Residents of California know that water has been a growing concern in the state for many years now, but the problem has gotten so bad that California has declared a state of emergency -- the first time in 54 years. Up to 160,000 rural Californians live in communities that are having difficulty providing safe drinking water, according to the Public Policy Institute of California (PPIC), and things are only getting worse.

Governor Jerry Brown has urged state residents to reduce their water consumption by 20 percent, but some local municipalities are going further than that by requiring citizens to cut consumption by as much as 25 percent. As bad as this sounds, these same cities may increase this requirement to 50 percent during the summer. As 2013 temperatures were higher than normal, 2014 isn't expected to be a reprieve.

A big concern for state and local officials are the 17 cities in the state that may run out of drinking water altogether if conditions get worse. A recent report from the PPIC says that many rural communities heavily rely on ground water, but this source is often contaminated. Anywhere between $30 million to $160 million in additional state funds would be needed to "adequately address this problem."

It is not the only budgetary gap the state faces, however, to deal with growing problems created by lingering drought. PPIC also identified flood protection as an area of the budget that needs to be fixed, along with management of stormwater and other polluted runoff, aquatic ecosystem management, and integrated water management.

What the 4 key areas of water management look like:

• Safe drinking water for small, disadvantaged communities. Overall, 80,000 to 160,000 Californians live in rural communities that have difficulty providing safe drinking water. Ratepayers have low incomes and the cost of supplying drinking water to households is high. These communities generally rely on groundwater, which is often highly contaminated. For example, many Tulare Lake and Salinas Valley wells are contaminated by nitrate, primarily from fertilizer and animal manure. An additional $30 million to $160 million per year is needed to adequately address this problem.
• Flood protection. Roughly 25 percent of the population lives in a floodplain in a state where climate change may bring warmer winters and more severe inland flooding, along with rising sea levels and storm surges on the coast. Much of the state's flood-control infrastructure is aging, and rebuilding typically requires costly upgrades to meet higher safety standards. New capital investments of $800 million to $1 billion annually are needed to shore up the system. Statewide, this means doubling the amount of money currently spent by local residents on flood management.
• Management of stormwater and other polluted runoff. Regulations to limit polluted runoff have become more stringent. As a result, costs have risen for capturing and treating stormwater before it is discharged into rivers, bays, and the ocean. Stormwater agencies need an additional $500 million to $800 million per year to meet urban permit requirements.Aquatic ecosystem management. Recovery plans for endangered species, habitat conservation, and other restoration projects need $400 million to $700 million more each year to mitigate the damage of past actions and promote the health of native species. About half of the cost is for work in the Delta and greater Sacramento-San Joaquin watershed, and about half is for coastal and estuarine ecosystems.
• Integrated water management. Better integration will improve the cost-effectiveness of California's large and decentralized water management system. One example: members of the Santa Ana Watershed Project Authority jointly manage a range of activities in the Santa Ana River watershed, from groundwater recharge to the protection of water supplies in the upper watershed. An additional $200 million to $300 million annually would jump-start more collaborations across agency boundaries and provide the scientific support to effectively manage these systems.

In total, the analysis estimates that the total amount of increased spending needed is somewhere between $2 billion to $3 billion. To fill this gap the state would have to approve new state fees and taxes, something that would not go over well with many California taxpayers. However, increased taxes are not the only financial concern for state residents.

The drought is expected to cause thousands of acres of agricultural land to go unplanted, which will inevitably lead to an increase in food prices. Such an increase will be felt most in California, but people across the country will likely see prices rise as well as California produces approximately 50 percent of the nation's produce and is the world's leading supplier of almonds.

Help doesn't just have to come from the state though, as Britt Hysen of Millennial Magazine reports (see above video). Businesses in the private sector are committing hundreds of thousands of dollars to help local communities build extra wells for their residents, as well as other projects to increase the availability of water.

Photo Credit: David McNew/Getty