* Planned 2010 deliveries cut to 5 pct of allotments

* Allocation figure typically raised later

* Cuts forced by drought and environmental restrictions

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By Steve Gorman

LOS ANGELES, Dec 1 (Reuters) - California officials said on Tuesday that drought and environmental restrictions have forced them to cut planned water deliveries to irrigation districts and cities statewide to just 5 percent of their contracted allotments.

Although the state Water Resources Department typically ends up supplying more water than first projected for an upcoming year, its 5 percent initial allocation for 2010 marks the smallest on record since the agency began delivering water in 1967.

Drastic cutbacks in irrigation supplies this year alone from both state and federal water projects have idled some 23,000 farm workers and 300,000 acres (121 hectares) of cropland in California, according to researchers at the University of California at Davis.

Water shortages also have forced California cities large and small to raise rates they charge and to ration supplies.

The state water allocation initially set for this year was 15 percent of the amount users are entitled to receive under their contracts. That figure was later raised to 40 percent, still well below the 68 percent averaged over the past decade.

While a return to wetter weather in the months ahead could quickly ease the crunch, the initial 2010 allotment was greeted with alarm up and down a state already beset with chronic budget problems and jobless levels above the national average.

“On the heels of three years of drought and ongoing regulatory restrictions, we are now bracing for yet another year of painfully limited water supplies,” said Laura King Moon, assistant general manager for the State Water Contractors.

ENVIRONMENTAL RESTRICTIONS QUESTIONED

Seeking to address California’s deepening water crisis, the state Legislature and Governor Arnold Schwarzenegger reached agreement last month on a landmark package of measures to conserve water and pour billions of dollars into new water infrastructure projects.

The state supplies more than 25 million people and over 750,000 acres (300,000 hectares) of farmland with water from the Sacramento-San Joaquin River Delta in northern California, fed by rainfall and snow-melt runoff from the Sierra Nevada mountain range.

That water is delivered to municipalities and irrigation districts throughout California by way of a sprawling network of reservoirs, pipelines, aqueducts and pumping stations known as the State Water Project.

But the prolonged drought, the worst in state history, has depleted the Sierra snowpack and reservoir levels. Complicating matters are federal restrictions on delta pumping levels in order to protect endangered fish species.

“We ought to look seriously at the cost of some of the restrictions they’re putting in place,” said Richard Howitt, a resource economist at UC Davis. “It’s not that they’re not needed. The fish are dying. But so are the farm workers.”

The other major supplier of water from the delta -- and a more important one for California farmers producing over half of the fruit, vegetables and nuts grown the United States -- is the federal government’s Bureau of Reclamation.

That agency waits until mid-February, near the end of California’s traditional wet season, to set its initial water delivery allocation. Last year, a zero allocation was declared for most of the farmers who buy water from the federally managed Central Valley Project, but that level was later raised to 5 percent of normal for many of them. (Editing by Dan Whitcomb and Eric Beech) ((steve.gorman@reuters.com; +1 213-955-6761))