Sierra snowpack measurements have continued to be grim - not enough snow here means less water downstream.
"A lot of people think we have a secret place where we keep water and then we just open it up in dry years and that's not the case at all," California Department of Water Resources spokesperson Teresa Geimer said.
Geimer runs the state's water bank -- an emergency action designed to shift water from Northern California farmers to the state's population centers and to Central Valley farmers during lean years.
The governor activated the state's water bank last June. It is the first time since the early 90's that the bank has been activated.
"Most typically what happens is the crop land idling - so a farmer won't grow a crop - thereby that water that the crop would have used is now available to be transferred," Geimer said.
Farmers are being offered $275 an acre foot to not grow their crops. That saves enough water to serve two homes for a year. Drier areas of the state pick up that tab in addition to cost of the water itself.
"Water banks worked really well in the early 1990's, in fact they ran for three years and saved the state and the farmers and the water users quite a lot of money," University of California, Davis agricultural economist Richard Howitt said.
Howitt says water banks are effective.
"It just makes sense to shift it from the low value uses to the high value uses -- and the water bank compensates those people so the people in the low value use actually make more money, and the people in the high value uses save the crops, and generate the income for the state that they wouldn't have been able to," Howitt said.
Crops like almonds use more workers, but need more water. Howitt says the payoff is not just in crop yields, but in jobs.
"Studies have shown that pretty much for every job you lose, you generate three others at least, or sometimes more," Howitt said.
But some farmers say the state waited too long to agree to a price for their water.
"We spent over nine months negotiating with the state and federal agencies," California Rice Commission Chairman Donald Bransford said.
Bradford grows rice in Williams, north of Sacramento.
"And with the current environment of rice prices, growers are more inclined to plant than market water," Bransford said.
North state rice growers rely on water to grow their crops and rice prices are at their highest level in 30 years. Ironically, a prolonged drought in Australia is largely responsible for driving up rice prices.
"Growers are looking at a potential significant increase in their revenue stream that they have not had in probably the last 25 years," Bransford said.
Rice farmers insist they were willing to work with the state, but a deal just could not be struck in time.
"Bad timing for a drought, but there was water to move but it just took too long to get there to an agreement," Bransford said.
The bank does still have water deals struck - just not as much as they could have. The water bank is only activated for one year, but if the drought persists it is likely it will be back next year.
"We have more people in the state than we ever have had before, and there is more need for water than before in these drier areas," Geimer said.
The state still plans to trade 82,000 acre feet of water this year, but that is less than 15 percent of target amount.
Written and produced by Ken Miguel