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Study Says California Agency's Propososal to Restrict Water for Frost Protection Would Cost $2 Billion

"Let's work out a way to balance the needs of the fish, the farming community, and the municipal water users. ... This is an effort to get their attention by showing them what's at stake."
October 26, 2010

A regulation proposed by California’s State Water Resources Control Board to restrict vineyards from using the Russian River, its tributaries, and connected groundwater as a source of frost protection could result in losses of business income, state and local taxes and land values costing the California economy more than $2 billion annually including $143 million in lost tax revenue to local governments, according to an economic impact study by Robert Eyler, chair of the economics department at Sonoma State University.

The study was conducted by Eyler for Williams Selyem Winery.

“While the impact will be felt dramatically in Sonoma and Mendocino Counties, all of California will be affected and the wine business harmed across the nation due to the prominence and size of the Counties’ wine sector,” Williams Selyem owner John Dyson said. “Start adding up all these taxes and it comes up to $145 million per year from what seems like a fairly simple effort at protecting the fish.”

The state regulation was proposed in reaction to two alleged events in which salmon, which are protected under the Endangered Species Act, were stranded. It is suspected that when multiple vineyard owners turned on their pumps at the same time during a frost event, last Spring, it resulted in an instantaneous drop in water elevation in some tributaries of the Russian River.

The proposed state regulation has been criticized as overbroad and ill-defined because it issues a complete prohibition on water usage for frost protection unless and until a water management program is approved by the Water Resources Control Board.

Dyson said a related set of regulations being proposed by Sonoma County regulators takes a more collaborative approach, balancing the needs of fish, municipal water users and farmers. A hearing on a proposed ordinance is scheduled for November 9, while the timeline for the State Water Board’s proposal isn’t as clearly defined at this point.

“Let’s work out a way to balance the needs of the fish, the farming community, and the municipal water users,” Dyson told winebusiness.com. “This is an effort to get their attention by showing them what’s at stake.”

A recent survey by Sonoma County’s Farm Bureau indicates that 49 percent of Sonoma County’s wine grape acreage is frost protected. The study assumes that all vineyards in Mendocino County are frost protected; indicating 15,581 acres in Sonoma County and 17,194 acres in Mendocino County would need to be converted to non-water frost protection if the new regulations are adopted.

Sonoma and Mendocino counties represent 17 percent of bearing and non-bearing acreage and 26.5 percent of the current vineyard land values in California.

The study concludes that approximately 900 jobs in industries unrelated to the wine industry in their everyday business would be lost because of the regulation and that more than 8,000 jobs would be lost in the two counties.

Estimated Installation Costs for Wine Machines
category Sonoma Mendocino
farms 271 170
cost per machine $32,000 $32,000
machines/acre 8.33% 8.33%
acres to be converted 13,858 17,194
wine machines needed 1,155 1432
direct cost $36,954,667 $45,850,667
debt service (7 percent rate on capital) $2,587,597 $3,210,502
Operational Cost Differential, Wind machines and Water-Based Protection
Sonoma Mendocino
farms 271 170
per acre cost of wind $170 $300
per acre cost of water-based 36 36
acres to be converted 13,858 17,194
annual op costs wind 2,355,860 5,158,200
annual op costs water 498,888 618,984
differential $1,856,972 $4,539,216


For more on frost protection, See "Product Review: Frost Protection--Managing the Air" in the January 2010 Wine Business Monthly 

Also, see "Saving Water, Don't just talk about it, do it! Best practices for vineyard water management during the growing season" in the June 2009 Wine Business Monthly


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