"They are charging a different price for water depending on how much you use. This is called tiered pricing or block-rate pricing. The idea here is that you charge a lower rate for the initial gallons of water you use, then you charge a higher rate for later gallons," Dr. Walden says. "For example, the city might charge a low rate for the first 2,000 gallons that you use in a month and then charge a higher rate for gallons 2,001 and above. And the idea is that those initial gallons are presumably being used for necessities -- like bathing, washing dishes and cooking -- and the higher levels of water are being used for things that are not necessities -- things obviously with value, but we don't have to keep our grass green or our shrubs water, and so you charge a higher price for that.

"The advantage of this is people get to choose how much those use. If it's really important to you to water your grass presumably you can continue to do that as long as you are willing to pay the price.

"The disadvantage is knowing where that cutoff is between prices, and cities have to estimate how ... many gallons of water are needed for necessities for a particular family. Now actually several towns in North Carolina use this system, and over a third of people living in cities nationwide use this kind of pricing for water."