Why put the onus on tree huggers and environmentalists? Aren't they the people that have warned about potential calamities for decades? Now it's their fault they were ignored I guess?

Sorry, but that rubs me the wrong way.
That's a conclusion you've drawn, Dave, and not the intent of my original post.
The article sited doesn't align very well with what I've read so far on the topic, most of it supplied by the state water authority and parroted by the media. Just last night on the news the use figure was quoted as 20% urban and 80% agriculture, with no mention of environmental at all. So as with all things political, numbers have a way of being twisted to align with points of view.
The article also fails to mention that a significant portion of the salmon population comes from state run fish hatcheries. In fact this year, huge numbers of fry from those hatcheries have been trucked down stream, around low flow and high temperature parts of the rivers, to help the salmon survive. That's an example of how the fish have been managed over the years, and an indication that the salmon card in the game is already being manipulated by the hand of man. Yes, it would be a tragedy to to lose the salmon runs, but the point where man could just step back and let nature take her course to ensure survival of the salmon was left behind years and years ago. So I don't buy the environmental plea that there's no give-and-take in the struggle to save the fish; we've already been managing them for years.
I do agree with you that more water efficient irrigation techniques and crop choices could significantly reduce agricultural water use. But to date all that's happening is that those with high priority water rights are selling their water to those with lower quality rights (becoming very rich farmers or corporations in the process), with only a 5% reduction in the number of unplanted acres and no significant shift away from water intensive crops. That news story was filmed at a water well drill site out in California's Central Valley. The driller was deepening that particular well down to something like 1000 feet because the water table had dropped. They also had clips of water agency employees measuring water depths in monitoring wells, and in one the level had dropped 200' over just the last five years. Apparently that's not unusual across the state. At this point there are few restrictions on where wells can be drilled and how much can be pumped from them, even though there's no doubt that the observed water table drops are due to agricultural use. On 60 Minutes last Sunday one segment showed the results of a satellite that could measure the amount of sub surface water present under the land masses of the Earth. The measurements started in the early 90s, and they showed time lapse maps with areas of high water depletion ending up in red. Almost all of the areas shown were also areas of high agricultural use, and all were getting the bulk of the water from wells. Once the water is pumped, it can take tens or hundreds of years to replenish. The take away here is that it's not just surface water that is being fought over, but ground water as well, and agricultural use is the biggest factor.
Mean while now I hear that we're all under a 30 something percent water use reduction, up from the initial 25% across the board mandate from earlier in the year. And that the reductions aren't uniform. The standard is water use in 2013, and those communities that are closer to that level of use now are being required to cut back much less than those where use has grown. That poses all sorts of problems, and apparently there is an appeal process in place to help rectify them. But no matter how much water is saved in urban areas, only 20% of all water use is by urban areas, so the overall savings will literally be just a drop in the bucket.
The bottom line from my perspective is that any solution is going to have to compromise all areas in order to be successful. Unfortunately, since agriculture is the largest user, they also have the most to lose and the most to contribute toward a solution. I don't think anyone would mind paying a bit more at the grocery store if it meant farmers could afford more efficient water use and crop strategies. The environmental laws at this point seem to be cast in stone, tying water manager's hands in working toward a solution that could work for all. So environmental stake holders also need to be more flexible in working toward a solution. And trying to squeeze a solution out of the largest number of water users that also happen to use the least amount of water will do nothing but anger the majority of the population.
Personally, my water supply is a well that taps into an aquifer, the flow rate of which is directly proportional to the amount of rain received over the winter and the length of the rainy season. We had a short and below average rainy season last winter, but slightly more rain than the year before. I was OK last year, but it stopped raining sooner this year than last, and I might be trucking water in if the rains are delayed in the fall. For that reason the availability of water here isn't tied to the amount I use. I haven't used that as an excuse to waste water, and I'm sure as heck not planning to ad any landscaping! But there's a very good chance I'll see a significant monetary impact due to the drought, no matter how the politics work out.