I recently read an article that explained the price of water and the effect it has on demand. It explains that at low prices, consumers will not pay attention to the consumption of water and will only determine what they will use it for, not how much they will use. Or in economic terms, it remains inelastic at low prices. Though the article was related to agriculture, I think it applies well to what is going on in St. George. As most people know, water consumption and conservation are a hot topic right now. The Lake Powell pipeline is in the works to keep up with the growth and consumption, but it may not be enough. Buildings continue to be erected and grass and other water features remain part of the landscaping. This continued trend, along with all of the golf courses and extremely hot summer weather don’t help the issue of conservation.
Until there is a substantial rise in the price of water, the demand curve will continue to shift to the right while the quantity will level off and force the price to go up.
I will bet that the rise in price will cause more “natural” and gravel landscaping instead of grass and water features that consume that majority of water. This will cause the demand curve to move back as people will be persuaded to try alternative routes to high water consumption.