What is the True Value of Water?

Or as Common Council President Willie Hines put it “What is Water Worth?” This question has been on the minds of local officials and citizens as of late because of the City of Milwaukee approving an agreement to sell water to New Berlin.

In New Berlin the questions and complaints regarding this agreement seem to be:

• Why should New Berlin pay the $1.5 million upfront fee?
• Why isn’t Milwaukee acting regionally?
• Didn’t the Great Lakes Compact would eliminate negotiations?

In Milwaukee the questions and complaints regarding this agreement seem to be:

• Was the $1.5 million upfront fee enough to cover the potential lost economic development?
• Is selling water to a suburb who has little transit or affordable housing acting regionally?
• Does this violate the Great Lakes Compact?

NewBerlin.now blogger JJ Blonien and Wisconsin State Senator Mary Lazich (R – New Berlin) expressed outrage over the $1.5 million upfront fee.  They argue that it fee flies in the face of regionalism, the Great Lakes Compact, and that New Berlin should explore other options to acquire water.  They even went so far as to call it “extortion”. 

For example, in Mary Lazich’s (R – New Berlin) article, “Despite an approved Compact, Milwaukee holds a gun to New Berlin” she claims the approval of the Compact should of alleviated the need for the $1.5 million fee.

Time and time again, I heard Compact proponents make the case that the Compact would address the water needs of New Berlin. The conventional wisdom was that the Compact needed to be approved quickly, and if it was, New Berlin’s water woes would be taken care of. Making those arguments were city of Milwaukee officials from Mayor Tom Barrett on down. They claimed the city of Milwaukee would no longer have issues with New Berlin getting water if Wisconsin would simply okay the Compact.

In JJ Blonien’s article, “Mayor sells out citizens in $1.5 million extortion deal“, he compares the fee to extortion as well and suggests that New Berlin should look elsewhere for water.

New Berlin has options besides Milwaukee’s one-sided extortion deal. The city utility can soften New Berlin’s water to comply with EPA standards, or it can pursue water agreements with the cities of Oak Creek or Racine.

These arguments imply that the City of Milwaukee received all the benefits of this deal and misrepresent the history of the Great Lakes Compact.  Further the argument against the payment of a one time fee is that to support “regionalism” the City of Milwaukee should ignore its own economic self interest.  Fortunately these arguments don’t “hold water”.  New Berlin needs to remove the radium from its water and needs access to additional water to continue its growth, which this deal makes possible, so clearly New Berlin is acting in its own economic self interest.  Further it is true that New Berlin does have other options to obtain access to water.  New Berlin could purchase water from Oak Creek at a higher per gallon cost, or build a water treatment facility at a price tag of $4 million plus additional on-going costs.  But in the long run the $1.5 million price will be lower than the either of the options.  In regards to the Compact what Mary Lazich (R – New Berlin) fails to grasp is that without approval of the Great Lakes Compact no sale of water to this portion of New Berlin would of been possible under existing federal law.  Not that passing the Compact insured that New Berlin could obtain water at any or no cost. 

From the City of Milwaukee’s point of view this water sale represents a potential loss in economic development and does little to help its own citizens.  Without the $1.5 million upfront fee the estimated benefit to a Milwaukee taxpayer, according to the City of Milwaukee Water Works, is the potential of holding water bills down a couple of dollars sometime in the future.  As this benefit is very slight it in itself doesn’t outweigh the potential economic loss this transaction represents.  The City of Milwaukee Department of City Development (“DCD”) estimated that this water sale could facilitate the creation of 5000 – 6000 new jobs and the construction of 1,100 new homes in New Berlin.  Additionally much of this new economic development will be inaccessible to residents of Milwaukee due to New Berlin’s lack of affordable housing or significant mass transit options.  Of course its not to say any or all of this growth would of occurred in the Milwaukee but by making clean water available to New Berlin, Milwaukee is encouraging growth to occur in New Berlin instead of Milwaukee.  This represents a potential economic loss to the city that Milwaukee has attempted to recoup by imposing the $1.5 million upfront fee. So it is clear both cities worked to obtain a resource necessary for their individual economic self interest which to some extent is what regionalism is actually about.

But the question still remains, “What is the true value of water”?  As Jim Rowen aptly points out in his article New Berlin Alderman Questioning Parameters, Payment in Water Deal:

Early settlers throughout history choose to build close to sources of water for a reason.  You need it to sustain life.  Without access to good clean water the land in New Berlin is worthless.

So the true value of water is whatever New Berlin would of paid for it and I believe Milwaukee could have gotten more.