The bigger water waste problem now isn't almonds but alfalfa grown for export to places like Saudi Arabia. Unfortunately this isn't just a regulatory issue; we can't fix it with improved regulations. At the core it's primarily a property rights issue. Many property owners are legally entitled to a certain quantity of water by titles that in some cases go back over a century. The government can't legally just take those away without paying compensation, which would be tremendously expensive.
We pillage our natural water sheds so the Central Valley can grow almonds. The underpricing of water is absolutely a regulatory issue.