March 21 (Bloomberg) -- Atlanta has always prided itself on its forward-looking perspective. As one business leader put it in the late 1980s, “Atlanta is a city of the future, not the past.” Today, however, Atlanta’s past is ensnaring it in a nasty conflict over water -- a kind of fight that’s likely to be more common in the future.
Atlanta developed as a railroad hub. Since railroads tended to be built on ridges, the city wound up at a place where several ridges intersected, “on the drainage divide between the Atlantic Ocean and the Gulf of Mexico,” according to the U.S. Geological Survey. As a result, it is the largest city in the U.S. that is not near a major body of water.
Forty miles northeast, however, lies Lake Lanier, created in the 1950s when the Army Corps of Engineers built the Buford Dam. As chronicled in “The Big Thirst,” by Charles Fishman, Atlanta refused to finance the dam -- partly because, at the time, it wasn’t clear the city would ever need water from Lake Lanier. As Atlanta grew, its need for water from the lake became increasingly obvious.
In 1989, the Corps of Engineers recommended that 20 percent of the water used for hydropower be diverted to Atlanta’s water supply. And therein began a war known as the tri-state water dispute.
Southern Water War
Alabama and Florida filed suit against Georgia and the Corps in 1990, arguing that diverting water to Atlanta was environmentally harmful and economically problematic, and that in any case it required congressional approval. As Alyssa Lathrop chronicles in an article in the Florida State University Law Review, the three states tried throughout the 1990s to reach an agreement, but their efforts finally collapsed in 2003.
In 2009, a U.S. district judge ruled in favor of Alabama and Florida. He gave Atlanta a three-year grace period during which it could continue to draw water from Lake Lanier -- but ordered that by July of this year, it could no longer do so unless Georgia reached an agreement with the other two states. Atlanta currently obtains about three-quarters of its water from Lanier and has no plausible alternative source, so the judge’s order set the clock for a crisis.
Before we could see how that would play out, however, the 11th Circuit District Court of Appeals reversed the lower court’s decision -- thus lifting the deadline for Atlanta. Alabama and Florida are appealing to the U.S. Supreme Court, but it’s not certain that the court will accept their appeal. So, crisis averted, at least for now -- and in this case.
This type of dispute is likely to become more common, though, as local water shortages multiply around the country. Once again, Atlanta is living up to its reputation as a city of the future.
As Deane Dray and other colleagues of mine at Citigroup Inc. have written, “There is an alarming global supply-demand imbalance, worsened by pollution and draining of underground aquifers reducing the available fresh water supply.” The massive Ogallala aquifer under the Great Plains, for example, is projected to run dry in two to three decades given recent withdrawal rates. Similarly, in the past two decades, groundwater resources in Great Lakes communities like Chicago and Milwaukee have fallen by 1,000 feet.
Old Water Pipes
Our aging water pipes are another challenge. The U.S. has roughly 700,000 miles of these pipes, and most are more than 60 years old. Substantial investment is needed to fix or replace them. Keep in mind that pipes account for about 70 percent of the cost of a water system.
So what can we do to preserve our access to fresh drinking water? One major need, as I have written about previously, is to address the pricing problem. The typical American uses 100 gallons of water per day, but in most places, prices aren’t adequately adjusted to usage. Prices that reflected usage would not only raise more money for addressing emerging water issues but also help raise everyone’s awareness of them.
Today’s low interest rates offer an ideal situation in which to finance investment in new or replacement pipes. We also need to invest in new technology -- from desalination to strategies for water reuse. In future columns, I will explore ways to better price water -- and also discuss the global dimensions of water problems.
There’s no reason to wait passively for the next water battle. Even before hearing from the Supreme Court, let’s look at the Lake Lanier story as a spur to aggressive action on our water problems.
(Peter Orszag is vice chairman of global banking at Citigroup Inc. and a former director of the Office of Management and Budget in the Obama administration. The opinions expressed are his own.)
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