The economics works out even if you were lifting concrete blocks rather than water, hence why you get pictures like this: https://en.wikipedia.org/wiki/File:Energy_Vault_Test_Tower_2...

The argument against lifting concrete is that you can dig a hole in the ground an pump water in/out of it for more reliability and lower cost than having a crane lift and lower concrete, and it's easy to make it much bigger both horizontally and vertically, so why bother.

But it does appear to be economical even with that, and water is cheaper.

We make lots of holes in the ground on a regular basis, including for extracting fossil fuels. Here's two, note scale bar, though I have no idea what the rock around it is like regarding water losses: https://www.google.com/maps/@50.9063171,6.4418046,17655m/dat...

* it's never "just" with things on this scale

It has a storage capacity of about 9.1GWh.

The upper reservoir (https://en.wikipedia.org/wiki/Marchlyn_Mawr) holds 9.2 million cubic meters of water.

So 1 million cubic meters of water provides ~1GWh.

We can see how that compares in terms of raw GPE (Gravitational Potential Energy):

1 million cubic meters of water = 1E6 * 1E3 kg = 1E9 kg

There's roughly a 500m vertical drop between the upper and lower takes at Dinorwig so:

1E9 kg * 500 m * 9.8 m/(s^2) = 4.9E12 J =~ 1.36GWh

As for water towers, if you look at something like the Roihuvuori tower in Helsinki (from https://en.wikipedia.org/wiki/Water_tower) which is one of the largest:

Height: 52m, Capacity: 12000 cubic meters

If we are generous and say that all of the water is stored at the maximum height then:

12000 * 1E3 kg * 52m * 9.8 m/(s^2) =~ 1.7MWh

You'd need over 5000 of them to match what Dinorwig can provide.