A California water myth which becomes especially pernicious in droughts is that California is “running out of water” (Hanak et al. 2009). Viewing California’s supply and demand pressures in terms of fixed water requirements perpetuates this myth and invariably places undue attention on building additional supply infrastructure. Instead, managing water as a scarce resource suggests a balanced portfolio of water trading, investments in conveyance, smart groundwater replenishment, and demand management. With such a balanced portfolio, 1) California’s water supply situation is not broadly dire, and 2) California’s vast and interconnected water infrastructure and groundwater resources can minimize most problems from the state’s highly variable climate.