For years the message drummed into Bud Harris, 78, and his grandson David Moreira, 27, was conserve, conserve.

And conserve they did, along with thousands of others across the GTA, watering their lawn less, replacing old toilets and installing water-efficient showerheads.

"We are trying to be economical and trying to do it to preserve the Earth as well," said Moreira, a locksmith who lives with his retired grandfather in a 1950s-era subdivision in Mississauga.

They've done all the right things, he says, 70 per cent for economic reasons and 30 per cent for environmental reasons.

But that win-win sentiment belies an inconvenient truth – one that came out in a recent unguarded comment from Durham Region's works czar, Cliff Curtis. Asked about declining water consumption, he told the Star:

"Conservation is killing us."

Realizing what he'd just said, Curtis smiled broadly and quickly added that there were, of course, a thousand reasons to conserve.

But one thing is certain: Conservation is putting cash-strapped municipalities in a bit of a pickle.

Tougher post-Walkerton regulations, growing communities and a rising backlog of crumbling pipes needing to be fixed are driving up costs even while diligent consumers are lowering their consumption and the size of their bills.

Toronto alone is facing about $800 million worth of repair and replacement work, since half of the city's water mains and 30 per cent of its sewer pipes are more than 50 years old. But last year, total revenue was only $604 million.

Other regions are hurting, too.

Peel Region treasurer Dan Labrecque estimates his region has lost $7 million to so-called "revenue or billable flows shortfall." The need to make up for that lost money accounts for nearly half of Peel's proposed 16 per cent water rate hike (expected to be phased in at 12.5 per cent).

"A number of factors are contributing to this, including the success of our water consumption (reduction) efforts," said Labrecque. "We've pointed it out to council saying, here's the trend, we don't know if it's a sustainable trend, or whether it's an adjustment because of changes, the Al Gore movie and all that kind of stuff."

Individual efforts are an obvious part of the change in consumption. For example, Peel's water use didn't increase last summer even though it was one of the driest on record; people took the message to heart and watered their lawns less.

That's been augmented by changes in the building code requiring more efficient equipment in new homes, and by programs that subsidize replacements in older homes.

Last year, homeowners in Mississauga, Brampton and Caledon installed some 7,103 subsidized low-flush toilets, compared with just 204 two years earlier.

The trend is the same everywhere.

Last year, Torontonians consumed 374 cubic million metres of water, a huge drop from the 424 million cubic metres that poured from the city's taps in 1988.

A staff report attributes the decline to "an underlying systematic trend towards lower consumption, partly due to greater promotion and awareness of water efficiency initiatives," plus the loss of some major industrial consumers and price sensitivity.

Toronto's 9.4 per cent hike in the water rate – expected to be repeated annually for some years to come – reflects a trend across the GTA. Blended water and wastewater rates are rising everywhere as consumption continues to drop: 6.5 per cent in Halton, 9.5 per cent in Durham, 11.6 per cent in Markham and 9 per cent in Peel.

On the plus side for conservation is the possibility that municipalities could save significantly if existing infrastructure, including the water plants, last longer – or if building new ones can be postponed. Also, less water use means less energy is needed to treat and pump water and wastewater – meaning savings on the power bill and fewer greenhouse emissions.

But in the short term, municipalities are forced to look for other solutions, including revising the water rate structure to reflect that, while conservation is good, there's a price to be paid for it.

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"If we want to promote conservation, should our billing practices reflect that?" wonders Labrecque, reflecting the direction he's getting from politicians.

"Fixed levies might be part of the new structure," Labrecque said, adding that there would have to be clear direction from the political side to go that route.

Other ideas floated by politicians and water staff include charging bottled-water producers more for using municipal water; creating block rates; and – taking a leaf from the hydro sector – charging higher rates for people who use more water at peak times.

"It's ironic," chuckled Mississauga Councillor George Carlson, chair of the city's environment committee, speaking of the success of the water-conservation message. The payoff for cleaning up our act may be that we end up paying more.

Canadians, according to the Canadian Environmental Law Association, are among the most wasteful water users in the world, at more than 300 litres per person per day – second only to the United States. The fact that our water comes so cheap has a lot to with that. And it's a message that's starting to get through.

"It seems to me we haven't been paying what we should be paying for water over the years," Mississauga Councillor Pat Mullin mused at a recent regional council meeting.

Locally, when conservation promotion is done as vigorously as it has been in Peel, retrofitting homes can have a dramatic effect.

Johann Manente, Peel's point person in the effort, pointed out that in the region's 30 public housing apartment buildings, almost 4,000 units have been retrofitted for water conservation.

The savings per unit were about 360 litres per day – the equivalent of running the tap on full for 25 minutes.

Depending on your point of view, that project alone saved – or cost – the regional treasury almost $550,900.

Manente said the region's ultimate goal is to reduce water consumption by up to 10 per cent in the next seven years.

Labrecque said what's needed next is a more detailed engineering analysis of how Peel Region's million-plus residents and 70,000 businesses are using water, to get a better handle on the trend.

"I've identified it as a positive – people are using less," he said. "How much less is very complicated.

"The alternative is to tell them to use more water so we can get more money," he said with a big smile. "But that's not our goal."