Department of Economics

The periodic curtailment of water exports from the Sacramento-San Joaquin Bay Delta to protect

fish species listed under the Endangered Species Act represents a perennial source of conflict

between environmental and agricultural interests in Central California. This paper seeks to

quantify the relationship between the restriction of water exports and the resulting economic

losses to farmers measured in terms of employment and value of production. Using a difference-in-difference framework to compare the San Joaquin Valley to the neighboring Sacramento

Valley, this paper finds that there are demonstrable losses to employment but not annual value

produced. It then makes the inference that these results occur because farmers have the ability to

re-optimize crop mixes in response to the amount of available water.