The water shortage in the central San Joaquin Valley is forecast to cost thousands of farm jobs in Fresno County and create larger ripple effects throughout the region's economy, according to a report issued Thursday by economists at Stockton's University of the Pacific.
Compared to other metropolitan areas in northern and central California, Fresno is expected to see a lower rate of growth in non-farm jobs, according to Jeff Michael, director of the Business Forecasting Center at UOP's Eberhardt School of Business.
"In Fresno, the recession was slower to arrive and not as deep as the northern San Joaquin Valley, but the recovery rate has been slower and the unemployment rate is once again higher than Stockton and Modesto," Michael said in his quarterly California and Metro Forecast.
The drought will magnify Fresno County's lag behind other metro areas. "We're looking at some pretty heavy impacts from this drought," said Michael. "We're likely to see a big decline in farm jobs, if the past is any indication."
Jobs outside of agriculture are predicted to grow by about 1.3% this year, compared to other areas of Northern California, where growth is anticipated to be near or above 3%. "When combined with the expected decline of several thousand farm jobs, overall employment in the Fresno area will be flat in 2014," Michael said.
Statewide, Michael suggested that a worse-case scenario for drought would likely not affect California's overall economic growth by more than a quarter of a percent. "However, the economic effects on specific industries and some hard-hit rural communities can be very severe," he said, "and significant environmental and quality-of-life impacts occur even in areas where economic output is virtually unchanged by dry conditions."
Michael said the 2009 drought offers some lessons on the potential damage this year.
Five years ago, farm water shortages forced farmers across the Valley to let about 250,000 acres go fallow, with a loss of about 6,000 farm jobs and about $350 million in farm production.
The hardest-hit areas were the west side of Fresno, Kings and Kern counties -- "some of the poorest rural communities in the country, so they are poorly equipped to deal with the loss of agricultural jobs," Michael reported.
Water shortages this year are likely to be even more serious and accordingly have a deeper effect on the area. "It ripples through consumer spending in the entire economy," Michael said. "When farmers fallow their fields, they're not investing in the input upfront, so suppliers see declines in sales, and there's less processing and harvesting on the back end."
Michael added that "it's hard to say exactly how bad it's going to be at this point, but it's not looking good. It's certainly going to be worse than 2009."
Another potential blow to the region's economy is the teetering fate of California's planned $68.4 billion high-speed rail program, where construction is proposed to begin this year in the Madera-Fresno area. "High-speed rail was anticipated as a construction stimulus for the Fresno area this year, but we have not included it in the forecast due to the project's significant legal and financial challenges," he said.
Even without high-speed rail, Michael said he expects jobs in Fresno County's construction industry to grow by about 4.5% this year, to about 13,500, and by 11.4% in 2015 to more than 15,000 jobs.
A significant portion of that growth will be fueled by an increase in housing starts this year and next.