Supposedly in the old British Royal Navy, watering down the daily rum ration was a common punishment for minor infractions. The offending sailor still received the same quantity of rum, just with twice as much water added. I can't imagine what the captains thought they were accomplishing.
Well, the quality of the water (as well as provisions) on a ship starts declining drastically once you're at sea for an extended period. I can't imagine any sailor actually wanting to drink the water, except out of pure necessity.
Watering it down as a punishment doesn't seem to make a lot of sense. I have read that the rum ration was mixed with fruit juice both to extend the drink and likely to attempt to combat scurvy. This is where 'grog' comes from, which is rum mixed with fruit juice.
