All (well most) true. A couple more more factors presently:
California water law goes back to the original stakeholders who put their flunkies in the legislature and wrote water law to their benefit: first the mining corporations who needed all the scarce water they could get to run their operations, and soon after the flatland farmers who practiced flood irrigation for rice and then almonds, among other things. Both interests wrote 'grandfather' legislation that allowed them all the water they traditionally received. Any later land development had to buy water rights from them. This legal basis is far out of sync with modern needs.
California is unusual in that no legislation has ever succeeded to monitor and control groundwater. The aquifers that stored water is pumped from in summer ( it never rains here all summer, the rainlesss season is practically Easter to Thanksgiving) can be pumped dry causing major subsidence of land levels, and nobody cares. Attempts to monitor and control this are overwhelmed by existing traditional water users who won't stop pumping.
Much of the water is provided at federally subsidized low price (thanks, taxpayers elsewhere!) for large scale commercial ag to grow subsidized rice and cotton for subsidized-price-control export (thanks taxpayers) to countries where this flood of imports undercuts their local farmers ability to make a profit. This is raw political power applied to enriching some of the largest corporations - since their elected representatives drafted the federal subsidy laws to their benefit. (Gasohol encouraging corn in the Midwest represents a similar market distortion).
And then recent events: the wholesale buying of farms for their underground water rights. Davis, just west of Sacramento and home of the ag college, now has to buy water from a corporation that bought the large corporate farm over their local aquifer. City of Davis should have bought that land, now its too late.
Large multinationals are, in the midst of drought, buying ag land and planting water-intensive almonds because the presence of the almonds guarantees the flood-irrigation water rights they got along with the land. I think Nestle, possibly the largest seller of bottled water worldwide, is part of this.
Basically passing more laws to unravel this mess is politically impossible. The largest stakeholders with the greatest financial interests have always been in the driver's seat.
One last story that illustrates why more dams aren't built: Auburn Dam above Sacramento never went forward because it was not economically rational. All the water that could be diverted there was already owned by existing interests, it wouldn't create any new water. Hydro power ditto, there isn't any spare water to put through turbines so zero hydroelectric potential. Flood control in the American River drainage is already sufficient, no benefit there. So what looked like an obvious dam site never got its dam.
. Good one! Okay, what does SEAwater do to a septic tank if used to flush?