California water issues are very complex as you state, but one big issue is going somewhat unaddressed by government - use of non-renewable underground sources. Currently, farmers are able to even increase production in the drought, but few know how long they'll be able to keep this up because underground water is not unlimited.

California could go the desalination route, but so far that progress is painfully slow and the methods being selected may result in significant harm to local marine ecosystems: http://www.reuters.com/article/2015/04/15/us-usa-desalinatio....

Something like this would be much better: http://waterfx.co/. Unfortunately, last update in their blog is a year ago...