We have a system like what you describe here, but for electricity. The "problem" is that the large users go off the grid (via solar, etc). Well, that is not a

We have a system like what you describe here, but for electricity. The "problem" is that the large users go off the grid (via solar, etc). Well, that is not a problem. The problem is that this introduces variability into the grid. That variability is expensive to smooth over, with the result that it can actually be more expensive as a fully loaded cost to supplement your power with solar than getting it from the grid, due to the equipment needed to manage the sun's mood swings. The result of all this is it is really hard to get the incentives right for pricing electricity. I suspect the same is true for water; it is hard to store, there are demand spikes, and there are things like private wells that have weird effects on the water available to everyone else.