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Ask Northern California sheep rancher Dan Macon what this drought is doing to his pocketbook and he'll break it down for you real quick.

"It's like if you woke up one morning and lost 40 percent of the equity in your house," he says. "Our primary investment in our ranch is in these sheep and we just sold 40 percent of our stock."

Macon had to sell off almost half his herd at an auction for cheap. There wasn't enough feed to go around. This has also forced him to take an off-farm job — a first since he started ranching in the Sierra Nevada foothills near Auburn, Calif., two decades ago.

"So in addition to taking care of the sheep, I [also] work 30 to 40 hours a week," Macon says.

Three years of severe drought in California is making a lot of farmers and ranchers like Macon make some tough choices, and in some cases rethink everything about their business. If the conditions persist – and many forecasters predict they will – this could have far-reaching impacts on our food system. By some estimates, California produces more than half of all the fresh food we eat in the U.S.

Yet producers in California are finding some opportunity in these tough times.

Rancher Dan Macon, for instance, says he has had little choice but to experiment and take a few chances. That "off-farm" job he took is with the local University of California, Davis extension office, where he learned about new varieties of experimental rye and wheat grasses that he's decided to try and seed his pastures with.

"This is part of our drought strategy to find some grass species that we can introduce that'll do better in drier conditions," Macon says.

Bleating sheep clamber around the pickup that is parked on a baked-brown pasture. The sheep don't know it, but they're also helping trample thousands of the experimental seeds into the soil. The hope is that if the big storms don't hit this region for a fourth straight winter, maybe these new grasses will help this pasture hold through another hot, dry summer.

Another strategy, says Macon, is to make better use of technology from right here at his pickup.

"I've got things on my cellphone that allow me to monitor our forage use and to map the areas that we're grazing that I didn't have five years ago," Macon says. "That all adds to our capability to manage through the dry period."

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California sheep rancher Dan Macon had to sell almost half of his herd because the drought left him without enough feed. Kirk Siegler/NPR hide caption

itoggle caption Kirk Siegler/NPR

California sheep rancher Dan Macon had to sell almost half of his herd because the drought left him without enough feed.

Kirk Siegler/NPR

How to manage in a future with less and less water is something you're starting to hear a lot from ranchers and farmers across California. This is an industry that has long been criticized for being reluctant to change. Agriculture still uses 80 percent of all the water in California.

But talk to long-time farmers like Kirk Schmidt, who's also an attorney and former Farm Bureau president in Santa Cruz County, and it's clear there's more to the story than that.

"Agriculture is an industry and industrial research is always led by the demand of the industry," he says. "There was no need for research in water conservation because there was no demand by the farmers."

But with droughts becoming the new normal, Schmidt says farmers have to change. Traditionally, research focused on maximizing yields and profits regardless of water. Now it's starting to move the other way: How do you squeeze more out of less water yet still turn a profit?

A good analogy may be to compare agriculture with the auto industry, which historically resisted tougher fuel efficiency standards. But today, new cars get better mileage than ever.

"Much like the auto industry, the problem is, it's one thing to know this and it's another thing to have the knowledge of how to do this," Schmidt says. "And that's where the delay is going to be."

Sometimes it takes a crisis to act. This is what happened recently in Schmidt's own backyard in the fertile Pajaro Valley along California's central coastline. Much of the nation's cut flowers and berries come from here – this is where fruit giant Driscoll is headquartered.

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Why California's Drought-Stressed Fruit May Be Better For You

The Salt

Fields And Farm Jobs Dry Up With California's Worsening Drought

Farmers long relied on pumping groundwater to irrigate their crops, until the day when those wells got so depleted that the only thing they could get out of them was contaminated sea water.

"That was a big eye opener for us that we could have something go bad that quickly," says Stuart Kitayama, whose family has farmed here since the 1970s.

After extensive negotiations, Kitayama and other farmers banded together with the local water agency to build a new state-of-the-art wastewater treatment plant. It used to be that all the wastewater from cities and towns here was treated and drained into the ocean. But at the plant it's now intercepted, treated, but pumped back to the local farm fields.

Kitayama says farmers were skeptical at first, but they came around. He says they had no other choice.

"Unless we solve this together with fairly expensive projects we're going to get left out on our own," he says.

This fall, with California in the grips of one of its worst droughts on record, the state finally took notice. The water agency and farmers here celebrated a sizable new grant coming from a state drought relief bill that will help expand the plant and ground water monitoring.

Local leaders gathered outside the plant, which sits just a couple miles from the coast, to celebrate. In a year where barely three inches of rain fell on Watsonville, they said a little creativity had brought some opportunity in these tough times.

California drought

farmers

agriculture

The mixed Arab and Kurdish city of Zumar in northern Iraq is a window into the fierce battles for territory between the Kurds and the Sunni extremist group known as the Islamic State, or ISIS.

The mountainous landscape is pockmarked with destruction. ISIS took control of the area in August and held it until late October. Then Kurdish forces, with the help of U.S.-led airstrikes, forced the militants back.

And while the so-called Islamic State is gone now, the dispute over this land, rich with oil, is far from over. Kurds and Arabs have claimed the same territory for decades. And now Kurds appear to be staking their claim to all of it.

It's a microcosm of a country fracturing along ethnic and sectarian lines while ISIS preys on historic enmities between tribes, ethnicities and sect to advance its own cause.

In some parts of Iraq, Arabs are forcibly displacing Kurds; in others, Shiite Muslims are displacing Sunni Muslims or vice versa.

On the road to Zumar that reality comes into sharp focus. For nearly a mile we drive by mounds of knee-high rubble. The Arab village of Barzan is gone; not a single house is standing.

Two young Kurdish soldiers, or peshmerga, riding with us claim that when ISIS invaded, the Arabs celebrated. The soldiers say the Arab villagers accused the Kurds of being occupiers and thanked the Sunni extremists for liberating them.

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Barzan, an Arab village outside Zumar, has been completely leveled by U.S.-led airstrikes and Kurdish soldiers. The Kurds say the whole village sided with the Islamic State, though no Arabs remain to tell their side of the story. Leila Fadel/NPR hide caption

itoggle caption Leila Fadel/NPR

Barzan, an Arab village outside Zumar, has been completely leveled by U.S.-led airstrikes and Kurdish soldiers. The Kurds say the whole village sided with the Islamic State, though no Arabs remain to tell their side of the story.

Leila Fadel/NPR

During the fight against ISIS here, U.S.-led airstrikes reduced some of the homes to rubble. The peshmerga blew up the ones left standing.

"The Arabs are not welcome here anymore," one of the young soldiers says. In his mind they are all ISIS sympathizers. "They killed our friends, our family and you think we will welcome them back? Impossible."

Among those killed was the young man's brother.

When we arrive in Zumar, the streets are all but empty. I try to get out of the car on a street of destroyed stores, but a truck of Kurdish soldiers stops us. They say they haven't completely cleared the area.

ISIS rigged the homes with explosives and left bombs hidden in pots and buried underground. They tagged buildings with the words "Property of the Islamic State." But those have hastily been crossed out with praise for the peshmerga now in control.

We drive on and find a family who returned home 10 days ago. Like that village on the road, their city looks like a war zone. Many homes are nothing but rubble, some destroyed by airstrikes, others by Islamic State bombings. Twisted pick-up trucks that once belonged to ISIS litter the streets.

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Mohamed Ali stands with his Kurdish family. They are one of the the few families that has returned to Zumar after being driven out by the Islamic State. They say their Arab neighbors should not return. Leila Fadel/NPR hide caption

itoggle caption Leila Fadel/NPR

Mohamed Ali stands with his Kurdish family. They are one of the the few families that has returned to Zumar after being driven out by the Islamic State. They say their Arab neighbors should not return.

Leila Fadel/NPR

Mohamed and Ahmed Ali are Kurdish brothers; they're among the few families who returned.

"When I came home and saw the walls standing, I kissed the dirt and the walls," Mohamed says. "I never thought I'd see this place again."

But he says, his neighbors, Arabs, have not and cannot come home.

"They are traitors," he says.

His brother Ahmed nods in agreement.

"My neighbor put a gun to my head," he says. The man was masked and he planned to kill Ahmed, because Ahmed is a policeman. But his children wept nearby, and Ahmed's son recognized the masked man's voice as the neighbor. Only then did the man let him go, but warned him to get out of town.

Throughout the city homes are spray-painted with the word "reserved." Others are tagged with the word "Kurdish," followed by a name.

Mohamed explains the graffiti. Kurds who came back and found their homes destroyed by the Islamic State are taking Arab homes to compensate themselves. When they pick a house they write the word reserved on it.

And Kurds who found their homes standing are writing "Kurdish" on the wall, to make sure no one mistakes it for an Arab home and takes it.

Kurdish residents say it's only fair, because they believe the Arabs sided with the Islamic State when the extremists invaded and Kurds had to flee.

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Mohamed points to the homes across the road.

"Those homes are Arab and all of the ones behind them," he says. "And they should not come back."

The Arabs of Zumar, who once made up about half the city, are not here to tell their side of the story. Most Sunni Arabs don't back the Islamic State, and many have died fighting the group, which isn't exclusively Sunni Arab.

But the ISIS does seize on historic grievances, like the tensions between Kurds and Arabs. The Kurds appear to be using this fight to seize land and oil that they believe should be part of a future Kurdistan.

Before leaving town, we meet a Kurdish man, Ismael Ali Ibrahim. He's just returned after months of displacement.

He walks us through his kitchen. A rocket pierced a hole in the wall, and glass and gravel cover the floor. One of his kid's toys, a little stuffed Santa Claus, lay in the rubble.

"I don't know what this ISIS wants or where they came from," he says between sobs, standing in his broken home. "I blame politics and the state."

We walk outside by an empty pen that once housed his sheep, and a bulldozer destroyed by a rocket that he once used to make a living.

He doesn't know what he'll do now, but he thanks God for his life.

Despite this war, his desire is for Iraq to stay united.

But when I ask him if his Arab neighbors should come back, he says no: "They were the cause of all these problems."

Islamic State

Islamic State of Iraq and the Levant

Islamic State of Iraq and Syria

Iraq

One week after Apple's new mobile payment system, Apple Pay, debuted in CVS stores, CVS has backtracked and barred its use. Rite Aid took the same step, leading many observers to note that the two companies are part of a group of retailers that's developing its own payment system, called CurrentC. Partners include Wal-Mart, Best Buy and 7-Eleven.

The two pharmacy chains stopped using Apple Pay and other "swipeless" payment systems, including Google Wallet. Previously, CVS and Rite Aid had joined other large retailers to create their own mobile wallet, with two key goals: cutting major credit card companies out of their transactions and building more consumer loyalty (and data tracking) through points programs and store credit cards.

Another test of the new system could present itself in the case of Target. Apple mentioned the retail giant at its event announcing Apple Pay, but Target is also a member of the Merchant Customer Exchange, the group that's working on CurrentC.

Further illustrating how delicate and complicated the mobile payment issue promises to be, the MCX website's photo of the CurrentC app shows it running on an Apple iPhone.

Here's a rundown of angles on the story:

"Apple is partnering with Visa, MasterCard and American Express as well as the biggest banks, which together cover more than 80 percent of credit card purchases in the U.S. And Apple is opening up a new revenue stream because it'll get a small cut from the transactions." — NPR's Aarti Shahani.

"Some merchants are finding themselves tied to the Merchant Customer Exchange, known as MCX, while Apple Pay is being rolled out. 'Merchants are contractually obligated to MCX, so they really don't have a choice,' Nathalie Reinelt, an analyst with Aite Group, said in an e-mail." — Bloomberg News

"Please note that we do not accept Apple Pay at this time," says a Rite Aid memo quoted by NFC World. "However we are currently working with a group of large retailers to develop a mobile wallet that allows for mobile payments attached to credit cards and bank accounts directly from a smart phone. We expect to have this feature available in the first half of 2015."

"The only thing that's clear is that sooner or later, consumers are bound to become confused. Which phone can I use (Apple does not support Google Wallet)? Which payment type do you accept? And who the heck can I trust with my data? There goes the convenience factor." — Forbes

apple pay

CVS

walmart

When Don Sage of Concord, N.H., learned his electric bill could rise by as much as $40 a month he got flustered. He and his wife make do on a bit less than $30,000 a year in Social Security payments, and they pay close attention to their electric bills.

"When the invoice comes in the mail to get paid, I have a target amount that we can fluctuate up or down, based on our fixed budget," Sage says. "They don't need my permission to hike up their rates, but the fact is we're the ones that are paying these increases."

Utilities in New England have announced electricity rates hikes on the order of 30 percent to 50 percent, making prices some of the highest in the history of the continental United States.

For Sage and other consumers, these changes seem to have come out of nowhere, but in reality, they have been a long time coming. Between the years of 2000 and 2013, New England went from getting 15 percent of its energy from natural gas to 46 percent. That's dozens of power plants getting built.

But the pipelines to supply those power plants? Not so much.

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At the same time, with the fracking boom just a few hundred miles west driving down gas prices, more and more homeowners were switching to natural gas for heating.

So now when it gets cold and everyone turns on their heat, the pipelines connecting New England to the Marcellus Shale are maxed out.

Power plant operators are left to bid on the little bit of gas that's left over for them, and the prices can get out of hand.

"In New England, this winter, based on what's been recently trading, is likely to have the highest natural gas prices on planet Earth," says Taff Tschamler, chief operating officer of energy supplier North American Power.

Gas for January delivery is trading at nearly $19 per million BTUs. Gas in Japan, which relies entirely on imported gas and often has the world's highest prices, is forecast to cost less than $18 this winter.

Big pipelines in New England are on the drawing board, but they won't be built until 2018 at the earliest — and that's only if they don't get swamped by local opposition.

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One proposed solution for New England's energy price spike problem: Importing more liquefied natural gas and feeding it into the pipeline network on the other side of the region's bottleneck. Sam Evans-Brown/New Hampshire Public Radio hide caption

itoggle caption Sam Evans-Brown/New Hampshire Public Radio

One proposed solution for New England's energy price spike problem: Importing more liquefied natural gas and feeding it into the pipeline network on the other side of the region's bottleneck.

Sam Evans-Brown/New Hampshire Public Radio

How To Cope

So what's a region to do? For one, if you import gas and plug it into the pipeline network at a different spot, you can avoid the bottleneck.

Distrigas, New England's only liquefied natural gas import terminal, is just north of Boston. Tony Scaraggi, the company's vice president of operations, says even with last year's frigid winter, New England only hit its maximum pipeline capacity for 40 days.

"That's equivalent to like, two and a half to three LNG tankers coming in. So you gotta compare that to the cost of a $2 to $3 billion pipeline," Scaraggi says.

He says burning more expensive foreign natural gas for those 40 days is still cheaper than building an oversized pipeline.

The environmental community is weighing in on the question, too.

Peter Shattuck with Environment Northeast put out a paper arguing the region could save money by using less power.

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"If demand for gas remains low, because of things like energy efficiency, distributed generation, renewable heating technologies like heat pumps and biomass, we may not need any infrastructure overall," Shattuck says.

So while it's certain that some pipelines will get built, the big question is how much additional capacity, and who will pay.

A plan from the six New England governors to subsidize bigger pipes was tabled recently when Massachusetts announced it wanted to study the question further before committing.

Ultimately, whether electricity prices continue to rise in New England next winter and the winter after that will come down to weather.

"At any rate, what I think we're hoping for is that the good Lord who protects drunks and the United States will also protect New England," says Peter Brown, an energy attorney with the law firm Preti Flaherty.

In other words, pray for a warm winter.

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