Right Economic Model for Water

The water crisis in Australia has required that everyone reduce their usage of water. Creditably many people have done so voluntarily. Now, the water companies are not making enough money as consumption has dropped. They are charging more to support their bottom line. Clearly those who reduced their consumption are not impressed.

So what is the right model for water consumption? Perhaps one can argue that water was too cheap and the price needed to rise. But a price rise in this context seems incongruous. Perhaps one can argue that water supply should not have been privatised.

I would like to know if people have good economic models for such a situation.