Yep — water doesn’t vanish!
But the amount of potable water available for a municipality to use, at any given moment, is constrained by the capacity of its water-treatment system to treat water and make it potable. If a new company shows up in town and starts using a lot more, that’s when you can get a real bottleneck. And of course, the increasingly feast-or-famine patterns of precipitation make load balancing with water even trickier; the southwest is grappling with this heavily. One could say, well, just build out more water-treatment infrastructure when demand goes up! But it’s very expensive stuff, and constrained by space itself.
I had figured this of water management was well-known to most readers — so I didn’t mention it in the piece. But several commenters have suggested that “water can’t be lost / wasted”, so I’m realizing that maybe it isn’t well known ….