We have run out of FREE water.
If all water use in CA cost anywhere close to residential water rates ($8 / 100 cubic feet) there would be no shortage.
Even a small tax of $0.01 per gallon would be a start in this space.
We have exploded population and if you look at water projects (that actually deal with supply) have not done the same over 50 years or whatever. Think grey water use and recycle / desal / dams etc etc.
It's the perfect trifecta+.
Ridiculous water use (afalfa for china) in a desert, free water (water "rights"), limited projects to increase supply for enviro and other reasons (inability of govt to do things).