Final answer:
Economists would expect people to use less water if it was taxed, similar to how they have reacted to increased energy prices in the past by finding ways to reduce consumption. Water conservation might not occur spontaneously due to its perception as an inelastic need and the lack of immediate consequences for overuse.
Step-by-step explanation:
If household water usage was taxed, economists would expect people to use less water. Economic principles suggest that consumers respond to price changes. For instance, when energy prices increased significantly in the past, people reacted by reducing the quantity demanded of energy; they turned down their thermostats and wore heavier clothing inside to adapt to the price change. Applying this to water, if faced with higher costs due to taxation, people would likely find ways to conserve water to reduce their bills. This could include measures like taking shorter showers, fixing leaks promptly, or investing in water-efficient appliances.
One reason these steps might not be taken without the incentive of a tax could be due to the fact that water is often perceived as a basic need with an inelastic demand. In wealthier nations, water is relatively cheap and accessible, which can lead to overuse. Additionally, the consequences of overuse are not immediately felt by the individual consumer, leading to a lack of motivation to conserve water. To encourage more efficient water conservation, incentives such as tax credits for water-saving appliances or tiered pricing that increases with higher usage could be introduced.