I used to think that massive, very long term droughts might cause serious instability, but I have since changed my mind. In highly developed nations, the amount of irrigation infrastructure built in the last 100 years is simple stunning. Plus, national agriculture research programmes are always researching how to use less water and grow the same amount of product. About drinking water: Rich places just build desalination plants. Sure, it is much more expensive than natural water sources (rivers, lakes, aquifers), but not expensive enough to cause political instability or serious economic harm. To be clear: Everything I wrote is from the perspective of highly developed nations. In middle income nations and below, droughts are incredibly challenging to overcome. The political and economic impacts can be enormous.
> Many farmers in the Texas High Plains, which rely particularly on groundwater, are now turning away from irrigated agriculture as pumping costs have risen and as they have become aware of the hazards of overpumping.
> Sixty years of intensive farming using huge center-pivot irrigators has emptied parts of the High Plains Aquifer.
> as the water consumption efficiency of the center-pivot irrigator improved over the years, farmers chose to plant more intensively, irrigate more land, and grow thirstier crops rather than reduce water consumption--an example of the Jevons Paradox in practice
How will the Great Plains farmers get water once the remaining groundwater is too expensive to extract?
Salt Lake City cannot simply build desalination plants to fix its water problem.
I expect the bad experiences of Okies during the internal migration of the Dust Bowl will be replicated once the temporary (albeit century-long) relief of using fossil water is exhausted.
You raise an interesting point about inland population centers. My guess: Household daily water usage is a tiny fraction compared to Ag. As a result, at some point, I assume that states will slowly raise the cost of Ag water, until the most wasteful practices disappear. Example: They could move to drip irrigation that Israel uses, but it must at least 10x more expensive.