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.
But that would still lower the amount of water used on grass lawns thereby increasing the amount of water available for other purposes (assuming the demand elasticity of grass lawns is larger than that of those other purposes, of course).
Status signaling through spending money on luxury items can be complex. The fact that not everyone can afford lawns makes the lawn a better signal for status and makes it more valuable as a status signal.
I think we need a discussion thread for the californian drought going on. I would like to compile information in the main post and would like help compiling it. If we really are proud to be effective altruists then this is an area we should really figure out.
Any one have any good ideas on how we can help?