conserve or not to conserve: that is the question

From World...

The environmentally conscious Canadian government has urged its citizens to conserve water. But now that enough citizens have listened, city officials in Toronto are learning that when the faucet turns off, the city's water works gets soaked in red ink. Armed with low-flow shower heads and toilets, Toronto residents used 11 percent less water in 2007 than they did in 1988. To make up for shrinking receipts from water usage, the city has instituted a 9.4 percent increase in water prices. "Conservation is killing us," one public works official, tasked with rebuilding an aging water infrastructure with declining revenue, told the Toronto Star.

Hilarious!

Is this, most of all, an example of:
a.) the unintended consequences of govt policy
b.) reversing cause-and-effect; if they wanted to do this, just raise prices from the beginning to encourage conservation
c.) the likely conflict of interest when govt is connected to service or good production through taxes or regulation
d.) toilet humor at the govt's "expense"