(1) Water conservation includes actions that, for a given level of water supply, reduce the demand for or use of water by -
(i) Improving efficiency in use;
(ii) Reducing loss and waste;
(iii) Increasing the recycling or reuse of water, thereby making existing supplies available for other current or future uses; or
(iv) Improving land management practices for the purpose of reducing water use, loss, waste, increasing the efficiency of water use, or increasing the recycling or reuse of water.
(2) Payments shall be considered to be made primarily for the purpose of water conservation if they are intended to finance actions, measures, or practices that can be expected to result in water conservation as defined in paragraph b(1) of this section.