water unlike all other commodities is seldom priced on the basis of supply and demand. Infact water is often regarded by communities as a free resource and further that there is an inherent right that the resource should be nearly free.
other commodities for which there is a sustained public need are priced on the basis of supply and demand except where socialist doctrines intervene.
because I can fill my swimming pool for about $30 and my wife can water the garden for cents rather than dollars the price incentive to be careful is absent and the community relies upon the responsibility of the user
in a world where water is scarce there are many many initiatives which can be taken to ameliorate the shortage problem, but most of these initiatives can be measured best as to efficacy if water is priced by conventional process. Then improved reticulation, improved storage, improved sourcing and wastage control can be motivated and rewared by the returns on capital available. It is very unlikely for instance that encouraging all households to instal a 5000 litre tank for capturing rainwater is a good use of capital. If water is priced at .1 of a cent per litre, the value of water stored is $5, a hardly attractive outcome for a capital outlay likey to be in thousands of dollars.
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I have just heard of a block of apartments in Sydney have have installed two tanks capable of holding 7000 litres of water. The cost of the tanks including installation and a pump was $12000; but the value of the water held (based un current water charging rates for domestic users) is $7. (Seven Dollars)
Even if the tank were emptied 10 times a year, which is unlikely, the return on capital would be less tha 1%pa and that is before maintenance and depreciation on electricity.
Put another way, given 10% as the cost of money and 5% as appropriate depreciation and 2% for maintenace, the cost of the 70,000 litres available is 2.9 cents per litre (29 times higher than Water Board charges.)
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