In California, water scarcity and water quality issues are ever-growing challenges. Periods of epic drought punctuated by intense precipitation events are becoming more common, making it harder to manage water supplies and protect the state’s ecosystems, communities, farms, businesses, and infrastructure. With the vast majority of California’s 9 million acres of cropland being irrigated, water quality and scarcity risks loom large for the agricultural industry. Additionally, an estimated 1 million Californians lack reliable access to safe drinking water, mostly in impoverished rural communities of the San Joaquin Valley.

The regularity of prolonged drought in California has led some, including leading scientists, to categorize the state’s situation as aridification or a megadrought rather than just a temporary condition. California is currently in a record drought, with a drought emergency declared in 50 of its 58 counties as of July 2021 (in Northern California, the past two years have been the second driest on record.) The state’s last severe drought, which lasted from 2012 to 2016, cost the agriculture industry $3.8 billion from 2014 to 2016 and took more than 500,000 acres of farmland out of production. In response to its ongoing water crisis, California in 2014 passed the Sustainable Groundwater Management Act (SGMA), requiring local agencies to form Groundwater Sustainability Agencies (GSAs) in medium priority, high priority, and critically overused basins, and to submit plans by 2020 or 2022 to bring their  overdrawn groundwater basins into balance by 2040 or 2042. 

Wildfires that are increasing in intensity and duration are also a major threat to the state and to water resources. The extreme weather patterns in California showcase the connection between forests, drought, fires, floods, and water quality. Extended periods of drought dry up vegetation, creating fuel for wildfires. Burned areas are more prone to erosion, increasing runoff and floods during storms. This leads to increased sediment accumulation, higher nutrient content, more dissolved organic carbon, major ions, and metal, and increased turbidity downstream. These changes in water quality can in turn lead to increased treatment costs for drinking water and a need to secure alternative water sources where water quality is degraded. 

Companies and investors have a critical need to respond to water risks in their California operations and supply chains, advocate for sustainable and resilient water policies, engage with SGMA implementation efforts, and ensure sustainable management of the state’s stressed and unpredictable water supplies.

Water Risks and Opportunities in California

By the Numbers

commodities grown in the state
of nation’s fruits and nuts produced

of nation’s vegetable’s produced

of state’s water use is
linked to agriculture


Key Commodities











Key Risks

Water Scarcity

Water Scarcity

21 of the state’s 515 basins are considered critically overdrawn, and the two largest reservoirs are at less than half capacity

Surface Pollution

Surface Water Pollution

Over 50% of bodies of water in California are impaired by nutrients, sediment, pathogens, and metals. Wildfires exacerbate this issue as burned areas are increasingly vulnerable to flooding and erosion, which increases downstream sedimentation and nutrient loading. 

Groundwater Pollution

Groundwater Pollution

Groundwater contamination is a growing water quality problem, as nitrate pollutes local drinking water supplies and treatment to remove contaminants is costly. This contributes to 1 million residents lacking reliable access to clean drinking water.

Climate Change

Climate Change

Climate change exacerbates extreme weather patterns such as severe droughts, unpredictable precipitation, and wildfires. Rising temperatures also amplify water scarcity by depleting snowpacks in the mountains. Instead of melting gradually to provide a steady source of water throughout the spring and dry summers, this snowpack now melts quickly, providing inadequate flow downstream.



Companies with Operations and Suppliers in California
Companies in Action



In 2020, Coca-Cola’s Simply Almond brand partnered with an almond supplier in California to implement a water replenishment plan in a high risk watershed in one of the company’s primary almond sourcing regions. When up and running, Coca-Cola aims to replenish 20% of the water used to grow and process Simply Almond. 


Campbell’s works with tomato suppliers to improve their water use per pound of product. As of 2020, 75% of Campbell’s tomatoes were grown using drip agriculture. Additionally, farmers reduced nitrogen fertilizer by 6% between 2012 and 2020.



Danone recently expanded their use of the Water Resources Institute Aqueduct Tool to identify priority watersheds in its supply chain. Through the Ceres AgWater Challenge, the company has committed to supporting the adoption of sustainable agricultural principles that focus on soil health and nutrient management on 5,000 acres of almond farms in California. 


Olam works with farmers in the water-challenged Firebaugh watershed to optimize irrigation and selective breeding for onions that require less water. This has saved 9.7 billion liters of water, 284 tons of nitrogen, 20,138 metric tons of GHG emissions, and 4.6 million kwh of power. 

Olam’s Edible Nuts Team collaborates with the Water Board and the California Almond Board on groundwater recharge programs. When there is excess water, Olam agreed to flood orchards during the winter to recharge groundwater basins. In 2019, Olam recharged 316 million gallons of groundwater (CDP Water Security 2020).


General Mills

General Mills helped fund the Groundwater Exchange, an online hub of science-based information to help support Groundwater Sustainability Agencies with Sustainable Groundwater Management Act (SGMA) compliance. 

General Mills, Coca-Cola, Keurig Dr Pepper, Nestle, PepsiCo, Olam

Companies and NGOs have joined hands to establish the California Water Action Collaborative to build social capital for improved local water management, return surface and groundwater, and drive corporate water stewardship.