No, it isn't right to say "how limited are water supplies" and the point has nothing to do with degrees of formality or informality.
It's wrong to think of it as an inversion, such as you get in questions. Statements of this kind are not questions so there's no inversion.
How big you are!
How clever she is!
How rich they must be!
How stupid he is!
Just think how much work he must have done!
Imagine what qualifications you would need!
I didn't realise how little time there was!
They dont appreciate how limited water supplies are!
You don't have to end with and exclamation mark. I've put one because statements of this kind tend to have an exclamatory character.