We're so far away from that being the problem that it's just absurd and irrational to even bring it up. The problem is a fight between industries and what we may want for the future, the problem is not people dehydrating in the street, Arrakis-style.

If this were truly a concern, the trivial solution is to have tiered pricing which steps up the price of water after the "essential" quantity has been dispensed. This could be implemented as a yearly rebate.

Who says residential uses have to follow that trend?

Residential use (outside of public works) is typically trivial, so could stay with its existing model.

Industrial use in contrast is much different so is a more interesting thing to model.