“So much turns on pricing when it comes to water,” said Robert Glennon, a professor at the Rogers College of Law at the University of Arizona and the author of “Unquenchable: America’s Water Crisis and What to Do About It,” a 2009 book on water policy.

“The beauty of tiered pricing is that it doesn’t prevent people from using water, and it doesn’t rely on government regulations,” Mr. Glennon added. “But it insists you pay more for extra water for your lawn than for basic human needs.”

The tiered approach has worked as intended. Since 2001, Santa Fe’s total water consumption has dropped by a fifth, even as the high desert city’s population has increased more than 10 percent. When water costs more as its consumption increases, people respond exactly as an economics textbook would dictate: They use less.

Santa Fe has the most expensive water out of 30 American cities surveyed by Circle of Blue, a nonprofit news agency that focuses on water policy, and the city’s residents are among the thriftiest when it comes to turning on the tap. In Santa Fe per-capita water usage has plunged, falling from nearly 140 gallons a day in 2001 to about 100 now.

By contrast, in Fresno, which has a single, uniform price for water, per-capita usage was 222 gallons per day last year, after falling from even higher levels because of a variety of conservation efforts.

As many as two-thirds of California’s local water departments use some sort of tiered-pricing system, but none have gone as far as Santa Fe. And now the whole idea of relying on prices to help balance supply and demand faces major legal and political obstacles in the state.

Late last month, a California state appellate court panel ruled that a tiered pricing system in Orange County may violate state laws that prohibit local governments from charging more for services than they cost to provide.