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This study addresses the effectiveness of using pricing mechanisms, government-imposed constraints, or a hybrid, as a means of rationing municipal water. We try to test which policies would be most accepted among rural and urban communities in a semi-arid region of Texas that depend on both surface and groundwater sources for their municipal supplies. This study reveals that a hybrid conservation policy that includes mandatory restrictions, fines for overuse, and pricing increases could be more acceptable, and hence more efficient, than a policy that only consists of regulation. Moreover, there is not a significant dichotomy in policy preferences between rural and urban constituents; although those in rural communities would seem to appreciate far less regulatory policy than would urbanites. (c) 2007 Elsevier B.V. All rights reserved.