Water bills should be allowed to rise to encourage people to save water in the face of scarcer resources, a Lords committee suggested today.
The Lords Agriculture, Fisheries and Environment EU sub-committee said consumers would need to "pay more or to save more" to protect increasingly under-pressure water supplies and the environment.
A report on EU water policy, which comes as much of England remains in drought despite the wettest April on record, also said the Government must speed up efforts to change rules on taking water from rivers for homes, businesses and irrigation because of the damage it was doing to nature.
More than one in 10 rivers are being abstracted to the point where it is damaging the natural environment, but the Government has set a target date for reforming the system by the mid to late 2020s, which the Lords say is too late.
Action must be taken more urgently, according to the report which called for the EU to start planning immediately for a future where water resources would be more uncertain in the face of factors such as climate change and population growth.
The Lords said that in the UK, political direction was needed to link up water suppliers so that companies in water-rich areas can supply drier parts of the country and to promote water efficiency.
But where other measures to tackle water scarcity have failed, the Government must allow the cost of water to rise.
They also raised concerns about the rate at which treated water is lost from supplies, but said the most obvious causes had been addressed and cutting current leakage rates of 20% to 25% implied higher costs which needed to weighed benefits.
And they said the possibility of higher consumer bills should not prevent water meters being brought in, but that safeguards were needed to protect people who could not afford the greater costs.
The report said: "The protection of our water environment while the population continues to grow will require the adoption of innovations, such as metering, and real-time information about domestic water consumption, and will require consumers either to pay more or to save more.
"We believe that the cost of water will have to rise in areas where other measures are not enough to meet the challenges of water scarcity."
The committee's chairman Lord Carter said the issue of water scarcity was becoming increasingly urgent.
"Having taken our water resources for granted for so long, we must start looking at ways in which we can protect the quality and availability of water resources in the face of challenges such as climate change and population growth."
And he said: "If we are to ask people to pay more for this crucial resource in challenging economic times, we must ensure that they fully understand what they are paying extra for.
"They must feel connected to their local areas and know the benefits that freshwater lakes, rivers and streams provide to their local wildlife and ecosystems."