Is the tense of the verbs correct?
Great white sharks, along with tiger sharks, appear in the western coasts frequently in summers, but now, in July, the water was cold and the sharks were less.
I wonder if the past tense can be used with "now"?
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Yes it can. If an event is being described in general, the relevant tense is used. In this case, the present tense, describing the activity of sharks. If the narrator wishes to take the listener/reader to a specific moment, they can. Imagine a TV nature documentary cutting to an interview with a diver who filmed the sharks during the cold period.
"Now (in the video), the water was cold, the sharks were less, and..."
"Now" is used to refer the moment of narration, whether it be past, present or future.
but now, in July, the water was cold and the sharks were less.
What is happening "now" is that "the sharks were less" - and the reason why they were less is because "the water was cold."
The sentence should be written more clearly as:
but now, in July, the sharks were less since the water was cold.