As an effect of this bill alone, the California Energy Commission estimates that the state will need to triple its electricity power capacity in the renewable sector to achieve this goal. In 2022, the California Air Resources Board passed a plan mandating that all new cars sold in California be electric starting in 2035. The combination of these two laws creates a desperate need for increased electricity production capacity fueled by renewable energy. As more of the California economy ’electrifies’, the need for clean energy sources will only increase. The timelines of SGMA, SB 100 and the CARB mandate align well with one another to form an ideal environment for farmers to transition from traditional crop production to energy production. Policymakers could leverage these alignments to incentivize solar energy infrastructure investment and lessen farmer losses from water scarcity. The aim of this paper is to identify agricultural land parcels in the San Joaquin Valley that would provide both private and social benefit from switching to solar energy generation. This paper analyzes crop choice from both a private farmer’s and a social planner’s perspective and will rank land parcels based on the estimated total benefits generated by permanently transitioning agricultural land to energy production. I will analyze usable farmland in the San Joaquin Valley that has been fallow for at least one recent growing season and use computed water application and revenues per acre for different crops to find relative sensitivities to water price shocks induced by continued water scarcity and regulation. A wide range of crops are grown in the region, nft growing system and crop choice drives most of the variation in revenue and water cost per acre. I will compare traditional crop revenues with projected solar energy revenues to determine if a land use transition would be privately profitable. Current water application to the land parcel and total acreage will determine the water savings and added solar generation capacity .

Growers in California have experienced increasingly varied precipitation and, consequently, surface water availability since the 1980s . 75% of California’s rain and snow occurs in the top third of the state, far from where the bulk of the agricultural activity occurs . In response to this reality, multiple water projects were created by the state to move water from where water is relatively plentiful in the north to the parched southern population hubs and central agricultural regions. Moving this water expends energy, and those requesting water delivery bear the cost. The price of water varies heavily by region due to variation of relative water availability, and is a large part of farmers’ variable costs of producing an acre of crop. The amount of precipitation is hugely important in farmer cropping decisions, and land allocation choices vary based on the relative wetness or dryness of the growing year. In figures 2 and 3, crop cover and fallow land in the SJV for growing years 2010 & 2014 are shown by hydrologic region. 2010 represents a year with relatively typical precipitation, and 2014 was a drought year in the midst of historic drought conditions lasting from 2012- 2016 . In each figure, I display the crop cover choices and fallow land from two years relatively close to one another, but with very different surface water availability. Panels and show fallow land in each of the hydrologic regions that make up the San Joaquin Valley. Comparing these figures, there is a pronounced increase in fallow land from the ’wet’ year to the ’dry’ year . Differences in crop mix for farmers are to be tied to the precipitation conditions they grew under. Comparing panels and of figure 2, the marked decrease in double cropping activity in the central portion of the San Joaquin River in 2014 is apparent. In the same panels in figure 3, deciduous tree fruits and nuts are nearly wiped out by the dry conditions, and the acreage of cotton planted decreases as well. Surface water availability plays a massive role in farmers’ land use and crop mix decisions. Relevant literature in the agricultural economics field study farmers’ adaptation decisions when facing water scarcity. Hagerty finds that in the short-term, California farmers operating irrigated land choose to fallow some or all of their usable land when confronted with water scarcity.

This finding is supported visually by the increase in the fallow land acreage from 2010 to 2014, as shown in figures 2 and 3. Water is more costly in years with decreased precipitation for two reasons: less surface water is available and groundwater levels are lower, which means that water is more expensive to pump. Hagerty estimates that a 10% decrease in annual surface water level predicts a 3.6% decrease in farm revenues for the growing season due to inability to grow high-value annual crops that are generally more water intensive than the more stable perennial crops. Further, when facing long-term water scarcity, Hagerty finds that California-based farmers adapt by permanently removing fallow land from cultivation. This retired agricultural land becomes grassland, which can be used to graze cattle, or is left untouched. This kind of unirrigated rangeland has a mean revenue of $11, where the mean revenue of the least water intensive crop category is $622 with mean water needs of 1.31 acre-feet per acre . Although grain has the smallest mean water needs per acre, the volume of water needed to cultivate any crops successfully is a massive cost to farmers. Delivery of water alone averages around $250 per acre-foot in the San Joaquin Valley, and water right permits can cost over $30,000 to obtain . Farmers who have no choice but to stop irrigating some or all of their land are suffering huge losses as compared to those that are able to shift land toward less water intensive crops. These losses are even greater when compared to the average revenue per acre of utility-scale solar production. Annually, renting land to solar energy generators could earn between $1,000 – $1,500 per acre of farmland . This value is larger than returns from cultivating most annual crops , and some perennial orchard crops . In addition to crop choice, political factors like access to water rights impact a farmer’s decision to fallow a piece of land. Smith finds that growers with lower priority water access are more likely to fallow their land, whereas farmers with better access tend to make water conservation choices that are less costly. Growers who have higher priority water rights are more likely to make smaller adjustments to planting decisions when water supply is constrained, like planting earlier or planting varietals that develop quickly.

This means there are also distributional impacts of water scarcity, and farmers who may be historically excluded or limited in their water access will be hurt more by the continued scarcity in the coming decades. Taken together, the agricultural water scarcity literature suggests that agricultural land in the San Joaquin Valley that is currently oscillating between active and fallow will be taken offline in years to come, with potentially devastating consequences for farmers’ economic well-being. If farmers were able to shield themselves from climate-related income risk with solar energy generation, they may be more able to tolerate increasing water costs caused by SGMA-induced scarcity and increased drought frequency.Although rooftop solar PV panels are easily installable in neighborhoods across California and the American Southwest, there are unique challenges and benefits associated with scaling up solar energy generation to the farm level. Electricity transmission lines are a major limiting factor in building out utility-scale solar energy, vertical hydroponic nft system and current infrastructure is concentrated in residential distributed generation areas and areas with existing large-scale solar generation . However, to its benefit, utility-scale farming may not be plagued by the solar rebound effect that is present for residential solar generation. The household solar rebound effect is the ratio of the increase in total electricity consumption to the amount of energy generated from a household’s solar panel system . Various studies investigate the percent solar rebound effect in the US and abroad, with estimates ranging from 12% to as much as 50% for an individual household’s rebound effect . The increase in electricity usage driven by adoption of residential solar PV diminishes the positive externalities that solar adoption provides. Oliver argues that SRE is avoided when bringing utility-scale solar generating sites because the very drivers that cause the phenomenon on an individual household level do not exist. Utility-scale solar decouples households’ electricity consumption decisions from the generation itself, which avoids the need for additional policies to induce adoption. This makes utility-scale solar relatively more energy efficient than distributed generation or rooftop solar tends to be due to the solar rebound effect. Utility-scale solar generation is commonly defined as solar projects with more than 5MW of generation capacity . For utility-scale solar energy generation, there are two dominant technologies farmers could choose to use on their farms: primary photovoltaic or concentrated solar power . CSP uses mirrors to amplify solar radiation, making it a more efficient, but more expensive, system. Typical fixed solar PV panels are less energy efficient, but a much more accessible and widely adopted tech- nology. There is substantially more information on energy generation using fixed solar PV, both in economic literature and in practical experience from users of the technology. In this analysis, I will assume all farmers who switch to solar energy generation will use a fixed PV system, and all costs associated with installing the system are equal across farmers. I will assume additionally that all adopting farmers have the same electricity generating capacity per acre of land, and thus equal revenues from using an acre of land for solar. This requires that all PV systems installed by farmers have the same energy conversion efficiency. In reality, solar panel systems can have a variety of features that increase sunlight exposure, like rotating in accordance with the optimal sun angle . I will assume all farmers choosing to produce solar energy will use ground-mounted PV panels with equal energy conversion rates and equal installation costs. Equal electricity generating capacity across farmers also requires that all farm plots receive equal amounts of usable solar radiation per acre. Figure 5 shows statistics for two different measures of solar radiation: direct normal irradiance and global horizontal irradiance . Both are used in determining solar PV generating capacity, though GHI is most commonly used to calculate fixed solar panel generating potential . Average daily GHI in the U.S. is shown in the map in figure 4. Visually, it is clear that the majority of solar resources are concentrated in the Southwest. Analyzing average daily DNI and GHI values, I find that the SJV has substantially more energy-generating potential than the rest of the Americas and California, with less variation. What little variation there is has a relatively small impact on energy generating ability, and thus revenues per year. Using the resource ranking system from NREL , all land in the SJV falls into the top four of the ten categorizations of solar potential based on GHI values. Thus, the San Joaquin Valley has ample solar resources to support utility-level generation. Currently in the valley, some land is already used for utility-scale solar generation. The PPIC estimates that the existing 3GW of capacity in the SJV takes up 15,000 – 25,000 acres of land, with projects averaging a density between 5-8MW per acre . By comparison, there were over 170,000 fallow acres of land in the same area in 2023 alone . Because of the existence of these solar projects, there is already some infrastructure to support the distribution of the energy currently generated in SJV. In order to feed utility-scale amounts of electricity into the California energy system, solar farms must be connected to high-voltage transmission lines, which are defined as those able to handle 69 kV or more . Figure 6 shows the various existing transmission lines over the active agricultural land in the SJV. Although Ayres et al. estimate that more high-voltage transmission lines will need to be built to handle incoming solar projects, the existing infrastructure can be built upon, and is near much of the active agricultural land. As a result, some land is already being used for energy generation, and energy transmission lines have been installed across the valley to distribute the harvested solar. Above, figure 6 shows transmission lines that are able to carry utility-generated electricity.