Officials hope the deal will serve as a model for more such agreements with growers in the nation's top-producing farm state, where agriculture accounts for 80 per cent of all water drawn from rivers, streams and the ground.
"We're in a drought unprecedented in our time. That's calling upon us to take unprecedented action," Felicia Marcus, chairwoman of the state Water Resources Control Board, said in announcing the agreement.
The rare concession from the farmers is the latest indication of the severity of the water shortage in California, which is suffering through its driest four years on record.
California water law is built around preserving the rights of so-called senior rights holders — farmers and others whose acreage abuts rivers and streams, or whose claims to water date back a century or more, as far back as Gold Rush days.
The offer potentially could cover hundreds of farmers in the delta of the Sacramento and San Joaquin rivers, the heart of California's water system. About 25 per cent of all California river water runs through the delta, according to the state's Department of Water Resources.
Some of the farmers made the offer after state officials warned they were days away from ordering the first cuts in more than 30 years to the senior water rights holders' allotments.
The state already has ordered cities and towns to cut their water use by 25 per cent, and it has curtailed water deliveries to many other farmers. But in recent weeks, many city dwellers and others have complained that agriculture should be made to share more of the sacrifice.
Rudy Mussi, whose family farms about 4,000 acres in the delta southwest of Stockton, reacted with mixed emotions about state approval of the deal.
"The 25 per cent savings, that gives us certainty," Mussi said. "But at the same time I'm being asked to give up 25 per cent of my paycheque."
By itself, the delta farmers' offer would not go far enough to save shrinking waterways statewide. But if more farmers sign on across the state, California could save significant amounts of water, since the nearly 4,000 senior water rights holders alone consume trillions of gallons a year.
The agreement "is an illustration of creative practical approaches that water managers in the state of California are taking to help get us all through this devastating drought," said Michael George, state water master for the delta.
California produces nearly half of the fruits, nuts and vegetables grown in the U.S., but agriculture experts say they would expect only modest immediate effects on food prices from any reduction in water for the senior water rights holders. Other regions would be able to make up the difference, economists say.
Under the deal, delta farmers have until June 1 to lay out how they will use 25 per cent less water during the summer. That could include irrigating their crops less or leaving some of their land fallow.
In exchange, the state gave assurances to the farmers it will not cut the remaining 75 per cent of the water to which they are entitled.
"When your back is up against the wall, I guess you'll do anything," said Paul Wenger, president of the California Farm Bureau Federation and an almond grower in the Modesto-area, outside of the delta. He said he is skeptical the deal will protect the farmers if the drought worsens.
Senior water rights holders last saw their water cut in 1977, but that move applied only to dozens of people along a stretch of the Sacramento River.
Ellen Hanak, a water policy expert at the Public Policy Institute of California think-tank, said senior water rights holders don't necessarily face complete water cutoffs, as people with less venerable claims to water have endured.
"It's important for people to realize that there are haircuts that are partial — they don't necessarily mean shaving everything off," Hanak said.
Any accord with delta farmers would probably rely largely on the honour system. California currently does not require monitoring or meters for superior rights holders.
Ellen Knickmeyer contributed from San Francisco and Terry Chea from Stockton. Smith reported from Fresno.