Mr King said with the Alliance Freezing Works double-shifting to cope with the influx of stock from farmers having to de-stock because of the big dry, residents had to weigh up if washing their cars was important.
"Isn't it economically better for our town for that water to be used for primary production?" he said.
While many in the town are questioning the value of the multi-million dollar impound water storage facility on Laws Rd, Mr King pointed out that last summer there was no hosing ban in Dannevirke because of the water storage.
"The issue for residents now is that when water usage is up to 6500 cubic metres a day and the impound system holds 113,000 cubic metres, just how long can we continue to use water at this rate?" he said.
"The impound system is working well, but some days our water use has been up to 7000 cubic metres and it's just the case of people saying 'it's dry and water is bountiful'.
"This crisis isn't a failure in the system. Residents have turned the taps on and blown our water budget and the only way we can supplement our supply is by drawing more than we're consented for and we can't do that. Horizons Regional Council have a key influence in protecting our rivers."
Mr King conceded a valve failure had been the reason water levels in the number two reservoir had dropped, but it should have been able to recover.
"But it didn't," he said. "That's because people were using more water than we had. Dannevirke doesn't have this problem on their own though. They're having problems with reservoirs in New Plymouth and the Waikato too."
Mr King is encouraging residents to purchase 200-litre water tanks to protect themselves from the water shortages.
"Yes, it's dry and the streams are low, but there's only so much water we can get into our pipes," he said. "If we don't restrict it, our impound supply could be gone in days and we don't know when we'll get the next decent rain. Our impound storage could be our reserves for the next few months."
Despite complaints received by the Dannevirke News about water running constantly at the duck pond at the Lower Domain, Mr King said the faulty valve had now been fixed.
Dannevirke plumber Brian Beale said he notified the council he had noticed the pipe running there in October.
"When I was rung this week about water at the A & P Showgrounds, I asked about that incident and was told it had been fixed. But it wasn't and the valve was only shut off on Tuesday," he said.