I actually agree with this in principle, but isn't California a huge source of food for much of the west coast? Where will the food be grown then?
Another problem crop in California is rice. We simply shouldn't grow rice in this state. Most rice is grown in the southern US where water is plentiful. We could stop growing rice without significant impact. More water is used in California growing rice than all of Los Angeles residential use put together.
We could cut these crops significantly without appreciable impact to our food supply, using a fraction of our existing conservation budgets, and not have to worry about residential conservation for decades or longer.
There's a pretty good intro to the economic breakdown here: https://slatestarcodex.com/2015/05/11/california-water-you-d...