On the subject of the problem of declining revenue from water conservation, there is this, from the February 2009 10-k filed by American Water Works, a private water utility, with the U.S. Securities and Exchange Commission:

Increased water conservation, including through the use of more efficient household fixtures and appliances among residential consumers, combined with declining household sizes in the United States, has contributed to a trend of declining residential per customer water usage. Our Regulated Businesses are heavily dependent upon revenue generated from rates we charge to our residential customers for the volume of water they use.