I should probably leave this one up to David at Aguanomics, but I'll spout off then let David call me stupid. From Reuters:
Despite dire warnings of water shortages due to prolonged drought, the Los Angeles City Council on Wednesday rejected a plan to ration water in the nation's second-largest city for the first time in 18 years...He said the council's rejection stemmed not from disagreement over a need for mandatory conservation measures but from questions about how the plan would work and whether it amounted to a rate hike rather than a rationing scheme.
I know water market pricing is screwy and I probably shouldn't apply market based analysis here, but I will anyway: Rationing schemes raise prices. That's the whole point behind cap and trade programs and why a debate over taxes versus cap and trade really comes down to questions of distribution and not market outcomes: Quantity restrictions raise prices. So do rate hikes. So my question to the LA City Council would be, why are you opposed to raising prices directly but seemingly willing to support raising prices indirectly?
