But you're making a broader point, one of many where Libertarians part company with most conservatives and "right populists".
The massive system of dams, channels, canals that today (mostly) controls the river was indeed constructed largely at public expense, but with the explicit understanding that the beneficiars would be the people who taxed themselves to pay for it (and their decendants). The present priorities, that send half of the water in the system uselessly out to sea deserve more than a shrug of the shoulders and contempt for those betrayed by their overlords who now control the government in Sacramento, imho.
Put that aside, the present priorties in California are not just bad policy over which reasonable people can disagree. They've gone completely nuts, and, even worse, are using the public infrastructure to target their cultural enemies. And they're willing to use water as a way to weaponize food supplies. That should concern everyone, even the most loyal Libertarian.