Is water too cheap?

I was just reading that householders in South Australia will pay almost 22 per cent more for their water next financial year. That follows on from an 18 percent increase during this financial year. 
It sounds pretty hefty; but Adelaide’s desalination plant is not a cheap investment – and really, water is still pretty cheap here when you consider we live in the driest state in the driest inhabited continent.
From next July, water will be 97 cents per kilolitre (kL) up to 30 kL (30,000 litres); rising to $1.88 per kL up to 130 kL and $2.26 per kL above that. So, at the low end it’s going to cost 0.097 cents per litre and at the high end, less than triple that. 1 cent gets us 10 litres of water. It’s a pretty good deal.
For US readers, that translates to around 0.4 cents per gallon at the low end. 
For basic human needs, 20 litres or just under 5 gallons of water is required per day for drinking, cooking, showering and washing; but not including water needed for the production of food. That’s around 2 cents worth under the new pricing.
That 20 litre figure comes from the UN and I think it’s pretty accurate given my own consumption when I’m out in the boonies for a few weeks. 
My rainwater tank holds about 9,000 litres and based on the new pricing of water, that’s about $8.70 worth. It’s hard to believe that the contents of the liquid-holding monolith I just about worship are worth that little in the suburbs. To have that water trucked in would cost me hundreds of dollars. To buy the equivalent in casks/boxes would cost $3,600.
I place a value on the contents of my rainwater tank even more than that; especially considering that if I was somehow cut off from the rest of the world while out in the bush, I would be dead inside a week without it.
According to some figures I have in my article on consumption statistics, in the USA average water consumption per person in 2008 was 575 litres daily. That includes water required in the production of the goods and services we consume. I’m pretty sure Australians use about the same. 
Clean water is such an important resource and like the rest of the bounty nature provides us with, we tend to abuse it.
While our lifestyles certainly don’t allow us to exist on 20 litres/5 gallons a day; we really need to be more vigilant in our water saving efforts and I think even bigger price hikes are in order to help achieve that. It’s unfortunate, but one of the best ways to modify wasteful behaviour is to aim for the hip pocket. 
Even though South Australia has the highest rate of rainwater tank ownership in Australia, further increases would not only make people more conscious of their water consumption but help boost the practice of rainwater harvesting by households even more. Even just simple rain barrels can provide a lot of water over a year.