http://en.wikipedia.org/wiki/California_State_Water_Project
A lot of people will say "the environmentalists" stopped them, but really it was that lawmakers gave environmental concerns only one effective tool -- enforcing standards via litigation.
The task of resolving environmental concerns was pushed out of the political and economic arena into an adversarial process that takes a huge amount of paperwork, lawyer time and calendar time to resolve.
Exactly like the Republicans with Proposition 13 (a California initiative which required supermajority voter approval for taxes), once you take fundamental powers away from the legislative and executive branches, you really limit the potential effectiveness of the government. And now California's infrastructure is a mess.