Aug 30 2012
Nearly all of the 19 WGA member states are currently affected by dryness or drought to some extent. In fact, over 75% of the contiguous United States is suffering from some degree of abnormally dry or drought conditions, with half of that being categorized as severe, extreme, or exceptional drought. The largest swath of extreme drought is centered over the Rocky Mountains and the Great Plains.
Drought is an expensive phenomenon: both the Southern Plains drought of 2011 and the widespread drought of 2002 cost more than $12 billion in today’s dollars.
Food Prices: Food prices are projected to rise by 3 to 4% in the next year, which is slightly above the average 2.8% annual inflation. Beef prices could increase as much as 5%.
Agriculture: Hay prices have as much as tripled in drought-stricken regions, adding pressure for ranchers across the West to sell cattle months before they would normally go to market.
Tourism: In addition to impacts to areas ravaged by drought-intensified wildfire, low stream levels due to drought can impact the recreation sector in western states. Rafting tours have been less popular this year in Colorado, and Montana has enacted fishing closures on some rivers and lakes.
Economic Confidence: A poll of Midwestern bankers in July suggested that drought is leading to weak confidence in rural economies. Agriculturally-based industries can suffer, too, as Bloomberg News suggested in a report showing a 6.3% drop in John Deere’s stock over 11 days.
Fire Risk: Wildfires were remarkably devastating in the West this season; although the national acreage subject to fire is in line with the 10-year average, several wildfires this year occurred in populated areas with valuable property. Insurance estimates for the Waldo Canyon fire stand at $352.6 million, more than 1.5 times the second-most expensive wildfire in Colorado history. Wildfire conditions were exacerbated by lack of precipitation, high temperatures, and low soil moisture.
Water Supply: Western reservoirs are in fair shape due to 2011’s wet conditions, but in some regions reservoir storage has dropped considerably. For instance, in Arizona, storage in the Verde and Salt river basin systems are at 59% of capacity, or 20% less than last year. The Southern Nevada Water Authority said the western slope of the Rocky Mountains would need at least seven years of normal snowfall to bring southern Nevada out of its 12-year drought.
Wildlife: Droughts adversely impact aquatic species: low water levels can increase water temperature and decrease oxygen levels, stressing fish and their food sources instream. Drought-exacerbated wildfires threaten terrestrial species: habitat for the sage-grouse, a chicken-like bird which lives in open sage land, has been subject to widespread fires in Oregon and Nevada.