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Blog Post · September 13, 2023

How Might Small Farms Fare Under SGMA?

This is the second in a series of two posts about farm sizes in the San Joaquin Valley; the first is “Mapping Farms By Size in the San Joaquin Valley.”

photo - Rolling green hills on Fresno farm

Change is coming to the heavily agricultural San Joaquin Valley. We know that a combination of climate change, new environmental regulations, and especially the implementation of the 2014 Sustainable Groundwater Management Act (SGMA) are leading to a decline in water available for irrigation. (By 2040, overall farm supplies in the valley could drop by as much as 20%—and irrigated cropland by nearly 900,000 acres.) But what we haven’t known is how these changes could impact farms of different sizes in the valley—and there is understandable concern about how the shift will play out, particularly for smaller farms that have fewer resources and capacity to adapt.

The first barrier to understanding SGMA’s impacts on farms of different sizes had to do with a lack of detailed information on where farms of different sizes are located and what they grow. We undertook an effort to fill that gap, providing a more granular picture of the valley’s farms in a previous blog post and dataset. In this new post, we combine that information with PPIC’s detailed estimates of changing water availability across the region, to shed light on how farms of different sizes might be impacted by growing water scarcity. We provide underlying data in an accompanying dataset.

Small farms tend to be found in areas where surface water is more abundant

While groundwater overdraft is a widespread problem in the valley, it will not affect all areas equally. As we showed in earlier work, the availability of surface water varies widely both within and across groundwater basins. The areas with the least surface water—which lean most heavily on groundwater for crop irrigation—will face the biggest challenges in attaining sustainable levels of water use. For those concerned about small farms and water access, our new analysis of water availability by farm size reveals some good news (see figure below). Smaller farms tend to be located in areas with more surface water, while larger farms tend to rely more heavily on groundwater. On average, the smallest farms (those with less than 50 acres) lie in areas with 2.2 acre-feet (af) of surface water per acre. Surface water availability declines as farm sizes grow; the largest farms (those with 2,000-plus acres) have just 1.5 af per acre on average.

This pattern reflects the fact that many smaller farms are located within some of the oldest irrigation districts (IDs) on the valley’s east side that have relatively senior surface water rights, such as Turlock ID, Fresno ID, Oakdale ID, and Modesto ID. Even when smaller farms rely on groundwater, they benefit from the better surface water availability in these areas, which results in less overdraft and lower pumping limitations to meet SGMA requirements. Larger farms are more likely to be active in areas that rely exclusively on groundwater, which face bigger cutbacks to comply with SGMA.

Still, nearly 20% of small farms are in especially vulnerable areas, with little to no surface water. (For context, lands with less than 3 af/acre of surface water generally need to rely on groundwater for at least some of their irrigation needs.)

figure - Most small farms are found in areas with more surface water

Farms of all sizes could benefit from water trading

Our previous work found that as much as 900,000 acres of cropland would need to come out of intensive irrigation to bring basins into balance by 2040. We also showed how trading both surface water and groundwater could significantly reduce the losses of farm revenues and jobs that will come from farming less land. Our new data allows us to explore what these changes might mean for farms of different sizes; both the California Water Commission and a coalition of family farm and community advocacy groups have raised concerns that smaller farms could lose out in water markets.

Once again, there is some good news for smaller farms. Because they tend to exist in places where surface water is more abundant, they face a lower fallowing risk than larger farms from SGMA implementation. If no adjustments are allowed in where water is used (the “no trading” scenario in the figure below), small farms (those with less than 100 acres) would need to reduce their acreage by 13% on average, whereas larger farms (those with 500 acres or more) would need to reduce by 22%. (The valley-wide average across all farms is 19%.)

Water trading would not substantially change this picture. With local trading—where farmers trade surface and groundwater within their local areas—small farms could experience slightly less fallowing, because some of them would buy water to avoid reducing their profitable orchards, vines, and other specialty crops. With basin trading (where they trade surface and groundwater within groundwater basins) or valley trading (where they also trade surface water across basins), small farms could increase their fallowing slightly—but only if some opted to sell water they now use for less profitable alfalfa and other field crops. Having the ability to sell their water if the price is right could be an advantage, especially if water cutbacks in their area make it harder for them to sustain their acreage.

These findings highlight the importance of ensuring that water trading systems are both transparent and readily accessible to growers of all sizes. Because smaller farms generally have fewer managerial and technical resources at their disposal, they may face greater challenges overcoming the transaction costs associated with trading unless special care is taken to ensure that they have access to the market.

figure - Smaller farms face lower fallowing risks with SGMA, and some could benefit from buying or selling water

Considering preferential groundwater allocations to small farms and rural communities

Smaller farms may also face greater adaptation challenges than larger farms, which have more capacity to maintain a viable scale of operations even if they need to idle some land. Such considerations have prompted proposals (e.g., this study from the California Water Commission) to give preferential treatment to small farms in groundwater allocations, to ensure they have the option to continue operating. And as we have discussed elsewhere, preferential allocations would also be a way to ensure continued access to drinking water for residents served by small rural water systems in the post-SGMA world.

We explored what preferential allocations could mean in each basin by estimating the potential groundwater demand of these water users and comparing it with sustainable supplies in 2040. For rural residents, we looked at water demands for small community water systems, and for small farms, we considered two groups—farms with less than 10 acres and farms with 10–50 acres. Several key findings emerge: First, providing groundwater allocations for small communities represents a very small fraction of sustainable water supplies—about 77,000 af or less than 1%. Second, when it comes to providing allocations for small farms, the size cutoff matters. Valley-wide, farms below 10 acres would require about 180,000 af per year to satisfy crop water demands (1% of sustainable water supplies). In contrast, farms between 10–50 acres would require nearly 1 million af (8%). Third, the share of allocations in total water use would vary substantially across basins (see figure below). These impacts would be largest in basins where small farms make up a larger share of total acreage, including Eastern San Joaquin, Modesto, Turlock, Merced, and Kings.

figure - Allocating groundwater to small communities would have small effects on overall supplies; for small farms, the effects could be large in some basins

In practice, local allocation policies would take a much more nuanced look at these issues. For one, as shown above, many small farmers have good access to surface water and wouldn’t be impacted by coming groundwater cutbacks. Also, many of the policy concerns around small farms reflect a desire to protect the viability of farms that provide the primary livelihood for families, especially when operated by historically marginalized groups. But many small farms are owned by people who maintain small acreages for extra income or as a rural lifestyle choice, and it is less clear that special assistance would be warranted in these cases. That said, reserving groundwater for small rural communities could help address the human right to water while causing limited impacts to other users. Making water markets transparent and accessible could help some small farms better manage the coming water changes in the valley. And targeted support for small growers who might merit special assistance also could be an appropriate approach to ensuring an equitable transition to groundwater sustainability.

This work was done by a PPIC team that also included Andrew Ayres, Zaira Joaquín Morales, and Joy Collins. We are grateful for the contributions of Jeff Allenby and Hallah Elbeleidy from the Lincoln Institute of Land Policy’s Center for Geospatial Solutions, who worked with us to create a dataset on agricultural parcels. This work was supported by the Lincoln Institute of Land Policy and the USDA Secure Water Future grant at UC Merced.


groundwater groundwater sustainability San Joaquin Valley San Joaquin Valley farm sizes SGMA Water Supply Water, Land & Air