By far the best reference on this subject is the Aguanomics blog and his book Living With Water Scarcity. This article barely scratches the surface of the insan

By far the best reference on this subject is the Aguanomics blog and his book Living With Water Scarcity. This article barely scratches the surface of the insanity of water allocation and the difficulties of regulation surrounding the industry. Suffice it to say, making water more expensive might not even be a solution until is it extremely expensive, because we already have water pricing so complex (in many places in the US) that many people have no idea what their water needs are or how to efficiently use water. Roughly a sixth of residential water usage in some areas effected by the drought in California is leaked from the building's pipes unused. The solutions are complex, involve analyzing risk and allowing high water prices in years without scarcity to fund investment in infrastructure (desalination, for instance) to avoid scarcity turning into a shortage (which no one wants).