I think you need to better identify your suspected problem before you consider a treatment plan. There are apparently many different beetles operating in California; I have no experience with any of them.
That being said, I think this covers the topic fairly well:
http://ipm.ucanr.edu/PMG/PESTNOTES/pn7421.html
"California now has 20 invasive species of bark beetles, of which 10 species have been discovered since 2002. The biology of these new invaders is poorly understood. For more information on these new species, including illustrations to help you identify them, see the USDA Forest Service pamphlet,
Invasive Bark Beetles"
"Prevention is the most effective method of managing bark beetles and related wood-boring insects; in most instances it is the only available control. Avoid injuries to roots and trunks, damage and soil compaction during construction activities, and protect trees from sunburn (sunscald) and other abiotic disorders. Irrigation may be important during dry summer months in drought years, especially with tree species that are native to regions where summer rain is common. Also, dense stands of susceptible trees should be thinned (complete removal of some of the trees) to increase the remaining trees’ vigor and ability to withstand an attack."
"Irrigate when appropriate around the outer canopy, not near the trunk. Avoid the frequent, shallow type of watering that is often used for lawns. A general recommendation is to irrigate trees infrequently, such as twice a month during drought periods. However, a sufficient amount of water must be used so that the water penetrates deeply into the soil (about 1 foot below the surface). The specific amount and frequency of water needed varies greatly depending on the site, size of the tree, and whether the tree species is adapted to summer drought or regular rainfall."
And here is the part you probably wanted to hear about:
"Highly valued, uninfested host trees may be protected by spraying their bark with a persistent, registered insecticide labeled as a preventive spray for bark beetles. Look for signs of recent infestation to help decide whether preventive spraying of nearby, lightly attacked or unattacked trees may be justified. Spraying a persistent insecticide on valuable, uninfested host trees near infested trees may be warranted to protect uninfested host trees from bark beetles. However, do not substitute preventive sprays for proper cultural care. The infestation status of a tree can be determined by inspecting the trunk or limbs for fresh pitch tubes or frass; peeling a small portion of the outer bark from the trunk or limbs and looking for signs of adult beetles or larvae; and inspecting the foliage for yellow or yellow-green needles or leaves. Frequently the infestation is diagnosed after the beetles have vacated the tree. For example, when reddish brown foliage is observed the tree is dead and the new generation of bark beetles has already emerged from the tree. Fading foliage throughout the tree crown indicates a dead tree and no insecticide treatment will be effective. Because each bark beetle species attacks only certain tree species, spray only healthy trees that are susceptible to the beetle species attacking nearby trees (for example, pine bark beetles do not attack oaks and oak bark beetles do not attack pines) (Table 1). Insecticide sprays are not recommended against shothole borer and cedar or cypress bark beetles."
On the topic of reducing stress and watering: The reason you keep hearing the importance of reducing stress on the tree by watering is because it involves how the trees actually fights an infestation. When the little bugs burrow through the living parts of the tree, it attempts to drown them in sap. Weak tree, not so much water available? Not enough internal juices to do the job! The bugs can then tunnel and bore, reducing water transport in the tree, and all of a sudden your tree has become a bark borer hotel with free admission and an all you can eat breakfast buffet.
