I don't have is really concrete examples of communities in the US or elsewhere that have demonstrated how the proper pricing directly impacts usage. I've certainly seen plenty of examples of conservation rates being applied and maybe correlated to reductions in consumption but these are generally used in conjunction with other conservation initiatives and it can be hard to parse apart how much of water use reductions result from pricing versus sprinkling ordinances, high efficiency toilet rebates etc. If you could point me in the right direction I'd be grateful.In section 3.13 of my dissertation, I discuss how 100% wholesale price penalties were effective in reducing demand from retail water agencies. I did not control for the simultaneous effects of (in)formal conservation, which requires econometrics. These papers do control for those effect, isolating and measuring price-elasticity, i.e., the percent reduction in water use that follows a one-percent price increase:
Nataraj, S. (2006). "Residential Water Demand: Estimating the Price Elasticity of Water Demand in Santa Cruz" Working Paper.
Mansur, E. T. & Olmstead, S. M. (2007). "The Value of Scarce Water: Measuring the Inefficiency of Municipal Regulations" Working Paper.
Does anyone have other examples from the academic or popular press?
Note that water managers held that price elasticity was zero (i.e, people do not respond to higher prices) until the early 1990s. Now they believe that it ranges from -0.3 for indoor use to -1.5 for outdoor use. Elasticities for farmers are even higher.
Bottom Line: Higher prices will reduce water use.