crisis that should demand political attention, not be ignored.
New State Study Finds Hotter, Flashy Weather Cuts Water Supply By 20+%
CA Dept. of Water Resources
The Department of Water Resources released its final 2023 State Water Project Delivery Capability Report, which presents a new and enhanced analysis of current and future expectations for the SWP water supply if no new adaptation actions are taken.
According to the report, SWP delivery capability and reliability could be reduced as much as 23 percent in 20 years due to changing flow patterns and extreme weather shifts – underscoring the need for California to continue addressing the impacts of climate change and upgrading infrastructure.
A 23 percent decline would be equivalent to about 496,000 acre-feet a year, enough to supply 1,736,000 homes for a year. This reinforces the serious need for California to boost water supplies to account for any SWP losses in the coming years, including the Delta Conveyance Project, Sites Reservoir, desalination projects, and more.
“The analysis underscores the need to modernize and upgrade our aging infrastructure so we can capture water supplies when it’s wet,” said DWR Director Karla Nemeth. “The State Water Project service area amounts to the world’s eighth-largest economy and includes more than 8 million Californians living in disadvantaged communities. Modernizing the State Water Project (SWP) is critical to delivering on the human right to water in California.”
The 2023 Delivery Capability Report introduces two new innovative approaches to characterize current climate change conditions and emphasizes the uncertainty in future climate change projections.
The first is an approach to account for changes in operations from the climate change that has already occurred. The second is an approach for developing a range of future climate scenarios. Both additions have undergone independent peer review and are considered significant improvements over previous methods.
The Delivery Capability Report is used widely both within and outside the SWP for water supply planning. The information in these reports is a key component of the drought planning done by the SWP and is fundamental to the drought planning done by the public water agencies that receive SWP and Central Valley Project water.
The report provides the information needed by these agencies to develop and manage their own water supply portfolios and is an important input for Sustainable Groundwater Management Plans, Urban Water Management Plans, Agricultural Water Management Plans, and Integrated Regional Water Management Plans.
These decreases in the availability of surface water deliveries can lead to supply shortages, an increase in groundwater demand, and reductions in available supplies to support groundwater replenishment.
DWR’s Sustainable Groundwater Management Office will use the information in the report to update its existing climate change data and guidance that many Groundwater Sustainability Agencies used for their initial Plans. Similarly, DWR’s Water Use Efficiency Branch will be advising urban and agricultural water agencies to update their water budget assumptions based on these new assessments.
The most salient findings in this report are:
- Under existing conditions, the estimated average annual delivery of Table A water for this report is 2,202 thousand acre-feet (TAF)/year, 119 less than the 2,321 TAF/year estimated for the 2021 Report (Table 6-2).
- The likelihood of existing condition SWP Article 21 deliveries (supplemental deliveries to Table A water) being greater than 20 TAF/year has increased by 4 percent relative to the likelihood presented in the 2021 Report (Figure 6-6).
- Under the climate change scenarios, which project conditions 20 years into the future under median to extreme hot-dry conditions with no adaptation, the estimated average annual delivery of Table A water shown in the three scenarios is 13 percent to 22 percent lower than under existing conditions.
- Under future climate conditions, California’s hydrology is likely to become more extreme with periods of high flows that current infrastructure and operations are unable to capture and longer more severe dry periods that challenge operations.
- While the 50% level of concern scenario is considered the median of the expected SWP delivery capability 20-years into the future, SWP water users are encouraged to carefully consider the information from all three 2043 potential future climate scenarios and evaluate their vulnerability to a range of climatic changes based on their respective risk tolerance.
Full Report:
State Water Board May Put Kern County on Groundwater Probation
Bakersfield Californian
Worried that Kern County residents could suffer “urgent impacts” to their drinking water from continued agricultural groundwater overpumping, staff at the state Water Resources Control Board announced they are recommending the entire Kern subbasin be put on probation.
Probation is the first step toward a possible state pumping takeover. A hearing before the Water Board is set for Feb. 20.
The finding was a blow to area water managers who had hoped a new groundwater plan submitted in May would address concerns about its 2022 plan, which was deemed inadequate in 2023. Managers of Kern’s 20 groundwater sustainability agencies had worked since then to revamp the plan.
“It appears that there was an extremely limited effort in evaluating the amended 2024 plan,” Dan Bartel wrote in an email referring to the Water Board staff recommendation for probation. Bartel is General Manager of the Rosedale-Rio Bravo Water Storage District and Groundwater Sustainability Agency. The new submission by Kern is essentially one plan with six “chapters” by individual GSAs.
“This 2024 plan is 100 times more protective of groundwater than our 2022 plan and gives Kern a great path to sustainability,” Bartel wrote.
He called the staff recommendation “deeply frustrating.”
Natalie Stork, assistant director of the Water Board’s Office for Sustainable Groundwater Management, said that while the probation recommendation was based mostly on Kern’s 2022 groundwater plan, staff had done a preliminary review of the 2024 plan, as well.
That new plan does improve on some aspects of how groundwater will be managed, she said, such as coordination among agencies. But it doesn’t go far enough.
Specifically, she told reporters, Kern’s new plan “could allow water levels to drop far below historic lows, in some cases, more than 100 feet below historic lows.”
Chronic decline of groundwater levels is one of three main deficiencies staff listed in the state agency’s draft report calling for probation. The other two are subsidence, land sinking and coordination among water agencies on how to measure, monitor and tackle groundwater issues.
All of that added up to “potential urgent impacts to drinking water supplies and domestic wells,” Stork said.
“An analysis we conducted with DWR (the Department of Water Resources) indicates that around 230 domestic wells could go dry in a drought scenario based on recent water level trends. Additionally, we found that over 400 wells would go dry at (groundwater) thresholds proposed in the 2022 groundwater plan.”
Bartel disputed the state’s data on groundwater levels and at-risk domestic wells.
Groundwater levels of greatest concern are known as “minimum thresholds,” or the lowest level water is allowed to drop without triggering significant action.
ern water managers have sparred with one another over those levels for several years. But as part of their coordination efforts under the 2024 groundwater plan, managers agreed to set levels more evenly across the subbasin, Bartel wrote in the email.
“Yes, a few MTs (minimum thresholds) went down because we had to come to a coordinated approach from what we did last time,” he wrote in an email. “Contrary to the what the (Water Board staff) has released about MTs, they were raised an average of about 40 feet from the previous 2022 plan.”
He acknowledged that the average minimum threshold is 30 feet below historic lows, which was done to give water managers flexibility to ramp down overpumping and increase recharge between now and 2040, when the Sustainable Groundwater Management Act mandates aquifers have to be operated sustainably.
“There is no requirement in SGMA that you cannot go under historic lows,” Bartel wrote.
Kern managers also did an impact analysis to see what potential harm the new minimum thresholds could cause to domestic wells.
That analysis shows a total of 77 drinking water wells could be impacted by 2040 if no other projects were implemented or actions taken, such as increasing recharge and finding ways to reduce pumping through internal groundwater markets or other measures. With those projects and actions, however, only 13 drinking wells could be dewatered, according to the 2024 groundwater plan.
Kern Water managers also developed what they felt was a robust response to deal with any dry wells and make sure residents have water and wells are repaired. Water Board staff, however, said the domestic well response “lacked details” on whether it would be short or long term.
Staff will issue a final report after the public comment period, which closes Sept. 23.
Kern is one of six San Joaquin Valley subbasins under scrutiny by the Water Board, the enforcement arm of SGMA.
The Tulare Lake subbasin, which covers Kings County, was put on probation April 16, though a Kings County judge recently ruled against some of the state’s measures.
The Tule subbasin, which covers the southern half of Tulare County’s valley portion, goes before the board Sept. 17.
The Kaweah subbasin, which covers the northern half of Tulare County’s flatlands, will go before the board Jan. 5.
The Chowchilla and Delta-Mendota subbasins will go before the board sometime later in 2025.
CA Farmers Pump Less Groundwater, Grow Less Food When Government Fees Added: U of Chicago Study
The Hill
California farmers are willing to cut back on groundwater usage when their local governments start charging for this formerly free resource, new research has found.
Historically, Golden State farmers have kept their crops irrigated amid extreme heat and drought by tapping into groundwater beneath their properties — at no charge, other than the costs of pumping.
That practice has fueled concerns about the depletion of the state’s available water sources as climate change drives worse and more frequent drought.
Some local agencies, seeking to address those concerns, have begun to change their operating strategies in recent years, following the passage of a significant revamp to statewide groundwater regulations, according to the authors of a new working paper, published by the University of Chicago’s Energy Policy Institute.
The widescale implementation of such shifts could lead to a reduction in acreage of the state’s thirstiest fruits and nuts by nearly a quarter, while encouraging massive transitions to less consumptive alternatives, per the paper.
“Water does have value, and we learn that lesson when there is less of it to go around—but it shouldn’t get to the point where some are starved for water,” co-author Fiona Burlig, an assistant professor at the University of Chicago Harris School of Public Policy, said in a statement.
To meet the lofty goals of California’s 2014 Sustainable Groundwater Management Act, the authors estimated that users statewide will need to reduce groundwater pumping by about 19.2 percent by 2042.
Local agencies have therefore begun instituting a variety of discretionary policy mechanisms — including taxes, fees, pumping limits and conservation incentives. More than half of these agencies, the researchers found, are opting to put some type of price on groundwater.
To quantify changes in both water extraction and pumping costs, the authors combined data on groundwater levels, pump efficiency and electricity consumption linked to pumping across California’s Central Valley, the state’s agricultural core.
From there, they were able to model how farmers respond to changing groundwater costs over different time frames by evaluating their crop choices and water use.
Ultimately, the researchers found that every 10-percent surge in groundwater pumping prices comes with a 1.4-percent reduction in land containing fruit and nut perennials, a 0.72-percent increase in land left fallow and overall groundwater pumping reductions of about 3.6 percent.
“While farmers don’t change crops in response to short-lived price changes, due mostly to the nature of farming, they do start changing what they grow — and whether they grow at all— when they are charged permanent fees,” co-author Louis Preonas, an assistant professor at the University of Maryland, College Park, said in a statement.
Meeting statewide targets of reducing pumping by 19.2 percent would require a groundwater pumping tax of about 60 percent — or about $30 per acre-foot of water used, according to the paper.
The implementation of such a tax, the authors found, would lead to an almost 9-percent switch in cropland to less-consumptive alternatives, as well as a 24-percent plunge in fruits and nuts and a 50-percent rise in land left fallow.
Evaluating these findings, Burlig stressed the importance of putting a price on groundwater and of treating “water as a commodity that should be conserved.”
Through such a shift in perspective, farmers are more likely to adopt cultivation strategies that are “more suitable to the land conditions and natural resources that we all have to share — rather than using up natural resources for free to make the greatest profit,” Burlig added.
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