In the week since Gov. Arnold Schwarzenegger declared a statewide drought in California, local authorities have begun denying applications for dozens of developments that cannot show a 20-year water supply. Observers say it's the first time water restrictions have sidelined development statewide, and the recent actions could be just the beginning of a trend. "The water in our state is not sufficient to add more demand," said Lester Snow, director of the California Department of Water Resources. "If we don't make changes with water, we are going to have a major economic problem in this state."