Drought's wide economic impact likely to last for years

Kansas City StarJuly 24, 2012 

Of all natural disasters, drought is the most common and the least understood.

It doesn’t hit like a hurricane, earthquake or twister. You can’t see it coming on satellite radar, experts note, which may be why many people disregard the effects.

Around Kansas City, drought creeps — first claiming the Missouri crop grower, then the Kansas cattleman who can’t afford grain to feed livestock. In time, grocery shoppers around the nation will wonder what’s with the higher prices for produce and hamburger.

The ground, meantime, shifts in silence. Water mains burst. Homeowners agonize over fractured foundations.

Thousands of trees around the metro likely will die. If not this year, then next.

Physically, economically and sociologically, droughts do their damage the way a python squeezes the life out of its prey, in super-slow motion.

“Much like a python, drought comes up slowly and can essentially suffocate a region,” said Alex Prud’homme, who wrote The Ripple Effect, a book about the creeping distress that follows a dearth of rainfall.

“It can set off a series of consequences, many of which we’re not aware of being associated with drought,” Prud’homme said in an interview.

In Kansas City, the months of April through June marked the driest three-month period endured since 1911. The area received about six inches of rain in those months — we’d normally get a foot more.

Forecasts suggest little change in the coming week.

As of Friday, July had delivered just a tenth of an inch of moisture at Kansas City International Airport (where, incidentally, the scorched conditions require pilots to use more runway before taking off).

The region’s dryness, in fact, began a year ago. And local economist Chris Kuehl foresees the effects mounting as 2012 drags into 2013.

It’s not just our area. Forest fires burned in Colorado, alien sandbars emerged in the Ohio and Mississippi rivers, nurseries declared bankruptcy around Atlanta, Ga.

This searing summer “is not coming at an opportune moment,” Kuehl wrote in a report issued last week by the Greater Kansas City Chamber of Commerce:

“In some ways it is reminding analysts of the drought and heat wave that affected the nation in the mid-1930s, as that was a drought and heat wave that significantly worsened the impact of the Great Depression.”

Many experts monitoring the dry conditions and their potential effects on the larger economy, including Kuehl, resist easy comparisons to the Dust Bowl years. Across the United States, triple-digit temperatures back then were more frequent, the drought was wider, the rural topsoil was grossly eroded and the national economy was in worse shape than now.

But with more than half of the country this summer suffering varying degrees of drought, some economic ripples are anticipated for seasons to come.

A drought’s direct impact on the agricultural sector is well known: Lower crop yields and higher feed costs mean less money for farmers to spend in the winter. But less understood is how that stress finds its way to urban areas such as Kansas City.

Here, residents might regard drought as a mere headache that requires rolling out the garden hoses. Here, the overall water supply, mostly fed by the Missouri River, remains healthy, officials say.

But local businesses may feel the pinch when visitors from drought-plagued small towns cut back on travel and spending.

Of the 21.6 million visitors to Kansas City in 2010, the Convention and Visitors Association estimates 70 percent came from, in descending order, Missouri, Kansas, Oklahoma, Nebraska, Iowa and Texas. All six states have since recorded some of their worst stretches of drought in decades.

But if dry conditions persist, damages felt by city-dwellers could extend far beyond higher food prices or fewer tourism dollars said Kuehl, an economist with Armada Executive Intelligence.

Retailers such as Home Depot and Lowe’s — which for the past several months have reported climbing sales and posted tens of thousands of new hires — could see a reversal of fortunes, as people give up on caring for lawns and gardens.

“They say ‘we can’t sell lawn mowers; we can’t sell lawn chairs’,” Kuehl said. “It’s the weird stuff like that.”

Consumers might even take a summertime nap from spending on entertainment.

“It’s all psychological,” Kuehl said. “Very, very hot days (and) very, very cold days keep people at home.”

His projection: “By the end of the year, probably, we’ll be hearing the U.S. economy lost .5 percent GDP from this drought.”

Drought degrees

What constitutes “drought” depends on whom you ask and where you’re standing.

At any one time, roughly 15 percent of the country experiences severe or extreme drought. This summer, such conditions are gripping 55 percent of the country.

The drought that Kansas Citians are enduring, however, appears to be different from the chronic aridity that has parched parts of western Kansas, Texas and much of the Southwest the last few years.

Mark Svoboda, of the University of Nebraska’s National Drought Mitigation Center, calls the pattern here and throughout Missouri a “flash drought,” in which unusually dry spells lead to a temporary “moisture-starved environment” that stalls cloud development.

As recently as April, no area of Missouri qualified under the Drought Mitigation Center’s definition of severe drought, whereas 83 percent qualifies today.

With little moisture to evaporate out of the soil or from plants, the atmosphere stays dry.

“It’s a drought feeding on itself,” Svoboda said.

A high-pressure dome has locked itself over the nation’s midsection, he added, and until a stronger system comes along to knock it away, meteorologists offer little hope for relief.

(Some optimistically note that the Pacific sea temperature phenomenon known as La Nina, which was credited for our warmer and dryer winter, may be shifting to its counterpart pattern, El Nino, which can trigger cooler, wetter weather in parts of the United States. But that shift may not be confirmed for several months.)

“Unfortunately, there’s no relief in sight for the next couple of weeks,” Svoboda said Thursday. “I see this whole region deteriorating drastically between now and August.”

Whether any of this is further evidence of global climate change is open to charged debate.

As the summer dries out our part of the world, places such as London, which is hosting the 2012 Summer Olympic Games, complain of too much rain.

Try picturing a big blob of weather moving south from the North Pole. If the rainy stuff can’t break through one part of the world, it will find another route.

“If you have a high-pressure barge of ridging east of the Rockies, which we’ve been dealing with for months now, there seems to be troughing in other parts of the globe,” said Chris Bowman of the National Weather Service station in Pleasant Hill, Mo.

Even in a single county, this drought is delivering different blows to different people.

Monty and Mary Wheeler raise Black Angus cattle near Bolivar, Mo., in Polk County. In early July, they shipped 117 head to a feedlot in Kansas, weeks ahead of schedule. All the good grass in their pasture had been eaten and low grain yields elsewhere were driving up the cost of feed.

“Our pasture? It’s all burnt brown,” said Monty Wheeler, 63, with an uneasy laugh. “This is as bad as I can remember…

“Even if we still had some grass, there’s no nutrition there. It’s dried up to straw.”

The Wheelers’ nine-month-old calves should be weighing about 600 pounds each. They’re at 450.

A few miles away, Trent Drake raises corn and soybeans on 600 acres. Some of his neighbors already have chosen not to harvest their crops, opting for the less-expensive process of bailing the fodder as silage for cud-chewing livestock.

Luckily, Drake has an irrigation system that’s keeping most of his field looking OK.

If his corn hangs in, Drake could benefit from the high market prices.

“The corn is pollinating now, so it’s critical they get that water,” he said.

That water doesn’t come cheap. Pumping it from his well at 1,500 gallons a minute, Drake is spending about $700 a day just on the diesel that fuels the pumps.

And he’s been doing it 24/7 for a month. Three summers ago, his fields needed irrigation for only six days.

Crop insurance mitigates the costs for many farmers who will suffer losses this year.

The U.S. Department of Agriculture earlier this month unveiled rules that officials said would speed up low-interest emergency loans to farm operations in more than 1,000 U.S. counties designated as disaster areas, including nearly all counties in Missouri and Kansas.

Yet that won’t come close to covering the creeping expenses of drought.

For consumers, the short-term price of beef just might dip a few months from now, with the market glutted by so many stressed cattle nationwide being shipped for fattening and slaughter at the same time.

But next year, gird for shocks at the checkout counter: Fewer calves will likely lead to higher prices not only for meat but also for other products gleaned from livestock, such as soaps, pet food and leather items, experts predict.

Products containing corn or soy could jump in price, too. That includes ethanol.

Deep costs

Calculating the costs of a prolonged drought is fraught with accounting challenges and potential oversights.

A 1991 research paper published by Colorado’s Westview Press estimated the total cost of the 1988 drought, which ravaged the Plains and mountain states, at $39.2 billion. But critics noted losses reportedly suffered by non-agricultural sectors — such as the public water supply, tourism, recreation or the $1,000 a homeowner might’ve spent to remove a dead tree — were left out.

The University of Missouri’s Food and Agricultural Policy Research Institute considered some of those “multiplier effects” when adding up the costs of the dry summer of 2002. Researchers arrived at a direct loss of $251 million in the agriculture sector and expenses almost as steep — $209 million — for the rest of the state’s economy.

A recently published study out of Texas suggests even broader consequences of drought, to the surprise of the finance professor who co-authored it.

Jorge Brusa of Texas A&M International University said he was dubious when a graduate student, Jun Huang, posed the hypothesis that U.S. droughts could cause global financial markets to crack.

Brusa was converted after the two of them compared stock market fluctuations with drought indexes going back 50 years. The Dow Jones Industrials and S&P 500 exchanges tended to lose steam or drop in value when much of the nation suffered drought, they found.

The link appeared strong no matter how much they teased the data by factoring in the effects of changing interest rates, consumer confidence and other variables that drive the Dow.

“It was significant,” Brusa said. “The losses from a drought only start with the agriculture industry. I suspect it spreads quickly to small towns, to service industries, and from there to large companies in Chicago and California, to Milwaukee, Kansas City” and on.

Extreme drought in Australia a decade ago led to depressed moods, as well as depressed spending, among the thousands of agriculture-sector workers polled in a government report:

“Respondents spoke of giving up their sport…, neglecting their hobbies and crafts, reducing their trips to town and not taking holidays. This is directly related to drought and has resulted in a higher degree of social isolation, particularly for farm family members.”

Cities too

Living in the city doesn’t immunize anyone from costs or despair.

Kansas City Master Companies, an engineering firm specializing in structural repairs, is taking 40 new calls daily from building owners with foundations broken or shifted out of place.

“I think there is going to be more,” said president and co-owner David Frey.

Drought conditions in the 1950s and the late 1980s caused widespread cracking to home foundations across Kansas City. The summer of ’88, in particular, opened engineers’ eyes to the destructive effects of the area’s soil when it cycles from moist to dry and back.

Prolonged dry spells change the chemistry of dirt beneath a house. Once clay soils have collapsed, they can dry permanently. Even heavy re-wetting won’t provide the force needed to lift up a foundation that has settled.

Thousands of local houses bear the scars of foundation problems that started in past droughts, and if those problems worsen, the typical homeowner’s repair would be $30,000 or more.

For Ryan Droege, of Harrisonville, repairs will run $45,000.

Earlier this summer, Droege noticed a growing gap in the front of his 40-year-old house, between a section of brick and the siding. His closet doors don’t want to shut, and cracks are forming around bedroom windows. The walls of his garage tilt to one side, and his back basement wall is pressing on the plumbing.

Droege and his family are planning to sell the house next year, but “we won’t be able to sell it in the condition it’s in now,” he said.

In Johnson County, residents this Fourth of July set a one-day record for water usage — just over 150 million gallons consumed in Water District 1, largely on brittle lawns and gardens.

With water rates recently hiked in Kansas City and the suburbs, Jan Jones frets over the vegetables, roses, melons, cone flowers and hostas on her five acres in Shawnee: “Can I afford to water all of them?

“You just have to pour water on it like crazy,” she said. “But it will cost a fortune to replace all of these plants.”

The Kansas City Parks and Recreation Department this summer has added 500 dead trees on public property to its removal list. Area fruit trees will continue to suffer until next year, because their ability to flower is being damaged now.

As for the grass?

“There’s a fine line between dormant and dead,” said Laura Dickinson of the Johnson County Extension Service. “All you can do is water it.”

(And if you choose to let your lawn go dormant for the summer, which is natural, don’t cut off watering all at once — reduce it gradually.)

Grass fires are spreading across Kansas and Missouri. Officials report some have been ignited by sources as slight as a spark from a lawnmower blade hitting stone.

A blaze in the Mark Twain National Forest in southeast Missouri this month sent flames climbing to the crowns of tall trees. Forest spokeswoman Becky Bryan said, “We’re looking at an ignition component up past 90 percent.” That is, if 10 lit cigarettes were tossed from a moving vehicle, nine of them would produce a fire.

In Lawrence, fire crews are dealing with two or three grass fires weekly. The largest, on July 5, spurred the evacuation of several homes in the southwest part of the city.

Lawrence Fire Chief Mark Bradford cited several accidental causes of the fires, including a man driving with a lit barbecue smoker on a trailer, with sparks flying, starting several fires.

It’s the drought, stupid.

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