Regions with an agricultural-based economy are having to find ways to address water resource challenges to ensure long-term sustainability and preserve economic vitality. Pajaro Valley in California is known for its rich agricultural heritage, providing a valuable source of revenue and employment for the region. Changing climate conditions, frequent droughts, and population growth have strained the limited fresh water sources, leading to over-pumping of groundwater to sustain the industry. Facing significant water shortages, the region enacted water fees to manage supplies.

The fees were initiated in the 1980s after the region had over-pumped its aquifers, and its proximity to the ocean led to saltwater intrusion which destroyed crops. To save the industry and region’s economy, the valley implemented water use fees, incentivizing farmers to adopt water-efficient practices such as drip irrigation, rainwater harvesting, and crop rotation. The fee started at $30 per acre-foot in 1993 and now can be as high as $400 per acre-foot, bringing in $12 million a year that is used “to recycle, restore and conserve the region’s groundwater.”[1] An analysis of the fees conducted in 2023 found that a “21% price increase led to a 28 acre-foot (AF) or 22% reduction in average annual groundwater extraction.”[2]

The implementation of water fees in Pajaro Valley is part of a long-term strategy and has been recognized as a blueprint for sustainable agriculture, not only encouraging water-efficient practices and reducing water waste but also improving the resilience of the region's agricultural industry. Although the price of water in the region is high, the strategy has proven effective, and the agriculture industry is thriving.

[1] Davenport, Coral. “Strawberry Case Study: What If Farmers Had to Pay for Water?” The New York Times, The New York Times, 29 Dec. 2023, www.nytimes.com/interactive/2023/12/29/climate/california-farmers-water-tax.html.

[2] Bruno, Ellen M., et al. “The Dynamic Impacts of Pricing Groundwater.” eScholarship, University of California, 16 Aug. 2023, escholarship.org/uc/item/2mx8q1td.