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An article by Newsweek's Jeneen Interlandi, made sit up and take notice of just how close we are to destroying ourselves. The article was titled “The New Oil" Should private companies control our most precious natural resource?

The author begins by describing a small town of Sitka, Alaska who has fewer than 10,000 people and is spread across 5000 square miles. This small town gets its water from Blue Lake reservoir, which holds trillions of gallons of water so pure it requires no treatment. Knowing that every year, countries are struggling to meet their water needs-the author describes the situation of this small Alaskan town as an "embarrassment of riches" because 6.2 billion gallons of Sitka's reserves go used. The citizens of Sitka Mason will soon capitalize on their treasure in a win, win situation. In a few months 80 million gallons of Blue Lake water will be siphoned into tanker trucks for shipments to Mumbai, India to be disbursed among the drought plague cities throughout the Middle East. This project will bring the city of Sitka, Alaska about $90 million annually. True Alaska Bottling and S2 Global will initially use 3 billion gallons annually, leaving Sitka about three billion gallons of unused water.

The transfer water is not new because NYC gets its water from the Catskill Mts, 125 miles away and Southern California gets its water from the Sierra Nevada Mts and the Colorado River Basin which are hundreds of miles away. The issue is not the distance but the matter of transferring public water into the hands of private companies "is morally wrong and dangerous" said James Olson, an Atty. who specializes in water rights.

Proponents of privatization continue to say that the markets of the best way to solve the problem because market price will drive consumption down in solving water scarcity. That comes with a price, because water will be sold to the highest bidder, not to the customer with the most compelling moral claim .Now that True Alaska Bottling has the exclusive rights to Sitka's water; it is in the business of making a profit, so water starving countries might have to take a backseat to Coca-Cola, Coors, and in general, the highest bidder. T. Boone Pickens wants to sell the water under his Texas panhandle ranch to thirsty cities like Dallas.

In the United States, Federal funds for repairing water infrastructure are scarce. The Obama Administration has earmarked $6 billion for repairs but EPA estimates that it will cost $300 billion. Meanwhile six billion gallons are lost to leaky pipes. Some cities like Pittsburgh, Chicago, and Santa Fe, New Mexico are not willing to put up with this anymore, so they're looking to privatize. On the surface it seems like a viable option to balance the city's budgets, keeping the water rates low, and pass off the repairs and expansion. The problem they run into is that 70 to 80% of water and sewer assets are underground, so it's virtually impossible to monitor the contractor's maintenance performance. Private operators often reduce the work force, neglect water conservation, and shift the cost of environmental violations onto the city.

Cities that are looking toward privatizing their water infrastructure should consider the expensive legal battles to get out such contracts. In 2009 Camden, New Jersey sued their contractor for $29 million in unapproved payments, water losses, poor maintenance and service disruptions. In Milwaukee, a state audit revealed that same company violated their contract by shutting down sewage pumps to save money; that move resulted in billions of gallons of raw sewage spilling into Lake Michigan.

Representatives of United Water argued that 95% of their contracts are renewed and the few bad examples do not represent the whole story. They went onto explain that the Gary public facility went private only after the EPA forced them to find it more experience operator. He went onto say the municipalities don't have the expertise to meet the new standards.

Economists call the problem; price elasticity, because no matter what water costs, we need it to survive. All the conservation in the world cannot meet the increasing demand. Wenonah Hauter, executive of the director of the nonprofit, anti privatization group, Food and Water Watch, summed it up pretty good when he said "Free- -market theory works great for discretionary consumer purchases but water is not like other commodities- it's not something people can substitute or choose to forgo."

October 18,2010 issue of Newsweek "The New Oil" by Jeneen Interlandi