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Monday, April 14, 2014 2:04 AM


California Drought Updates: Reader Anecdotes, Well Drilling Boom, Images; Drought Spawns Gold Panning Rush


An email from reader "Bombillo" got me looking at the drought situation in California once again. Bombillo writes ...

Hi Mish,

Hope all is well with you. I see you have your wine conference coming up with a great speaker roster!

The California drought is now going to grind into the brutal summer season with the full effects to be seen shortly. I have read that since the San Joaquin Valley is not going to be receiving any irrigation water from Federal canal projects (first time ever) a half million acres of land will go fallow this year there.

Since ag is going to be shut down, the workers that man those operations are moving elsewhere. This in turn is causing a collapse in student enrollment at the public schools where school district funds are allocated on per pupil attendance. There is talk about giving the districts money even though there will not be anyone in these schools.

I am not certain how all this will play out but the price of beef, produce of all type, fruits and nut prices will go up nationwide, if not worldwide. We have members of the Franzia and the Mondavi families at the resort right now, and even though they have a high value added product their water costs and access have them worried.

Life has a way of playing these tricks but after wailing about these things it looks very much as though a huge El Nino is building up (unusually high ocean water temps in the eastern Pacific) something we haven't seen since 1998.  This means a torrential rainy season is likely coming up for the winter of 2014/15.

One has to wonder though, with ever more people and ever more stretched/stressed supply chains, how close to some sort of disaster we are.

I read your interesting article about the Inevitable Bankruptcy of Los Angeles, a response to a question really, posed by a home owner in LA wanting to know what affect he may see from a pension system collapse. Your comment was to expect tax increases and invention of new taxes.

I have first-hand experience with two outrageous tax grabs that prompted me to write state congressmen, not that it will do any good whatsoever.

Bombillo
California Drought Spawns Well Drilling Boom

ABC News reports California Drought Spawns Well Drilling Boom.
The scarcity of irrigation water in drought-stricken California has created such a demand for well drilling services that Central Valley farmer Bob Smittcamp is taking matters into his own hands.

He's buying a drilling rig for $1 million to make certain he has enough water this summer for thousands of acres of fruit and vegetable crops.

"It's like an insurance policy," said Smittcamp, who knows two other farmers doing the same thing. "You have to do something to protect your investment."

With California in a third dry year, well drilling is booming across the nation's most productive agricultural region, and some drilling companies are booked for months or a year. In some counties, requests for permits to dig new wells have soared, more than doubling over this time last year.

Farmers expect to get only a fraction — if any — of the water they need from vast government-controlled systems of canals and reservoirs interlacing the state. In an effort to make up the difference, they are drilling hundreds of feet deep to tap underground water supplies.

Smittcamp estimates that he spends $4,000 an acre tending his peach and grape crops before the harvest. If a well were to run dry mid-season with nobody to call, Smittcamp said he could lose that investment — and perhaps entire orchards or vineyards.

 The price to dig a well depends on the depth and ground composition, drillers say, costing a farmer anywhere from $50,000 to $500,000 before installing the pumps.

Tapping groundwater has other costs. The water that was deposited underground naturally over thousands of years isn't being replaced as rapidly as it's being drawn, causing the ground in the Central Valley to sink in a process called subsidence. In California, there is little if any regulation of groundwater pumping by the state.

 In most years, Central Valley farmers draw one-third of their water from wells, while the remaining two-thirds comes from California's State Water Project and the federal Central Valley Project. Most farmers expect to receive no water from either this summer, and that ratio is dramatically shifting to underground water supplies, which could eventually run dry.

Matt Rottman, president of Rottman Drilling Co. based in Lancaster, said his mid-sized firm of three rigs is backlogged 15 months. For a recent job near Bakersfield, his crew dug a 1,840-foot well. Three wells coming up later this year in the Central Valley will hit depths of 2,000 feet.

 This summer, Smittcamp said he has to come up with two-thirds of his water that would normally come from the state and federal water deliveries.

"This year, we get none out of the projects," he said. "So we've got to pump the whole enchilada."
California Drought Monitor



Here's a link to California Drought Monitor updates. The above map is from April 8 (released April 10).

Images

The Atlantic has a series of 25 interesting California drought images in its report California's Historic Drought.



Houseboats are docked at Bridge Bay in Shasta Lake, which is 100 feet (30 meters) below its normal levels, in Shasta, California, on January 23, 2014. Now in its third straight year of drought conditions, California is experiencing its driest year on record, dating back 119 years, and reservoirs throughout the state have very low water levels. (Reuters/Robert Galbraith)



A car sits in dried and cracked earth of what was the bottom of the Almaden Reservoir on January 28, 2014 in San Jose, California. (Justin Sullivan/Getty Images)



An empty boat marina at Folsom Lake, at 17 percent of capacity, in Folsom, California, on January 22, 2014. (Reuters/Robert Galbraith)

Drought Spawns Gold Panning Rush
Three consecutive years of below-normal rainfall have left reservoirs at a fraction of their normal depth, seriously threatening farms in the state that grows half the nation's fruits and vegetables. California Governor Jerry Brown has declared a drought emergency and signed a $687 million drought-relief package into law, and 125 additional firefighters have been hired already in anticipation of a dangerous upcoming fire season. One bright spot: gold prospecting. Amateur prospectors are flocking to the Sierra Nevada foothills, taking advantage of lower water levels to search for gold in riverbeds that have been unreachable for decades.
The above images and gold rush text courtesy of the Atlantic.

Personal Anecdote

Our home is on well water. We hit an underground river at 30 feet. That is too shallow to be usable for drinking, so they kept drilling. We hit water again at 80 feet.

I do not remember the cost precisely, but I believe it was something like $500 (good for up to 100 feet) in 2001, not the $50,000 to $500,000 mentioned in the above drilling boom article.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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