Why are diamonds more expensive than water?

This is a question of supply and demand. The reason why diamonds are more expensive than water (generally speaking) is because there is a lot more water around than diamonds. If you live in America, all you need to do is turn on the faucet, and you can get as much water as you need. But if you wanted a good quality diamond, where would you go? You would have to go to a store to buy one. Moreover, the store would have to get it from a company that mines for diamonds, and so forth. It is basic economics. The rarer and more difficult to get something is, the more it will cost.

With that said, there are instances where water is more expensive. Think about it, it you were in a place where people were dying of thirst, what good would a diamond be? It would be worthless, but water would be extremely precious. The basic principle behind this scenario is the same - supply and demand.