I think that water should be priced way higher than diamonds! Diamonds are useless except for making necklaces and bracelets and nobody even does that anymore. Water is misused everyday and if it were higher priced more people would use it responsibly instead of just wasting water like they do now.
Water is one of the most needed things on earth so a basic need should not be priced so high because some poor countries can't even afford water the price it is right now. WE do not need diamonds to survive we NEED water to sustain life on the earth.
Whilst you do acknowledge that the demand for water is greater, you seem not to recognise the supply side of things. The two fundamental principles of supply and demand are:
-The greater the supply (or willingness to supply), the lower the price
-The greater the demand, the higher the price
Whilst it is true that water is more valuable than diamonds, and thus the demand for water is greater than that of diamonds, it is imperative that you look at the supply of those two goods. Diamonds are very rare (supply is low), and this offsets its low demand. On the contrary, water is very common, and since there is so much of it (supply is high) this offsets its usefulness and value when considering its price. Thus, the reason why diamonds are more expensive than water is because there is a lower supply of diamonds.
As for whether water should be priced higher, it should be noted than any law and legislation (short of subsidisation) results in less of that good being produced, whether due to the lack of demand (if the price is too high) or a lack of supply (if the value received by the sellers is too low). The quantity that ensures the most water being produced and used would be the equilibrium quantity, where supply and demand are equal at a certain price). Thus, an attempt to distort the market price for water, whether by making a minimum price or by taxation results in less production and consumption of water, which would be wasteful to the potential water we could have produced and consumed.
Thus, it is more wasteful to try and distort the price of water than it is too "misuse" water.
Let the market figure it out. Nearly everyone wants both but there is much more water then there are diamonds. Additionally, since water is found in many places and actually falls down from the sky, people will only pay so much for it. In addition water is a necessity whereas diamonds are a luxury, so water should obviously be cheaper than diamonds.
This is a take on the paradox of value which I feel can be quite easily answered. Yes, the use-value of water (as a vital resource for survival) far exceeds that of diamonds (which has little to no practical commercial uses), but the price and the exchange value of diamond far exceeds that of water. With this said, yes, I believe that water should be priced slightly higher than diamonds, given that said diamonds are priced according to their use-value, which is nil. This is not practiced in reality because of another factor in pricing: the amount of human labor exerted in extracting this commodity. Water is ubiquitous and its demand is quite high, thus the extremely low prices. Diamond, on the other hand, is rare and requires far more human labor to extract (also accounting for workplace hazards and accidents) compared to water.
Until there is less water than diamonds, why should it? Even if there was less fresh water than diamonds, it is easier to produce fresh water than it is to produce a diamond and, therefore, should be priced less. I do not know any situation where diamonds can be priced lower than water.
Water is something the human body needs in order to survive. If water was priced higher then diamonds then the human race would rapidly start dying off since not everyone can afford the price that diamonds cost today, plus you can survive of rain water, and it does in fact rain, so making water cost more then diamonds would be a complete waste of time, and it would be stupid.