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.
Economically speaking, diamonds are more expensive than water because of supply and demand. In this case, it's more because of supply than because of demand.
You might expect that water should cost more because people have to have water and they don't have to have diamonds. So the demand for water should be high.
But there is so much water around that it is relatively cheap. Diamonds, by contrast, are pretty rare. Since the supply of them is so low, their prices are high.
But if water became scarce, its price would be really high too.