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california Water Today 95 <br />Figure 2.11 <br />Costs escalate quickly with higher agricultural water cutbacks <br />sOURcE: statewide Agricultural Production model. <br />NOTEs: The maps show the loss of farm revenue incurred by the last acre-foot of water lost when supplies are reduced by 5 and <br />25 percent. This is the value that farmers would be willing to pay to purchase an additional acre-foot of water to apply to their fields. <br />as those in the west side of the San Joaquin Valley, have more productive farms <br />but less secure water supply contracts. Water transfers are particularly valuable <br />when farmers with less secure rights grow tree crops, which will die without water. <br />Water subsidies are not necessarily a hindrance to water marketing, because <br />farmers still have incentives to sell water as long as they can earn more by <br />selling water than by producing crops. In contrast, crop subsidies can create a <br />disincentive if the subsidy payment is tied to the volume of production. Crop <br />subsidies are now less closely tied to crop acreage and production than in the <br />past, with payments based on past volumes and acreage. However, it is likely <br />that farmers still consider the potential for the loss of subsidies with program <br />adjustments when they make their planting decisions (Bhaskar and Beghin <br />0 50 100 150mi <br />km0 80 160 240 <br />Marginal cost with <br />5% water cut <br />(2008 $/af) <br />$60–$74 <br />$75–$99 <br />$100–$149 <br />$150–$300 <br />Marginal cost with <br />25% water cut <br />(2008 $/af) <br />$115–$249 <br />$250–$499 <br />$500–$699 <br />$1,800+