The demand curve for water is downward sloping. As the price rises, the quantity demanded declines. And yet water is consistently underpriced in many areas. From today's NYTIMES:
The punishing drought that has swept California is now threatening the state’s drinking water supply.
With no sign of rain, 17 rural communities providing water to 40,000 people are in danger of running out within 60 to 120 days. State officials said that the number was likely to rise in the months ahead after the State Water Project, the main municipal water distribution system, announced on Friday that it did not have enough water to supplement the dwindling supplies of local agencies that provide water to an additional 25 million people. It is first time the project has turned off its spigot in its 54-year history.
Blah, blah, blah, etc. etc. etc. They want to do more research into climate change. What a frickn waste: do more research into the economics of water. Raise the friggn price and watch the quantity demanded drop.
Oh, some people will be hurt when the price of water is raised? Yes, that happens. They have been benefiting from a price that has been held too low for far too long. Time to face reality.