It was explained to me somewhat cynically: water has a cost. If you use a lot, and your neighbors use a lot, the cost to of the water goes up for everyone – including your industrial neighbor 3 miles away who happens to use your water system, but regularly consumes 50% of the system’s supply. They don’t like paying more for anything, so they ask everyone to use less so the prices stay low.
The real reasons are more nuanced and complicated – getting into things like aquifer access and water well density and whether or not it is legal to capture rain water if Nestlé is anywhere near your watershed. It has a lot to do with the cost to treat water.
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