California farms fail as land values plunge amid groundwater crisis

There was a time when the water beneath Nick Sahota's Terra Bella farm was free and plentiful, supporting neat rows of pistachio trees and table grapes to be sent to Bay Area groceries like Costco, Food 4 Less and SaveMart.

Now the water costs on his Tulare County farm have risen to about $1,500 per acre because of pumping restrictions imposed by California's historic Sustainable Groundwater Management Act. A decade after the law was adopted, after great controversy, implementation is beginning to pick up, and farmers' nerves are on edge, thinking that bankruptcy is a real possibility.

With outstanding loans of more than $15 million, his family lives in fear of the farm that his family spent decades building and once boasted as being very profitable to lose. The value of his orchards has plummeted to one-fourth of what it was just four years ago.

"How are we going to pay the loans? It's impossible," said Sahota, 50, who farms with his 83-year-old father in the flat, sandy soils of eastern Tulare County, where summer temperatures often rise to more than 100 degrees.

Sahota is one of many farmers now facing the threat of ruin as the groundwater law is being implemented across the San Joaquin Valley, the enormous southern half of the Central Valley. Agriculture is the single largest employer in this region, so idle land means fewer jobs to support the local economy.

Last year, the value of orchards dependent solely on groundwater declined between 30 percent and 40 percent in an analysis of land between Sacramento and Chowchilla, according to veteran appraiser Janie Gatzman of the American Society of Farm Managers and Rural Appraisers, who tracks San Joaquin Valley properties.

“That’s a huge loss in equity for growers who have been farming at a loss for the last three to four years” due to rising water costs and decreased demand for nuts, she said.

That could turn parts of the San Joaquin Valley if farms fail and acreage goes fallow. The valley is the backbone of California’s $59 billion-a-year agricultural industry, which provides more than one-third of the nation’s vegetables and two-thirds of its fruits and nuts.

The most affected are farms in the far eastern stretch of the valley in so-called “white areas,” which are solely dependent on groundwater. Ironically, water was once so plentiful here that access to imported state or federal water was deemed unnecessary; now it’s a lifeline. In addition to eastern Tulare County, the counties of Madera, Fresno, Kern, and Merced have large patches of “white areas.”

Historically, the value of California's agricultural land has always been determined by its water availability. ”You don't buy land by the acre. You buy it by the acre-foot of water,” said Daniel Sumner, a professor of agricultural economics at UC Davis.

Thus, by tapping into groundwater, vast, lucrative, and manicured orchards of almonds, pistachios, and other tree nuts can be created from rough rangelands. According to Gatzman, grazing land is worth $500–$2,500 per acre; orchards, until recently, could command $20,000 per acre.

But the Sustainable Groundwater Management Act is triggering a profound change, said Sumner.

“If you previously had access to water and you no longer do, you don’t own what you thought you did,” said Sumner.

Over time, instead of orchards, the land may support solar panels, beef cattle or wheat. But these non-irrigated uses are much less profitable.

The groundwater act, enacted in 2014, seeks to ensure a more sustainable use of groundwater after years of over-pumping that depleted basins and eroded water quality in some rural areas.

Research indicates that the state's agricultural valley is using twice as much groundwater as nature is feeding back through rain and snow. According to the Department of Water Resources, it is sinking in on itself as the aquifer beneath it is being siphoned off, causing roads to crack and buried pipelines to pop up. Some portions of the California Aqueduct have been raised to maintain flow.

It was observed that accelerated land subsidence or sinking occurred after the drought of 2020-2022. Groundwater levels began to partially rebound in 2023. But it will likely require several more wet years, along with a boost of groundwater recharge and a decrease in pumping, to recover from decades of over-pumping, according to the state.

Local water agencies are responsible for determining how the landowners in their jurisdictions will meet the sustainability goals of SGMA. They must establish a limit, or “cap,” on the total amount of groundwater that is pumped.

To reach the act's pumping reductions that are expected to dry up as much as 20% of the valley's farmland, by 2040, a report published by the Public Policy Institute of California. It estimates that up to 500,000 acres — one-fifth of the San Joaquin Valley's farmland — may need to be taken out of cultivation to stabilize the region's aquifers, it says.

In the long run, there will be new uses for the land, said experts.

Nevertheless, ”it may be too late for current growers who are in trouble. That’s a personal tragedy,” said Sumner, the UC Davis professor, whose grandfather came from Texas to California after his cattle operation was wiped out by the Dust Bowl.