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Help your business weather the California drought

Help your business weather the California drought

As California – and especially the arid south – heads into its third straight year of drought, water-dependent businesses throughout the state are scrambling to cope.

From tourism to manufacturing and agriculture to professional services, nearly every business is affected – hardest hit is California’s $45 billion agricultural sector, which supplies nearly half of all U.S.-grown fruits, nuts and vegetables. As California farmers leave fallow hundreds of thousands of acres due to the water shortage, the state’s agricultural industry will suffer $1.7 billion in lost production, resulting in a hit of $5 billion to the state’s $2 trillion economy, according to the California Farm Water Coalition. Ag-related businesses, like trucking companies, implement dealers and fertilizer suppliers, will directly feel the impact.

Besides higher food prices, the drought may hit businesses, homeowners and renters in other ways. For instance, without relatively inexpensive hydroelectric power, state electric rates may rise; the 2007-2009 California drought cost consumers around $1.7 billion more in energy bills. And due to the potential for drought-related fires, property insurance may soar in cost or be unavailable, according to industry experts.

Proactive ACTIONS:

Conserve energy by…

  • Getting an energy audit. An on-site consultation can help reveal energy waste and generate a list of suggestions for saving money.
  • Making small changes such as improving insulation and installing fluorescent lighting and timers for automatic shutoff.
  • Buying office equipment with the Energy Star label. Energy Star-qualified computers, copiers, fax machines, printers and scanners use 40% to 70% less energy than standard models.
  • Dialing back the thermostat during non-business hours and turning off computers and lights not in use.
  • Getting smarter bulbs: Compact fluorescent lights use 75% less energy than regular bulbs and last10 times longer.

In addition, consider conducting a cost/benefit analysis of alternative forms of energy, such as solar. How much would it cost to install solar panels? How much energy could you create? In California’s sunny climate, the benefits might make solar energy worth the investment as it reduces future energy expenses for years to come. Additional benefits include tax rebates, credits and incentives, and the possibility of selling excess energy back to the grid.

Little Water on the Horizon

Unfortunately, there is little water relief in sight: California’s mountain snowpack is at just 12 percent of the average for this time of year – the lowest since record-keeping began in 1960. For early 2014, the National Weather Service predicts “drought persistence or intensification across California due to the extremely dry initial conditions.”

In an unprecedented move, in late January, the California Department of Water Resources (DWR) announced a halt of state water supplies – barring additional precipitation – to 25 million California urban customers and nearly a million users of agricultural land. "The harsh weather leaves us little choice," DWR Director Mark Cowin said. "If we are to have any hope of coping with continued dry weather and balancing multiple needs, we must act now to preserve what water remains in our reservoirs."

Proactive ACTIONS:

Conserve water by…

  • Rethinking your upkeep of a grass lawn
  • Watching for leaks. Appliance and toilet leaks can be the largest hidden water-users 
  • Installing more water-efficient appliances, such as faucets that turn off automatically
  • Showing your company’s dedication to water conservation and publish your organization’s monthly water use to show progress

What You Can Do

Federal lawmakers are wrangling over the scope and scale of assistance to farmers and communities in particularly drought-stricken areas of the state. The U.S. House and Senate have significantly different drought relief packages and must reconcile their legislation.

Yet as a saying goes, you can only control what’s within your control. We hope these tips help. Making energy- and water-conservative choices isn't just good for the environment, it's good for business. It can help you build a reputation for being environmentally responsible while enjoying the satisfaction of doing your part. Even sharing your conservation efforts via your social channels could help enhance your brand’s perception and customer loyalty. 

And if that's not enough, there's plenty of money to be saved!   

For more information about ways to finance energy-efficient upgrades, visit our Business Loans and Leases page or contact a CB&T Business Banker.1

1. Loans subject to credit approval. Terms and conditions apply.
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The information contained herein may not represent the views and opinions of California Bank & Trust or its affiliates. It is presented for general informational purposes only and does not constitute tax, legal or business advice.
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