This is absolutely how things work, the water for farming and industry is cheap by design (at least in the US) so that people will have relatively cheap food and consumer goods.
Now you can absolutely try to go change that to a strictly capitalist "One gallon of water is 1 cent, whatever the usage", but you'll have a hard time finding a political group in this country that stands behind such a principal. Even the most conservative groups typically back farming subsidies.
