"Well with any resource ... you of course have two parts: you have supply and demand. In the short-run, obviously what's happened is our supply is way down. Now over the long-term we might want to build additional capacity for supply, more reservoirs. But right now the only way to get into balance is to bring consumption down (that is demand)," says Dr. Walden, a professor of agricultural and resource economics. "And so far what government officials have down is they have, number one, tried to encourage people to conserve. And secondly they have imposed restrictions -- rules on when you can water, for example, outside; if you can water; et cetera."

"Now there is an alternative approach that economists would argue at least should be considered, and that is to simply raise the price of water until you get the necessary reduction in usage," he continues.

"Raising a price is a way to get people's attention. Also it communicates to them that this resource water is now more valuable, and it is more valuable since the supply is lower. Also raising the price avoids the government having to set up rules and monitoring those rules, catching violators, et cetera.

"Now what you could do with the additional proceeds when you do raise the price and more revenues flow into the government water system is you could firstly return that money to citizens in terms of income grants, or perhaps better you could use that money for programs, for example, to help people buy mechanisms for the house that allow them to save water, also to put those monies into a fund to build more infrastructure to enhance supplies in the long run."