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Gauging the economic impact of California's drought

Following California Governor Jerry Brown's announcement earlier this week, to put the entire state under historic water usage restrictions, some analysts are wondering about the long- and short-term economic impacts of Brown's decision.

California has been in the grips of historic drought conditions for several years now -- and that dryness has threatened not only the famous California lifestyle but the state's economically essential agriculture sector and its related jobs.

Potential solutions to California's drought emergency

"This is the drought from hell," Michio Kaku, professor of theoretical physics at the City College of New York, told CBS This Morning last year. "We're witnessing a catastrophe in the making. The economy of the West could be a train wreck in slow motion."

The lack of water is forcing some California farmers to spend huge sums of money to keep their crops irrigated and growing. And the scarcity of water is also affecting the value of some farm land.

"You're already seeing banks wanting to know where the water comes from before they make loans," Modesto-area walnut and almond grower Paul Wenger, president of the California Farm Bureau Federation, told the Modesto Bee last month.

Some observers, meanwhile, are wondering why Governor Brown waited to impose water conservation restrictions until now.

California governor orders historic water use restrictions due to drought

"I'm surprised it hasn't come a little earlier, given the extent of the drought," J.R. DeShazo, Director of UCLA's Luskin Center for Innovation, tells CBS MoneyWatch. "Many urban water consumers have not yet really felt the pinch of the drought, and I think that they will soon."

DeShazo points out that California's dryness has had a national impact on food prices, as the cost of some U.S. produce grown exclusively in the Golden State, such as almonds, artichokes, olives, persimmons, pistachios and raisins, marches upward.

And while he expects water prices to rise for California agriculture, its households and commercial consumers, DeShazo sees the drought as an opportunity to force the state to seriously focus on its water supplies and overall consumption.

"Even if the drought continues another couple of years, I think through prudent conservation measures we will adapt," he noted. "We may have to give us our lawns along the way, but here in Southern California many of us already see that as part of our future...and the responsible thing to do."

And it has already brought about changes that other drought-prone parts of the nation may learn from and eventually adapt. DeShazo says that, despite the state's growing population, California's per capita water consumption has been going down for several decades.

"We're becoming more efficient and less wasteful per person," he added, "and that means that our limited water supplies are enabling us to support more people."