SAN FRANCISCO, US - California Governor Arnold Schwarzenegger has demanded that President Barack Obama's cabinet rethink federal policy that would divert water from parched farms and cities to threatened fish, his administration said on Wednesday.

California's rivers used to brim with salmon and sturgeon, but a massive system of canals diverted water that fed farms and cities, now suffering through a third year of drought.

Schwarzenegger has gained credibility as an environmentalist for his push to curb greenhouse gases but he argued that federal plans to save fish will worsen a water crisis that has cost farmers more than US$700 million (S$1.1 billion) and caused mandatory rationing in cities of the most populous state.

"I am concerned that the catastrophic impacts of the current crisis on our economy and environment could take decades to reverse and significantly hamper any long-term solutions," Schwarzenegger wrote in a Tuesday letter to U.S. Interior Secretary Ken Salazar and Commerce Secretary Gary Locke.

He demanded the two intervene in a battle over water from the state's top source, the marshy river-fed Delta that eventually empties into San Francisco Bay and which supplies water to farmers and the city of Los Angeles as well as Northern California.

Federal agencies responding to court orders have proposed leaving more water in rivers to protect the fish, and the governor said there is not enough left for the 38 million Californians.

"We have entered an endless cycle of consultation that is guaranteed to reduce water supplies and water supply reliability, but is not guaranteed to recover or even reduce damage to endangered species. This cyclic regulatory process is not working for people, and it has not worked for fish," he wrote.

Environmentalists who launched suits to keep more water in rivers say that the federally planned diversions could easily be made up with more conservation. In June the National Marine Fisheries Service said salmon runs looked untenable without change and proposed diverting 5 percent to 7 percent of supplies from key state and federal suppliers.

Letters from the state requesting reconsultation have not been answered, Schwarzenegger said.