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California Drought

What's Changing California's Landscape? Cash for Grass

As Californians face a historic drought, more people are tearing out thirsty grass lawns to cut down on water use.

As Californians face a historic drought, more people are tearing out thirsty grass lawns to cut down on water use. Nick Ut / AP

The drought is changing California's landscape in some unexpected ways.

Not only is it drying up lakes, turning streams to a trickle and causing the land to sink, it's weaning Californians off lush, water-guzzling lawns.

Julio Lopez owns and runs Cadre Landscaping in the Southern California city of Glendale.

The 54-year-old Lopez said he's been so swamped with work lately, he's unable to handle the dozens of calls he gets from homeowners wanting to remove their current lawns and put in drought-resistant ones.

"Most of my business is commercial real estate like banks so I'm too busy to help them out," said Lopez, who employs nine people.

"But we've never seen this amount of phone calls since the rebate program began," he said.

The program Lopez referred to is known as Cash for Grass, a rebate that property owners get for changing their lawns to drought-resistant foliage as the state enters its fourth year of severe drought.

The rebates to replace water-intensive lawns with turf grass started in 2009 in California.

But two recent developments have made them more popular than ever: an increase in the amount of the rebate—in some cases more than $3 a square foot—and having the rebates be tax free.

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"We took a survey this spring of our clients, and 77 percent of them said they want different landscaping because of the drought," said Chuck Carr, president of the California Landscaping Contractors Association (CLCA).

"There's a huge demand to do this because of the rebates," Carr added.

Rebate up to $3.75 per square foot

It's estimated that a three-bedroom house in California uses 174,000 gallons of water a year.

And according to the California Home Building Foundation, 57 percent of that amount is used for landscaping, though analysts such as Carr said that figure is too high.

To get homeowners and commercial properties to switch to more native and drought-resistant landscaping and use less water, many water districts throughout California have been paying for the rebates through their own revenues.

The rebate amount has been as low as 50 cents a square foot. But districts have been raising them as the drought has worsened.

The Los Angeles Water District just increased their rebate from $3 a square foot to $3.75.

Another boost to the program came in September when a bill signed by Gov. Jerry Brown made the rebates tax free.

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But even before the rebates escaped the IRS, homeowners were jumping on board.

According to the Metropolitan Water District of Southern California (MWDSC), lawn removal in the Los Angeles area went from 99,000 square feet last January to 2.5 million removed by July.

"We've been super busy because of the rebate program," said Becky Mineo of Chatsworth Garden Nursery and Landscaping in the Los Angeles suburb of Chatsworth.

"People are saving water by doing this, and it looks nice," she added.

Business cuts back

Business cut backsCalifornia's landscaping is a $25 billion industry, according to the most recent statistics from the California Landscape Contractors Association.

The industry employs around 169,942 individuals and has a total employment impact of 257,650 jobs.

And, for now at least, the rebate program is giving a boost to landscapers, said Bob Muir, a program manager for the MWDSC.

"The transition toward climate-appropriate landscapes is creating new market opportunities for the landscape industry," Muir said in an email to CNBC.com.

"These landscapes are not maintenance-free, and consumers that invest in removing lawn and changing their landscapes need plant care, irrigation and other maintenance services," he added.

But those in the industry say it has limits.

"We just got a contract to do a city project for the next two years, but the drought would be hurting us if we didn't have that," said Joyce Mabar of S.B. Landscaping in Rancho Palos Verdes, California.

"Some landscapers are suffering because of the cutback in maintenance, and many are having to cut prices because of that," Mabar added. "It's getting even more competitive to be a landscaper as the drought goes on."

And there are some caveats on the rebates themselves, said CLCA's Carr.

"Every water district doesn't have the money to do this, and the rebates won't cover the whole cost of removing and replacing your lawns," he said.

Educate people on benefits

Educate people on benefitsNot everyone in California needed a rebate to make their landscape more drought resistant.

Susan Gottlieb and her husband live in Beverly Hills. She made their nearly one acre of land drought resistant in the 1990s after seeing a nearby lake and water source dry up.

"I don't have a lawn," said Gottlieb, who is active in the California Native Plant Society. "I have shrubs and small plants that are native to the area."

Gottlieb said she's working on her neighbors to do the same and is having some success on getting them to change their ideas of landscaping. "A person I know called me one day to say she's taking her lawn out. I think the idea is catching on with a lot of people," she said.

But whether the recent push to less water-intensive landscaping takes hold beyond the current drought is not a given, said CLCA's Carr.

"People have short-term memories," he said. "They often revert back to old ways. All we can do is educate them on the benefits of this going forward."