SANTA BARBARA, Calif.—California’s four-year drought is putting a new spotlight on a plentiful but costly water alternative: ocean water, minus the salt.

This Southern California beach city may spend up to $40 million to update and reactivate a desalination plant it mothballed after another drought ended about 24 years ago.

With its local reservoirs at less than 30% of capacity, the City Council voted in September to pursue reopening the facility, which can turn sea water into the equal of nearly three-fourths of Santa Barbara’s normal demand for drinkable water.

While desalinated water will cost about a third more than the city’s imported freshwater supplies, Mayor Helene Schneider said other options, including more conservation, have been exhausted for the city of 90,000.

“It should be the source of last resort—and the reality is we are getting to that place of last resort,” Ms. Schneider said.