Very interesting chart. It shows where the larger percentage of water storages exist across the U.S. Amazing how it is split right down through plains states. Or maybe not so amazing, since those states are like deserts–hot and dry–and make for great growing conditions if that is all you do. But with the drought in those plains states, farmers will have a hard time. Crops will obviously be more expensive. And how will they compete if the American consumer along the border states and the west coast are getting cheaper food from places like Mexico, Canada, or the San Joaquin Valley?
If they are to remain in the farming business, some of these families may have to move to other regions to farm.
Gary North says don’t move to where the natural resources exist, for they can always be imported. Always for a price, of course.
On the Ogallala Aquifer, Gary North has some interesting comments:
The dry states from the northern part of Texas to the Canadian border are going to get hammered by the drought. The Ogallala Aquifer is falling, and it is not going to come back. They know that now. They have drained it almost dry in some counties, and it isn’t going to change.
Farming is no longer a major source of income for the nation. In any case, there is nothing they can do about the lack of water. The farmers want a gigantic federal subsidy in the form of an aqueduct, but Congress is not going to give it to them. These people are finished. They’re going to have to leave the land in the next generation. A declining number of farmers are hanging on to a declining amount of water. Their land will no longer sustain agricultural output, because there is not enough water.
These people plant corn, and corn production uses a lot of water. They’re going to have to change, but, as in Mississippi, Alabama, and Louisiana, people don’t like to change. Farmers in the Midwest have been using pumps to sustain their livelihood since the end of World War II, but they have used what they thought was a free resource in a wasteful way. This is what always happens. When you have a common resource that nobody owns, the tragedy of the commons begins. They have drained the aquifer, and it is gone essentially forever.
We are told that there is going to be an international water shortage over the next century, and if there is, technology will come to save the day for the highest-output farms. Eventually, they’ll get desalination projects that will bring water into cities, and if there is any left over, farmers can buy it. But it is no longer going to be a free resource in the United States.
This is more evidence that the process which we have seen for 250 years is not going to change: urbanization. People are going to leave rural areas. Their children are not going to move back to the farms. We will grow our food with new technologies, because we are going to have to save on water.
Only about 2% of the nation’s population lives on a farm. Of these farms, most are marginal. Far less than 1% of the population produces over half of the agricultural output. A way of life has basically ended, and it is not going to hang on much longer in those areas that depend on the Ogallala aquifer. Things change. We can’t change the fact that things change.
On brains, Dr. North says
If you want to make money in real estate, go where the brains are. That’s the basic rule. Go where there is a good university locally. Go near a university that specializes in engineering and computers. Go where young adults enjoy the lifestyle, and then want to stay in the region if they can get employment. Put your business there.
In California over the last 40 years, the big real estate money has been made in the area where I grew up: the South Bay area. That was because of water. People want to live at the beach. I didn’t perceive it when I was 18, but now I do. Look at the other areas where there has been tremendous increase of the value of real estate. Look at the major universities. Where the universities are, property values have skyrocketed. The main universities are these: Berkeley, UCLA, and Stanford. Real estate values in the areas immediately surrounding these three universities have skyrocketed. This is not true of the University of Southern California, because it is located in the middle of the ghetto.
Because of the oil bust in the early 1980’s, real estate got really cheap in Austin, Texas. That was the best place to buy real estate in Texas in 1984.
Houston has now become a place where real estate is climbing in value. The University of Houston is there. So is Rice. I think the area around Texas A&M is going to do the same thing.
Go where the brains are. Don’t worry too much about the natural resources. You can import natural resources from just about anywhere. It is not easy to import brains. They are expensive. They are in demand.