> Would you be willing to pay an extra $3.5 per month to never have to worry about a drought again?
Yes, you'll never have to worry about your basic supply of 50 gal/d/person being threatened in a drought, but just think about this for a second: the population of Melbourne is around 5 million people. In the 2020-2021 year, Melbourne Water delivered 439 billion liters (116 billion gallons) of fresh water[1]. That is roughly 318 million gallons of water consumption on an average day. What kind of drought would reduce the available water from 318 million gallons to 25 million gallons per day?
Personal consumption (drinking, showering, household washing) is not the primary driver of water use. In general, it is dominated by agriculture, and to a lesser extent by industry. The economics of these activities would not permit an order of magnitude increase in the cost of fresh water.
[1]: https://www.melbournewater.com.au/media/18976/download