The state owned entity only depends so strongly on the revenue from selling water because of the capitalist system it is embedded in. If water conservation is valued then substituting that revenue in a way that doesn't waste water should be a high priority.

(I'm assuming "interrupted the initiative for revenue loss" is correct for the sake of this post. If it's not then the capitalism complaint is very weak.)

It doesn't matter what economic system you had, you'd still get the same problem which is that reducing utilisation of a service doesn't reduce the resources required to provide that service either immediately or linearly. Non capitalist systems still have costs, the resources for the water authority still need to come from somewhere and fundamentally that somewhere is the community. There are no shareholders to satisfy, no profit to pay to anyone, they're free to manage their service provision and costs in the best interests of the community.

> the same problem which is that reducing utilisation of a service doesn't reduce the resources required to provide that service either immediately or linearly.

I disagree with that being the problem. The way I see it, funding the utility via sales is the problem.

Let's say usage drops by 50% and costs drop by 10%. Under the current business model that's a disaster. Under a central funding model, hooray costs dropped!

Sure, but whether you go for a central funding model (which boils down to everybody pays regardless of use) or a user pays model, that decision has nothing to do with capitalism. In a non-capitalist system you could do either.

In fact in a capitalist model you could still do either. The utility could be privately owned but have just one customer, the government. It’s not a great idea, but it does happen.

> In a non-capitalist system you could do either.

You could but there's much less reason to pick that way.

> The utility could be privately owned but have just one customer, the government.

The government being the only customer provides it a lot of control and I would say this is an obfuscation of state ownership more than it is actually capitalism.