Here you find yourselves at the crossroads.

Everyone needs water to live. The actual price of water, fairly pricing in long term externalities, may be too much for a family of four to afford their 8 or 10 kgals a month. At least for many such families.

But when you price it at the marginal cost to pump out the extra gallon, it becomes economical to do silly stuff like grow water intensive crops in the desert and draw the city's aquifer down.

Hence the conundrum. Price it fair, some people can't afford flush the toilet. Subsidize it at a flat(ish) rate, or even just ignore externalities, some people can afford to destroy the commons. So, conservation pricing.

> Everyone needs water to live. The actual price of water, fairly pricing in long term externalities, may be too much for a family of four to afford their 8 or 10 kgals a month. At least for many such families.

Depends on where you live. And perhaps we shouldn't encourage people to live in such dry areas where an honest pricing of water would make living unaffordable?

> But when you price it at the marginal cost to pump out the extra gallon, it becomes economical to do silly stuff like grow water intensive crops in the desert and draw the city's aquifer down.

Your pricing should take the longer term into account. An auction style pricing can do that. (Or a system that simulates auction-style pricing. No need to go through all the hassle of actually holding auctions.)

> Hence the conundrum. Price it fair, some people can't afford flush the toilet. Subsidize it at a flat(ish) rate, or even just ignore externalities, some people can afford to destroy the commons. So, conservation pricing.

That sounds like your conclusion is driving your argument.

Give poor people money, if you want to help them. Instead of mucking around with prices.

They can then use the money to either pay for water or move somewhere less inhospitable. Or spend it on something they like even more than either of these two alternatives.

Btw, flushing toilets with drinking-quality water sounds like a big waste. You should only do that when you have plenty of water to go around. Perhaps that family wants to buy a composting toilet, and pocket the savings? Instead of flushing water down the drain every day?

> Depends on where you live. And perhaps we shouldn't encourage people to live in such dry areas where an honest pricing of water would make living unaffordable?

This is a really big aspect of it, and "save water" applied without thought can be counter-productive.

Where I live, the water comes out of the ground in wells, goes through the system, and leeches back into the ground in a giant septic system (that they call the wastewater treatment plant). It's pretty well contained and as long as we are nowhere near the limit the main thing sewer/water is paying for is maintenance of the system.

That is NOT the case everywhere in the USA, especially the states where water is piped in from miles and miles away.

I do agree that much of the problems we have is forcing public utilities (water, power, transit) to ALSO be social programs; this dual-goal always ends up messing things up.

> I do agree that much of the problems we have is forcing public utilities (water, power, transit) to ALSO be social programs; this dual-goal always ends up messing things up.

Amen to that. Not only public utilities, but also employers and stores etc.

Giving (poor) people money should be the default. Everything else should require careful justification.

Right. Government should strive not to create perverse incentives. People should pay what water costs and maybe learn not to water their lawn at 3 in the afternoon or leave their shower running while they apply soap. That should include giant companies like Nestlé who pump outrageous amounts of water for next to nothing.

Because like other utilities, homeowners often get vastly subsidized usage. Which can be fine until it starts running out.

I would suggest to drop the subsidies, instead of bolting on extra rules.

I believe that, in the case of water, homeowners tend to pay high prices, whilst farners get incredibly low prices and businesses can usually get sweetheart deals if they are big enough.