There's water, and then there's water. You can put just about any water on a farm field or orchard, but not into someone's tap. Water for taps has to be treated.
This means that you can have more than one kind of water shortage. There's shortage of water, and shortage of treatable/treated water.
What's more, water is difficult to (efficiently) transport long distances. Aquaducts are about the only way to do it. This means you can have a shortage of water in one place, and water available somewhere else, and not be able to fix things.
Then, as Joel Garreau pointed out in "The Nine Nations of North America", there's the difference in viewpoint between northern and southern California. Southern California (think LA) believes in development, growth, conquering nature. Northern California believes in harmony with nature, and leaving things unspoiled. This means that in LA, "letting a river flow unchecked into the sea is a waste, a sin. In San Fransisco, it's a blow struck for God's original plan for the land." This makes it very difficult to find political consensus for a plan of action.
And, on a bit more specific topic, I see people talking about orchards. Let's say you've got an orchard that takes lots of water. People are screaming at you to turn off the taps because things are so dry. But your trees are, say, 30 years old. That means if you turn of the water because this is a dry year, it's going to take you 30 years to fully recover from that move. So you're going to do everything you can not to have to turn the water off to your trees.