Meanwhile, Fetzer Vineyards has managed to reduce the average volume of water used to make a gallon of wine to 2.1 gallons, compared to the industry average of 8 gallons. It has cut overall consumption by 24 percent through various initiatives, such as installing water meters and aeration ponds to treat their own wastewater.

Water agencies are trying to help customers save water through outreach and rebate programs. East Bay Municipal Utility District, for example, has set a goal of reducing water use in the eastern San Francisco Bay Area by 35 million gallons per day, and boost recycling capacity to 5.1 billion gallons per day. The agency offers free water surveys for all CII customers, as well as rebates to offset investments in reduction, and provides leak repair and site maintenance.

The Metropolitan Water District of Southern California created a one-stop shop of a rebate program for certain technologies while an outside vendor implemented the program by region. The agency also offers a financial incentive program that rewards customers for water saved.

The report concluded by laying out a set of nine recommendations to help the state overcome its water consumption challenges. Topping the list: Establish efficiency standards for water-using products.

"The California Energy Commission (CEC) should establish such standards for buildings, appliances, and landscape irrigation equipment," the report advised. "Setting robust efficiency standards will play a critical role in spurring innovation to bring more water-efficient technologies to market and in accelerating their adoption in the CII sector."

Sprinkler image CC licensed by Flickr user zone41.