Ben Powell at Texas Tech has an essay on water scarcity at Huffington Post in which he channels David Zetland:
But water shortages in Lubbock and elsewhere are not meteorological phenomena. The shortages are a man-made result of bad economic policy. …
Droughts make water scarcer, but by themselves they cannot cause shortages. To have a shortage and a risk of depletion, a resource must be mispriced. …
With the freedom to choose, consumers can demonstrate whether it’s worth the cost to them to water their lawn an extra day or hose dust off of their house. Realistic pricing also incentivizes them to take account of water’s scarcity when they consume it in ways that aren’t currently prohibited. Have your long shower if you want . . . but pay the real price of it instead of the current subsidized rate.
Of course Ben is correct in his analysis and his policy recommendation, although I would nuance it with David’s “some for free, pay for more” to address some of the income distribution/regressivity aspects of municipal water pricing. Water is almost universally mispriced and wasted, exacerbating the distress and economic costs of drought.