California Drought Hurts More Than the Ag Industry

California Drought Hurts More Than the Ag Industry

April 2, 2014

Source: Shan Li; Los Angeles Times 

The California drought could dampen employment growth in coming years and have a ripple effect on several industries in the state, according to a UCLA report released Wednesday.

Economists said in the quarterly forecast that arid conditions in 2013, the driest year on record for the Golden State, could diminish the fishing and manufacturing sectors in the state. However, the effect depends on whether the drought is "normal" or the beginning of "a long arid period."

California's employment could be suppressed about 0.2% during the next few years because of the drought, the report concluded.

"If the drought is like the ones we had before, which are plentiful in California, then the data suggests it's not a big deal economically," said Edward Leamer, director of the UCLA forecast. "If this is really a climate change, that is a different story."

Even without the weather factor, Los Angeles, among other cities, is grappling with major problems with its job market.

Among problems plaguing cities: the high cost of housing, congestion, lack of skilled workers and an unfriendly environment for businesses, said William Yu, an economist at the UCLA Anderson Forecast.

"It should not be surprising that a business is less likely to start up, relocate or expand its business in a city who is business unfriendly, especially when there are many other business-friendly cities from which to choose," Yu wrote in the report.

Over the next year, however, UCLA economists do expect the state's economy to continue growing.

The current drought in California not only affects the agriculture industry, but California as a whole. Individuals should take the initiative to conserve water during this tumultuous time.