If the state is artificially keeping the price low, of course people aren't going to change their habits and business models. And the end game is running out of water instead of innovating to keep your water bill down.
Agricultural interests with senior water rights have a legal right to a much greater amount of water at much lower cost. Those with riparian rights (upstream) have the right to take as much water as they can use.
There are hundreds of reasons why it's not as simple as "turn this knob to raise price".
For some industries this already exists in the form of the regulation of emissions. If you're capping an industries carbon output into atmosphere what you are really capping is the mass of oxygen they can consume from the atmosphere. If you do the thermodynamic analysis of it, you're basically putting a cap on the amount of energy that a business can acquire from using the atmosphere. Most industries run 24/7, so it is really easy to calculate how much oxygen they'll use each year and how much carbon they'll emit into the atmosphere.
It isn't so easy for individuals and smaller businesses. For example, I own a generator that uses oxygen from the atmosphere to get electrical energy. However, I only use it for a tiny fraction of each year.
The city also doesn't read my meter monthly, but yearly. It just estimates it from month to month. So about once a year I get a huge, insane bill for about 3 times my monthly bill. OTOH they only bill me for the water when they do that so technically I'm getting sewer for 'free' during the year.
I live in Santa Barbara. The first 3000 gallons of tap water I use each month cost 0.5 cents per gallon. Even the most expensive rate for my water is only 2 cents per gallon. Bottled water, even in bulk, tends to cost $0.50 or more a gallon.
And of course agricultural users pay an order of magnitude less than I do.
It doesn't quite work like that. For eg. Fresno pays one-third of what San Francisco pays, even though both of them are in California.
There was a very long article in yesterday's Seattle Times on this very topic -
http://www.seattletimes.com/seattle-news/data/rain-soaked-se...
But isn't that the case with ALL finite/natural resources? In this case it's might be the state, in the case of oil it might be other actor(s), in case of rare minerals the causes are again different.
Could our world even work without these discount prices? Probabely not. Thats why this is all so terrifying. There is no data about how much oil or silicon or aluminium or uranium we have. We dig this things out and throw them on the marked and then act as if those prices reflect the value of this things.
I don’t see a solution for this
Hint: The State doesn't have control over the price. Its mostly be extracted via privately owned water rights.
http://www.breitbart.com/california/2014/09/18/ca-laws-restr...
> “With the stroke of his pen, the Governor changed over 100 years of water laws – without the people’s input. This is not the democracy Californians deserve.” – State Senator Jim Nielsen
> In the midst of drought and heightened overdrafting problems, California passed legislation allowing the state to control and regulate the use of groundwater on privately-owned land. Citizens, previously free to use whatever water was underneath their own land, are now preparing to challenge this governmental undermining of their property rights in court.
Private property owners were engaging in unsustainable behavior for their economic benefit is basically why this is a problem. Proper planning and not burning through reserves to grow almonds/alfalfa/etc for export would have prevented the issue from getting this bad.
Attitude "...If I’m an overlying landowner, I have the right to pump as much water as I can..." leads only to the tragedy of the commons and ensuing disaster...
I'm just explaining why this came about. This is very much a tragedy of the commons where one sector of the economy was able to profit from this privilege and socialize the costs now that it is a problem for them.