I should directly address what I believe to be the main reason that State agents do not want to get into crop bans. My interpretation is that the Brown administration mostly believes that “the market” (which is synecdoche for growers acting individually within a market and going out of business if they are wrong and privatizing profit if they are right) can do the best job of selecting a crop mix and providing that mix at the cheapest price for consumers. Here is an excerpt from DWR Director Cowin’s editorial today:
Some argue that California agriculture uses too much water to grow crops for export such as almonds and pistachios, and suggest the state ban such crops.
Where should the state draw that line? Should the state judge the worthiness of crops based on water use? Nutritional value? Profit per acre-foot of water used? Is broccoli acceptable, but not wine grapes? How do we account for the tremendous waterfowl habitat created by rice fields?
It is not the proper role of the state to tell farmers what to grow. Those who plant almonds, pistachios and other permanent crops take the risk that they can keep orchards and vineyards irrigated year after year. Some of those bets may not pay off.
And another:
“We really think the decision of which crop to grow is an individual decision that the grower makes based on a whole variety of reasons,” said Peter Brostrom, water use efficiency manager for the state Department of Water Resources. “We’re not trying to intrude into that area. We don’t see that as the role of the state to tell people what to grow.” …
Jeanine Jones, the DWR’s interstate resources manager and deputy drought manager, has said increasing vulnerability of water supplies could prompt some growers to voluntarily change what they plant. But state officials say they can trust farmers to make that choice.
“They will look at their water supply and make the best decisions possible,” Brostrom said.
Well, now, see, that’s not what “the market” does. “The market” is a machine for inexorably turning resources (water, labor) into private profit for sellers and low costs for consumers. That is all it ever does. If that’s not what you want, then what “the market” does is not the “best”. If you want anything different, like sustainability or social justice or cute little farm towns, then you must put bounds on the market. Economists love to think of “the market” as wringing inefficiencies out of the economy, but those inefficiencies may have been people’s jobs, or pleasant lifestyles, or fish, or rivers.
I have written about “the market” before, to emphasize that it is a policy tool, not a goal of itself. Naturally, I have made fun of economists. But I want to repeat my main point. My policy preference is not economically efficient food production, so I do not want to set an undirected market in motion. I would happily give up some economic efficiency for: environmental stability, less wealth disparity in farming communities, food security for crops eaten directly by humans. As a consumer, I would accept higher food prices to achieve those things. As a citizen, I would support policies that create them in our increasingly variable climate. As a non-farmer, I don’t actually care if they make smaller (but less variable!) profits. Even with climate change, I think we are rich enough to sacrifice some efficiency for other nice things.
So, no. I do not want growers to respond to market forces by planting endless almonds, even if it makes the most money for them and even if they are accepting the risk (which they aren’t really because they either don’t believe in the risk or they are willing to suck aquifers dry or they think they can use politics to push that risk back on to the public). That is the efficient market outcome, and it is self-evidently absurd if you care about things other than the wealth of individual almond growers (and the way that wealth acts in the farming community).
It is manifestly appropriate for the State to choose a different priority than economic efficiency. They don’t want to make an explicit choice right now, but it would be easy to choose one and then figure out what qualities our agriculture needs to have to achieve that. Let’s try “Resiliency”. Our crop mix needs to be temporally flexible (not trees and vine); growers need support when they have fallowed lands; we need to be researching crops and growing technologies for variable climates; growers get a bonus for having experience growing a wide variety of crops. Or, let’s do “Sustainability”. Irrigated acreage can’t exceed surface water supplies plus sustainable groundwater yield. We prefer and support crops that are directly eaten (or worn) by humans. We protect agricultural lands from urban encroachment.
I see “water markets” critiqued on a logistical basis (water is too hard to move) and a justice basis (why the hell should senior water rights holders get all that wealth when they have no moral superiority over buyers). But my critique is different: I do not want an economically efficient distribution of water nor an economically efficient farming community. So I don’t think “markets” are the best mechanism. I wish they were not the unthinking default.
On the public record 
“The market” is only sustainable if all participants are paying the true price of their materials. Just sayin’
Unfettered free markets can be dangerous – see the sub-prime mortgage debacle as an example – free markets still needs some boundaries to operate in, just like a football game operates within boundaries and according to certain rules. But, choosing what farmers may or may not plant is like the State calling the plays rather than the coach. The missing boundary here is the lack of limits on the use of groundwater to bail out farmers who overplant permanent crops like almonds. The same farmers likely rail about deficit spending by the Federal government as constituting a burden on their grandchildren, but that is what they are doing relative to groundwater. The analogy goes further in that the additional costs of drilling and pumping deeper and deeper wells is like the interest you have to pay when you borrow to cover deficits, however, it breaks down at some point because in fact short-term deficit spending might be helpful to the economy as long as renewed prosperity and inflation bring thing back into balance. But what is the equivalent with groundwater? There is at present no mechanism to bring things back into balance. If farmers were required to either pay interest on the groundwater that they have borrowed or to pay for surface water to recharge the acquifers that they have drawn down in the absence of sufficient natural recharge, would they plant so many permanent crops?
Markets are the best mechanism to allocate water AFTER you’ve set constraints (e.g., sustainability). In my book, I say “allocate social water first” (part II), then use economic incentives (Part I) to distribute the rest (as planners are either too uninformed or corrupt to get that right).
The book’s short and free to download: http://livingwithwaterscarcity.com/