Graduated pricing for water will have the same effect it has on electricity. People will be able to optimize the price they pay by making a capital expenditure,

Graduated pricing for water will have the same effect it has on electricity. People will be able to optimize the price they pay by making a capital expenditure, bringing them below cost recovery and starving the network of revenue. In electricity, this is solar panels, in water, it's a well (as evidenced by a comment on this post, where someone did just that). The price should be the price. If this causes problems with availability, that should be fixed by separate cash payments. Using energy and water markets to avoid cash welfare just distorts the market and subsidizes rich people.