I think everybody understands that if you raise the price of water enough farmers won't be able to be in business and shut down instead of using up water. The problem doesn't seem to be understanding of basic microeconomics but the politics and process.

Do you raise prices by taxation? Do you raise prices by taking drafting rights away and doing yearly auctions of water?

Is there a way to change the pricing of water on a seasonal level? Price pressure only works to reduce consumption if the people are knowing which price they are paying. If you do this, do people actually know which price they are paying at which time?

To me those seem to be questions for economists.

Prices alone also don't challenge norms that good home owners maintain grass lawns. They just turn grass lawns into a desirable luxury that not everybody can afford.