(Bloomberg) -- California water prices are at all-time high as a severe drought chokes off supplies to cities and farms across the Golden State.

The price of water on the Nasdaq Veles California Water Index touched $1,144.14 an acre-foot on June 27 — up 56% since the start of the year. The index tracks the average price of water-rights transactions in five markets in the state.

In some pockets of California, water is even more costly -- hovering around $2,000 an acre-foot in the Westlands region, according to Sarah Woolf, president of Water Wise, a water brokerage and consultancy based in Fresno. Comprising more than 1,000 square miles of farmland in Central Valley, the Westlands is the largest agricultural water district in the US.

The soaring prices are a reflection of how quickly California’s water crisis is escalating, with dire implications for food crops that are almost entirely reliant on irrigation. Historic drought has cut off surface water to even those with the most seniority under California’s complex water-rights system, and California Governor Gavin Newsom has declared a state of emergency, ordering water-use restrictions and some curtailments for irrigation districts and farmers.

Prices have never before been so consistently high, Woolf said in an phone interview. “From the agriculture front it’s just not sustainable,” she said. “I don’t know of a crop that can carry water prices like that.”

New regulation of the use of groundwater is also complicating the supply picture in the state, with some estimates showing as much as one million acres fallowed in California’s San Joaquin Valley over the next few decades due to reduced ground and surface water access.

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Author: Mark Chediak and Kim Chipman