Referring to the diagram shown below, we can see an arrangement consisting of a circular enclosure having a couple of pipes drilled in and a circular turbine shaped wheel installed inside the enclosure.
The pipe connections allow water to flow in through one of the inserts and flow out from the other side of the enclosure insert.
The extended turbine propellers or wings are purposely placed in path of the flowing water so that it begins rotating in response to the force exerted by the flowing water on the shafts.
A magnet can be seen attached at the outer end of one of the turbine propellers, and a fixed complimenting hall effect magnetic sensor at the outer periphery of the enclosure.
When the turbine rotates in response to the water flow rate or flow pressure, the attached magnet cuts through near the hall effect sensor inducing a triggering voltage into it with each rotation cycle.
This pulsed voltage from the hall effect sensor corresponding to the flow rate of the water is appropriately fed to a cascaded IC 4033, 7 segment decoder circuit for indicating the recorded water consumption at any particular instant.
The image above shows a 3 digit pulse counter, the clock input of the circuit may be integrated with the hall sensor triggers for getting the intended water consumption rate.