I can only speak about what has happened here during prolonged droughts, and why we sometimes need to curtail water use through restrictions.
Most of the time our mains water supply is adequate (mostly coming from surface water reservoirs).
At one time, the amount of treated water was more than adequate for the population, but as population has increased, so has demand for treated water. We had a sequence of exceptional droughts a decade or two ago. There were no water restrictions at first, people kept watering lawns and gardens, washing cars, etc.with treated water, provided at low cost. The reservoirs began to show record low water levels, the water became more difficult to treat (because there's more silt, algae, etc. as the water becomes shallower). Some reservoirs dried up completely, drinking and cooking supplies had to be trucked in to some towns.
Lesson learned, in later droughts, restrictions were applied early. Higher cost of treatment was factored in, and higher rates were charged for customers with excessive water consumption. Fined if the watering restrictions were violated. Water is a commodity associated with costs, passed on to the consumer. Result: we have had similar exceptional drought periods, but not the dry reservoirs of the past.
