Does the question require further improvement?
I think the following text should be removed as it detracts from the question. I would say that it assumes facts not in evidence; that is, if California can make no such change in subsidies, then neither of these concerns can be addressed in the manner given.
The political concerns listed above could, on their own, be addressed without resorting to the current use-it-or-lose-it system. Political concern #1 could be addressed through direct subsidy to agriculture. (However much the voters want. Heck, pay almond growers $5/pound if that's what we want. We can put the last Italian almond farmer out of business and give California farmers the full incentive to save water. Win-win!)
And political concern #2 could be addressed by transitioning to the new system in a way that immediately compensates everyone involved according to what is changing for them. For example:
The state buys up farmers' restricted discount rights at the current market price (which reflects both the fact that the water is restricted to agriculture only, and the value of the discount) on the existing agricultural water access markets.
The state removes the restrictions and discounts on the water rights, resells the unrestricted water to farmers and urban districts -- at great profit -- and applies the proceeds towards part 3.
The state pays all farmers for actual farming that is not based on the legacy, restricted, discounted water, according to the desired subsidy effect.
Is there reason to believe that California can make no change from water subsidies to agricultural subsidies?
Yes. There are two major water systems involved. The Central Valley Project (CVP) and the California State Water Project (CWP). California does not have effective control over the water (or prices) from the CVP that is used for irrigation.
CVP is a federal project run by the United States Bureau of Reclamation that supplies both power (2,254 MW) for general use and water (7,000,000 acre-feet), including about 75% for irrigation (3,000,000 acres) while the remainder goes to wildlife refuges, municipal and industrial users, and other fish and wildlife. [1] While CWP is a state project that supplies power (2,991.7 MW) for general use and water (2,400,000 acre-feet) for cities and about 30% for irrigation (750,000 acres).
I have made no attempt to investigate the title question, nor the question about research. I will retract my close vote and delete my comment.
1 See, Central Valley Project: Issues and Legislation, Updated March 8, 2022.