Drought and Fruit and Vegetables Production in California

ABSTRACT California's increasingly frequent and intense droughts are a pressing problem for the state's agriculture and the US food supply. California supplies more than half of all fruit and vegetables produced in the United States. This paper quantifies the severity of the problem by estimating the impacts of the drought on California's fresh fruit and vegetable production. We estimate panel‐data models using comprehensive, county‐level agricultural, irrigation, and weather data from 2000 to 2019. We find that droughts significantly reduce total output by 1.2% to 2.2% for each additional week of drought. The estimated effect is driven by lower yields and fewer harvested acres. Drought effects differ among crops, with thirsty crops and crops with lower economic returns and established insurance programs being disproportionately affected. Results also show the extent to which higher irrigation levels mitigate the adverse effects of drought. Our findings provide insights into the importance of enhancing drought‐related risk management and implications for designing cost‐effective policies for future adaptation decisions.