WASHINGTON — The recent drought emergency declaration in Washington State is a short-term positive credit positive development for the agricultural communities in the central and eastern portions of the state, Moody's Investors Service said.
Gov. Jay Inslee declared a drought emergency earlier this month after the governor's Emergency Water Executive Committee found that 48 of 62 watersheds in the state have water supplies of 75% of normal or lower, Moody's noted. Very low snowpack levels are also expected to result in historically low runoff levels. Drought is negative for the state's credit, but the emergency declaration is a short-term boost for some of the state's issuers, Moody's analysts believe, notably Grant County, Yakima County and Benton County.
"Under the declaration, the three communities and others will be able to temporarily obtain water from alternate sources and take advantage of emergency withdrawals of groundwater and surface water, including dead storage in reservoirs in certain permitted conditions," Moody's said. "The state's Department of Ecology is expected to provide financial assistance to farmers, while paying them to leave fields fallow and forgo senior water diversions. A water exchange has also been established to help users buy or sell available water."
Unlike California, suffering its own brutal drought, Washington has imposed no water usage restrictions. The state's department of agriculture is expecting the drought to cost about $1.2 billion in crop losses this year, Moody's noted.
