Would conservations (like people giving up luscious grass lawns) be enough to sustain the population in the west? (In your opinion.)
Whether that would be enough to survive off the precipitation alone with our current population I kinda doubt (especially in Southern California), but you never know.
Also, is the problem really that the government subsidizes water. As I understand it, there is a naturally occurring aquifer that is currently being used at free market rates. We would need the government to tax this to reduce usage.
What actually happens is groundwater salting which starts at the coast and works inland, killing pretty much all plant life as it goes.
A bunch of water also goes back to the environment, but I don't think we want to take that.