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California Gov. Arnold Schwarzenegger declared Wednesday that the most populous U.S. state is in a drought after two years of drier-than-normal weather and court-ordered irrigation restrictions.

The declaration issued by Schwarzenegger calls for increased conservation, more federal funding for water projects and the transfer of water to areas facing shortages. There might be rationing if the problem worsens, he said.

“We must recognize the severity of the crisis we are facing,” Schwarzenegger told reporters in Sacramento.

California’s last drought lasted from 1987 to 1994, costing the state as much as $1 billion in farming losses and increased electricity usage. The state accounts for about 13 percent of agricultural sales in the U.S. About 43 percent of water taken from lakes and reservoirs is used for farming, according to California’s farm bureau.

Melting snow, which fills reservoirs and irrigation systems for 36 million people, is at 67 percent of normal for this time of year, according to the California Department of Water Resources.

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