It is necessary to build more capacity as demand increases. Demand management opportunities are real and increasing. Take advantage of all cost-effective options before increasing infrastructure capacity. Demand is a matter of quantity. Treat all supply-side water to potable standards, and collect all wastewater for treatment in one system.
Demand is multi-faceted.
Water follows a one-way path from supply, to a single use, to treatment and disposal to the environment. Reuse and reclamation. The only things we call infrastructure are made of concrete, metal and plastic. Besides pipes and treatment plants, infrastructure includes the natural capacities of soil and vegetation to absorb and treat water. Larger systems, especially treatment plants, attain economies of scale.