[thinkski]

When there’s a mismatch between capacity and load, price increases bring the two back into balance (incentivizing additional capacity and reducing load). But if price increases are not permitted, keeping water cheaper than it should be, then yes, people will waste it.

If price increases were permitted, additional capacity would make economic sense, such as desalination plants and aqueducts. And load would decrease. People would save water and some would move out of state. California’s population has increased more than its water supply, which has remained largely static I imagine.

[EricE]

The load you are going on about is from agriculture - over 80%. If addressed, replacing outdated irrigation practices and correcting lack of maintenance/loss through distribution systems would solve this "crisis".