I am in Colorado for an economic teaching conference and there are fires in a number of places including nearby. The drought here is nothing new, nor the complaints about water rights and usage.
Water is, of course, a scarce resource. However, we are not running out of water, nor will we ever run out of water. This is because the Earth has a closed hydrologic system. The amount of water is constant throughout the ages. Water evaporates and precipitates, but the amount never changes. Fresh water is a very small portion of the total and is not evenly distributed around the globe, so the dilemma is how to care for this necessary resource.
Though water is dear, it is often sold cheap through government utilities. Some municipalities have privatized their utilities with great success.
Water not directly controlled by government may be nominally private, but a mish mash of tradition and regulations makes a mess of that, too. Rainwater collection has been made illegal in many western States. So water that falls on your land is not yours, it belongs to “society”. Also, farmers are not allowed to sell any excess water contained in their land for any non-agricultural use, even if no other farm needs it. These rules are ridiculous and need reform.
Desalinization has been one solution to fresh  water shortage in many areas and improved technologies will continue to increase water supplies.
Several studies over the years have shown that free markets in water can be used to allocate even this very important resource.
See “The Use of Pricing and Markets for Water Allocation” and “Markets for Water”.