This seems to be a carefully-considered market-based solution to a complex problem, but there are a few details I'm struggling with.
Significantly increasing the price of a natural resource would have severe impacts on impoverished communities while having no effect at all on wealthy people and companies; is this intentional?
Around 45% of households in California are rentals. Renters are often restricted by their rental contracts in what they can and cannot do with a yard (if they are wealthy enough to have one). Should renters be stuck with extremely high water bills when their landlords require a green lawn? Or should landlords not be able to require certain landscape features?
And the toilets, should the renters living paycheck-to-paycheck be the ones replacing these units? ...actually, I'll retract that question, it's a silly one. On further consideration, I realize that if the cost of water exceeds the cost of replacing a toilet, then people working for minimum wage will be properly motivated to find some way to replace their landlord's fixtures with newer models.
Your examples are mostly focused on residential water usage, which has been about 10% of the state's overall water usage, and has been steadily decreasing for years. I noticed that you explicitly didn't want to point any fingers, but can you think of any examples that might not be residential? Something more specific, perhaps, than "more sustainable farming". As I'm sure you're already aware, water rights are an extremely sore point of political contention between farmers and the state, and one of the major drivers of conservative and "State of Jefferson" separatist politics up and down the entire I-5 corridor. Can you estimate, in dollars, the upper limit for the cost of agricultural water before someone starts shooting lawmakers at the capital?
You mentioned desalination. This solution works so well in Israel, I don't understand why it wouldn't work for all of California too. The Carlsbad desalination plant was completed and became operational just a few years ago. It only cost one billion dollars to build, an additional $50 million per year to operate, and will be able to provide about 7% of San Diego county's water needs. Do these numbers feel like they're making water expensive enough? California is mountainous, with a large central valley separated from the coast by a range of mountains that is in some places taller than the tallest mountain in Israel. Do you think it would be better to build massive pipelines over these mountains and pump water uphill from the coast into the central valley, or would it be better to tunnel through the mountains and pump the water that way? I wouldn't worry too much about the cost either way, since more expensive water is better.
Oh, speaking of cost: when there's a rainy year, should Californians be forced to continue buying water from desalination plants, or should the desalination plants be shut down and then restarted the next year?