One should study the history of water development and indeed the development of the State of California before making these claims. The water for farming and infrastructure / power supplies for the California economy was provided to the state for decades at subsidized rates at the expense of taxpayers. Suddenly the state has reached an infrastructure limit and without these continued subsidies the state has come to realize that it cannot survive.
One should question when and how does vast farmland spring up in a desert? The answer is at the expense of taxpayers.
The California economy was artificial to begin with and they are beginning to start the long spiral down to present value. It will be a long and painful ride for that state.
Below is an excellent book on the history of water development in the West and the payout/investment cost vs. the price that these resources were provided. It is quite evident that the large programs that sprung up after the Great Depression created "value bubbles" that cannot be sustained indefinitely.
http://en.wikipedia.org/wiki/Cadillac_Desert