I think economists use the concept of "marginal utility" to solve the problem you describe. If you already had 10 glasses of water, the marginal utility of having another drink is very low. If you haven't had anything to drink for two days, the marginal utility is high.
Your own example should make it obvious that "utility" is not a good way to think about value. Should people pay 100$ per glass of water, even if they live next to a river of fresh water? It wouldn't lead to good economic results to set prices that way.
I think anything else than "what people are willing to pay" will ultimately lead to bad results. For example the misguided "value theory of labor" keeps messing things up and leading people down the destructive path to communism.
Your own example should make it obvious that "utility" is not a good way to think about value. Should people pay 100$ per glass of water, even if they live next to a river of fresh water? It wouldn't lead to good economic results to set prices that way.
I think anything else than "what people are willing to pay" will ultimately lead to bad results. For example the misguided "value theory of labor" keeps messing things up and leading people down the destructive path to communism.