I don't think anyone is proposing to installed another 8 million people in Mendocino. Places like San Francisco and the East Bay have tons of water rights because they were originally outfitted for tens of millions of residents before being suddenly down-zoned around 1970. The East Bay Municipal Utilities District currently serves less demand for water than it did in 1980 because of systemic efficiency improvements, despite the fact that the served population increased 50% since then.
Also, there is the small fact that apartment dwellers use a tiny fraction of the water of people who live in detached houses.
In short, there is plenty of water in various major metropolitan areas.