Answer:
(C) The first is a premise supporting the argument's main conclusion; so is the second.
Explanation:
The two sections in boldface are "Supplies in local freshwater reservoirs have been declining for years" and "few users have bothered to adopt even easy conservation measures"
In the economist's argument, both highlighted sections are premises giving the reason why the price of tap water should be drastically raised.
The conclusion of the argument is that the supply of water be drastically raised, the two boldfaced sections are just premises on which the conclusion is based.