The fundamental concept of cap and trade is greater government control and taxes - both of which are ALWAYS destructive
Those pushing cap and trade ideas are in it to seize more money for wasteful government, cater to organizations who lobbied politicians and who would scam the system for big profits, and those who would scam those profits
A cap-and-trade system to ration water is not a good idea. There is plenty of water on Earth for everyone. Although more complex, there are ways to build massive desalination plants on coastlines to pipe freshwater to cities and farms. Cap-and-trade for water isn't the same as for carbon. Water is plentiful and needed everywhere. Carbon is plentiful and needed nowhere.
No, cap-and-trade for water is not a good idea because one of the problems with cap-and-trade is that it hurts business. Cap-and-trade for water might seem like a good idea because it would supposedly help the environment, but it is not worth it because it hurts business too much. It causes businesses to lose to much money due to the taxes.