State control of water rights, while compelling, actually presents many unseen costs and damages the efficient allocation of one of the necessities of life. Clear ownership frameworks and enforcement of that ownership will allow water to become far more available than in the current system of state control. The state has three primary layers of costs. The administrative costs of determining water use rates adds a cost with no clear opposition to its continual rise. The state's monopoly on water also allows monopolistic pricing practices, particularly when they can be justified through environmental concerns. Finally, the greatest cost of government water ownership is the loss of technological discovery by people competing in the water market.

While the government taking ownership of water has some costs given to the taxpayer, the problem of allocating, distributing, and pricing it is able to suck up an unnecessary amount of resources. Understanding how to set prices for various types of consumers for water often takes up entire teams of civic servants. They devise various methods to make farms accessing water conditional upon their environmental agreeability. Even with water prices already high, they enforce strict regulation on private well use, and also on the selling of water between farms. Regulation of consumers takes up a similar amount of time as restrictions are put on lawn watering and various other activities seen as socially suboptimal. While the direct cost of all this is high in terms of administrative time and salaries, the indirect cost is much greater as farms and citizens must re-orient their lives to count for this loss in access to affordable water. The actual distribution of water is one of the few areas where the government holds a genuine advantage, because their ability to take over land land through eminent domain enables them to build more direct pipelines at a cheaper price than private citizens. However, the state has less incentive than a private business to be efficient with its time, because local governments most often hold the theory that if they just deliberated for enough time, they could come to a far more expedient solution.

One of the most overlooked problems in all government controlled industries is the establishment of a true monopoly. The state's monopoly on water makes it impossible to determine a meaningful price, and the cost will often balloon beyond what it would be in the private market. Numerous different owners of water rates would almost certainly undercut one another in price in a race to the bottom, because the industry would be so dispersed that it would be difficult for them to collude. The state has no competitors in the water industry, and thus water prices will always be an oddity and at best confusing. At worst, many more liberal states use the price of water to enforce an environmental agenda on one of the most basic needs of life. Entire sectors of farming have been wiped out because of the absurd water prices. The states monopoly does not destroy only competitors in the water industry, but also has power to destroy anyone they deem unworthy. Whether or not a state actually chooses to utilize these monopolistic privileges, they are there, and anywhere is only one election away from them being used against the people.

While the water market would certainly benefit from race to the bottom pricing in a freer system, the ownership incentives and profit potential could bring countless new technologies and ownership systems that could enable lower prices for consumers and viable agriculture. Water rights are siloed by state borders in many situations, and the private market could allow far more interstate coordination of water prices than before. The same sort of minds that are attacking other tech problems would have a higher incentive to apply their skills to the water industry. The state can fund research, but it will never have as much impact as research done in an industry with meaningful competition. Low return industries like farming could engage in mutually beneficial deals with water companies, where they allow some form of profit sharing rather than being solidly priced out as they are in many industries, particularly in California. Innovation in business structure, water transportation technology, and water discovery technology are being greatly limited by the bureaucratic ownership of the water process from top to bottom.