I whole heartedly agree with this plan as long as firstly you can control and repair any water leak within a set time as there is for Gas. Too many times we see what is a water leak which is left to be repaired for days. That to me is not good enough, perhaps a tighter SLA?
Secondly by installing a water meter it would help in explaining to the consumer how much water they use as most consumers are unaware of this. Plus it will help us all save money in the long run.