California is a big state. Los Angeles is in a desert portion of the state. I have not researched where alfalfa is primarily grown but that is important information. You can see alfalfa test plots on this map are not in desert portions of the state. You can also see how much of the state is not a desert. http://alfalfa.ucdavis.edu/-images/variety_map.gif

Buying in bulk is different than buying just enough to drink. A bottle of water for $5 at a movie for example.

Maybe the price of water in LA primarily covers infrastructure, not water. Their water does come from hundreds of miles away.