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This is tyranny. If you're willing to pay desalination prices for water, you should be allowed to use as much of it as you want, no matter how wasteful your purposes are.
What about if it were plutonium? If you’re willing to pay for it to be produced, should you be allowed to use it for whatever purposes you want?
Or tragedy? The many folks paying desalination prices to waste water raise the price for those who don't. Since water happens to be required to live, this is a problem, is it not?
> The many folks paying desalination prices to waste water raise the price for those who don't.

Not necessarily. Water prices are regulated anyway, so the rule could be something like "the first 3,000 gallons per person per month are at today's prices, and the rest of your usage is at desalination prices", or "you can choose whether your water source is cheap Lake Mead or expensive desalination, and water conservation rules only apply to people who pick the former".