Robert Stavins, professor at Harvard’s Kennedy School of Government and Chairman of their Environment & Natural Resources Faculty group, advocates for letting the market decide water prices:
Raising water prices (as with the elimination of any subsidy) can be politically difficult. This is probably one of the primary reasons why water demand management through non-price techniques is the overwhelmingly dominant approach in the United States. But the cost-effectiveness advantages of price-based approaches are clear, and there may be some political advantage to be gained by demonstrating these potential cost savings.
Yglesias adds his own two cents.
The Dish 