Judging by the amount of coverage it received outside the US, the move in California to impose a statewide reduction of 25 percent in drinking water usage throughout urban areas must have been huge. Effective immediately and set to run until February 2016, the state is employing a mix of measures including restrictions on irrigating turf or outside newly built houses and buildings, ‘encouraging’ water suppliers to raise prices and investing in new technologies such as desalination and precision technology.

California is enduring the driest period in over a century. Converting the current level of snow in the Sierra mountain range into water produces a comparable water figure of only five percent of normal levels. Historically one-third of the state’s water was provided by snow across the mountain ranges, and with demand for water by households not peaking until the hotter summer months, it is not clear how the rest of the year will develop. Household rationing has not yet been imposed, but it may have to be.

What is happening in California, both the drought but also the response, is symptomatic of a global strategic problem. It is estimated that the planet will face a water deficit of 40 percent by 2030 as expanding populations call out for more food and energy.

Consider the following:

• Every American indirectly uses 1,981 gallons of water every day, mainly indirectly through food extraction
• To generate one calorie of food requires 0.2 gallons of water
• Producing a kilo of rice requires 925 gallons of water, a kilo of beef 3,963 gallons
• Its not just growing food that calls for more water. The UN believes that water demand for manufacturing will expand by 400 percent during the first half of this century, driven by growth across emerging markets

While encouraging or forcing consumers to be more thrifty in their approach to water usage, there is an elephant in the room – the demand and usage of shrinking water resources by the agricultural sector. By 2050, the earth’s agricultural resources will, somehow, need to provide 70 percent more food, while the figure in developing countries will be an additional 100 percent.

The Majority of California Now Suffers Exceptional Drought

In California, the amount of water utilized by agriculture depends on whether the state has had a wet or dry winter and the figure is currently a very high 80 percent. Pricing anomalies mean that farmers are often incentivized to focus on water heavy crops such as almonds, which requires 600 gallons of water for every pound of nuts produced. Higher margins on these nuts (not surprising if the water costs are artificially low) mean that farmers focus on crops irrespective of their drain on water resources and not on less water intensive ones such as asparagus or cantaloupes. Yet the protected status of farming in California is not an exception; it remains a sacred cow in many developed countries such as Japan and across Europe where it consumes one quarter of the European Union budget.

In spite of the high profile Californian agriculture enjoys (half of all fruits and vegetables consumed in the US are grown in the state), agriculture accounts for only 2 percent of the state’s GDP. Until there is the political will to deal with the broad range of pricing anomalies and historic quirks that allows the agricultural sector in particular to exploit water underpricing, one wonders how, if ever, this crisis will be resolved.

The severity of the water situation in California is mirrored in the southern hemisphere by a drought impacting Brazil, and in particular the population and industrial heartland of Sao Paulo. The drought here is the most severe experienced in eighty years. Sao Paulo generates one-third of the country’s GDP and with a 1:2 chance that hydro-electric sourced energy will have to be rationed. It is a stark reminder the economic consequences are set to rival the social and environmental ones and what happens in southern Brazil (home, we should be reminded, of more available fresh water than any other country on earth) will likely spread. Over 90 percent of urbanization is occurring in developing countries with China, India and Nigeria the three largest centers. Fixing leaking pipes and water rationing in developing countries most needy for water are short-term fixes to a wider strategic problem.

Charging higher prices by themselves will not work – all of us, rich or poor need the same amount of water to live and pricing those at the bottom out of the market would inevitably lead to social unrest and emigration. If one of the richest states in the richest country on earth can’t get it right, what hope remains for the rest of the planet?