California water plan aims change Gold Rush thinking

* Plan makes human, environmental use equal priorities

* $11 bln bond could fund dam, environmental restoration

* California, environmental leader, lags in water

By Peter Henderson

OAKLAND, Calif., Nov 4 (Reuters) - California legislators struck a middle-of-the-night water wars truce on Wednesday that could unleash the biggest spending spree on water in half a century and aims to satisfy environmentalists, unemployed farmers and the lush cities of Los Angeles and San Francisco.

The key theme of the package is that human and environmental uses of water are equal priorities.

But critics, including the environmental group the Sierra Club, have called the bills and an $11 billion bond a pricey sham that left a new council to govern the largest estuary on the West Coast without funding or power. They said it would spark more fighting.

The most populous U.S. state is one of the driest, yet full of thirsty industry from rice farms and the nation's largest fruit and vegetable crops to Silicon Valley microchip plants. It also frequently teeters on the edge of financial crisis and resorted to handing out IOUs earlier this year. There is no guarantee voters will approve the $11 billion bond passed by the legislature.

California is an environmental leader -- from its car pollution standards to its climate change agenda -- but lags much of the world in water. New conservation rules may change that.