Essentially, water is subsidized by the Californian water pricing rules in order to provide low-cost feed that boosts milk production in cows (this is why alfalfa in particular probably won't be pushed out). Californian dairy is a surprisingly powerful lobbying group with enough of a budget to also have a general public ad campaign to protect their interests.

The price subsidy encourages overconsumption, which causes the shortage.

Most places raise prices to fund desalination plants (if they have access to large bodies of water near the population centers, like California does), but that's why they don't. And given they won't do the obviously ideal strategy that works for everyone else in the world, it's been hard to get money from the struggling general budget to build the facilities. Why should every other department struggling for a budget to meet basic needs lose their chance because they won't adopt a simple price structure change?

Instead, non-renewable reserves are being depleted, as mentioned in the article.

The problem here isn't really technical in nature, though.