Heat butter over medium heat in a medium-size saucepan. Add onion, and sauté until pale golden, 1 to 2 minutes. Add rice, and stir to coat.
Add 3 cups water, and bring to a boil. Add salt and pepper. Cover, and reduce to a simmer. Cook until the liquid is absorbed and the rice is al dente, 18 to 20 minutes.
Remove from the heat. Fluff with a fork, and stir in chopped parsley.