There is already a great way to do this: prices! The market isn't perfect, but with commodities it really does seem to function. We don't need artificial usage limits, we just need to charge for water on the open market. Reserve whatever is needed for residential use and sustainability and auction the rest. Or allow it to be sold freely.

Right now many pleases have a tragedy of the commons situation. If you don't use up as much water as possible, and dig deeper wells to use it up faster than your neighbors, then you can end up with no water and out of business. If you could secure specific water rights you could plan your business. Farms _would_ go out of business with crops that are too water-intensive relative to the price, but that is actually a desirable property of the system. Those crops will raise in price until the demand lowers and the cost of higher water is sustained. Lower water-utilizing crops will replace the previous higher intensity usage.