The water shortage in California, and especially Southern California, is real. About 80%-90% of San Diego water comes from either the Colorado River basin or from Northern California (State Water Project). Due to the drought in the Colorado River basin San Diego had to obtain about 78% of its water from the State Water Project. However, a judicial ruling last year determined that due to impacts on the endangered Delta smelt the current pumping of water from Northern California to Southern California must be dramatically reduced, or possibly cease.
Desalination is a possibility for the future, but the cost of the treatment process is still substantially higher than other available options. It will also take time to build the plants, so expect at least five years before a plant can be designed, permitted and constructed. If desalination becomes the only option you can expect that water prices will substantially increase until that technology becomes further refined.
If water use isn’t reduced in the near term then San Diego will be forced to purchase water from other sources, such as Imperial County, that has rights to the limited supply from the Colorado River. However, San Diego will be competing with other communities in Southern California that are in the same water shortage situation. The price of water will go up, the question is by how much. What if the cost to water that grass is $400/month or more?