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What’s water worth?

Waukesha Mayor Larry Nelson stands near the community’s water tower that is under construction. Nelson said he expects to negotiate a deal to have water pumped from Milwaukee to Waukesha. “We’re certainly aware that when New Berlin negotiated their purchase of Milwaukee water, there was a lump-sum paid,” he said, “and we fully expect to have to negotiate some figure more than that because we’re bigger.” (Photo by Dustin Safranek)

Waukesha Mayor Larry Nelson stands near the community’s water tower that is under construction. Nelson said he expects to negotiate a deal to have water pumped from Milwaukee to Waukesha. “We’re certainly aware that when New Berlin negotiated their purchase of Milwaukee water, there was a lump-sum paid,” he said, “and we fully expect to have to negotiate some figure more than that because we’re bigger.” (Photo by Dustin Safranek)

Milwaukee’s location along Lake Michigan provides the city with an abundant supply of water. Milwaukee is in a good position to strike a water-supply deal with Waukesha, says Milwaukee Alderman Michael Murphy, but Milwaukee is limited in how much it can demand because Oak Creek and Racine also are willing to sell water to Waukesha.

Milwaukee’s location along Lake Michigan provides the city with an abundant supply of water. Milwaukee is in a good position to strike a water-supply deal with Waukesha, says Milwaukee Alderman Michael Murphy, but Milwaukee is limited in how much it can demand because Oak Creek and Racine also are willing to sell water to Waukesha.

Milwaukee has it and Waukesha wants it; now the cities are trying to negotiate a deal that benefits both

By Sean Ryan
sean.ryan@dailyreporter.com

Waukesha has life and liberty, but in its pursuit of a cold glass of water, the city is realizing some basic human rights come with a cost.

The trick for Waukesha and the city of Milwaukee, which has the water Waukesha wants, is putting a price on something that is essential not just for development, but for survival.

“There is not a hell of a lot of detailed science on the subject,” said Bob Korth, director of University of Wisconsin-Extension Lakes. “It’s like saying, ‘What is the Grand Canyon worth?’ or, ‘What is the Statue of Liberty worth?’”

But the two cities will have to find an answer if Milwaukee chooses to sell and Waukesha, which has water quantity and quality problems, wins state approval to build a pipeline to Milwaukee.

Putting a price on water

The quandary facing Milwaukee and Waukesha is rooted in a 1907 state law that prohibits putting a price on water because it belongs to the public. Water utilities, for example, cannot put a per-gallon price on water as if it were gasoline when setting customer rates.

The Public Service Commission of Wisconsin, when setting water rates, uses a guideline that the cost should not exceed the expense of getting clean water to the user. The PSC will use that same guideline when considering how much the Milwaukee Water Utility can charge customers in Waukesha, said Dave Sheard, assistant administrator of the PSC water division.

“Full cost recovery is our goal,” he said, “and those costs are tied into the cost of developing and providing the water supply. It’s not based on valuation.”

But state law does not prevent side agreements as long as they do not affect water rates. Milwaukee, for instance, agreed to a $1.5 million payment from New Berlin in 2008 before selling more water.

“So is water a commodity?” said New Berlin Mayor Jack Chiovatero. “I think it has become a commodity as shortages and other issues have emerged. But for us, it was a health and safety issue.”

Waukesha Mayor Larry Nelson said he will be ready to negotiate a similar deal with Milwaukee.

“We’re certainly aware that when New Berlin negotiated their purchase of Milwaukee water, there was a lump-sum paid,” he said, “and we fully expect to have to negotiate some figure more than that because we’re bigger.”

Milwaukee Alderman Michael Murphy said he wants more than money. More water means more leverage to attract companies and developments, he said.

Let’s make a deal

If Milwaukee gives Waukesha that leverage, Murphy said, Milwaukee should demand Waukesha build more affordable housing so people in Milwaukee can move to the area to get those jobs.

“Waukesha is very reluctant, or any of these suburban communities,” Murphy said. “They won’t even consider it.”

Nelson said he is open to including Waukesha developments and housing in the water negotiations, but he must get a fair deal for his community. Milwaukee stands to benefit from increased water rate collections alone, he said.

“We’re hopeful if we got to that point that we can negotiate in good faith for what would be historic regional cooperation,” Nelson said. “I think the bigger issue is economic development.”

Murphy said Milwaukee is in a good bargaining position, but is limited in how much it can demand because Oak Creek and Racine are both willing to sell water to Waukesha.

He said he wants Milwaukee to study how much more it would cost Waukesha to build a pipeline to those two communities compared with a Milwaukee pipeline. The difference in cost will help define Milwaukee’s bargaining limits, Murphy said.

“We can’t be too aggressive,” he said, “because we are not the only game in town.”

Milwaukee and Waukesha will not be the last communities that try to put a value on water, Korth said. Shortages will continue to be a problem, and more community leaders will find themselves wondering what water is really worth.

“If you hadn’t had a drink of water in five days, and if somebody offers you a pint of ice-cold water,” Korth said, “what would you pay for it?”

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