Contrary to the popular talking point, climate models do take into account H2O as a greenhouse gas. In fact, it is the largest single feedback factor in the climate system. And also contrary to another popular talking point, models are being validated in many ways.
Go have a read at Gristmill for a post by Andrew Dessler on a recent paper he co-authored[PDF] that seeks to assess the state of current climate science literature on the topic of water vapor feedback in models and the climate system. He describes papers raw material as a "mountain of evidence" supporting a strongly positive effect. He also has this observation:
Interestingly, it seems that just about everybody now agrees water vapor provides a robustly strong and positive feedback. Roy Spencer even sent me email saying that he agrees.
Note that Spencer is one of the climate septic poster boys who, like most of the actual scientists on the Heartland Institutes call list don't actually disagree that global warming is real and anthropogenic. They just tend to hand wave away the apparently dire consequences that more sober scientific assessments indicate are very likely.
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Spencer also has moral and theological reasons to claim (hope) that AGW will not have catastrophic effects. He is afraid that doing what is necessary to reduce CO2 emissions will cripple the efforts of the Third World to raise the standard of living to something more comparable to what the First World enjoys now, and will actually result in harm to them. I think his position has more than a little wishful thinking in it.
You should check out Spencer's web site to see what he really thinks.
http://www.drroyspencer.com/
In my opinion the largest threat for California are cataclysms and ecological catastrophes. Not important is how many money we have because one tragedy can us take all.