Well, about 80% of water use (in the west) is for irrigation purposes. Ideally, making farmers pay market (and externality adjusted) rates for their water would discourage them from growing plants which need a lot of water per unit food (like alfalfa). We could get a LOT further with water-aware legislation for what farmers can grow (or if you prefer a libertarian viewpoint, have the government stop subsidizing water for farmers in drought prone areas).

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.