This is not true. Demand for water is inelastic in the short term only. The (obvious) effect of increasing water prices over the medium and long term would be

This is not true. Demand for water is inelastic in the short term only. The (obvious) effect of increasing water prices over the medium and long term would be the displacement of water hungry crops such as almonds and rice, as it would no longer be economical to farm them in California. The equilibrium level of water consumption would be much lower as a result.