It's cheaper to screw your neighbor than to build infrastructure.
Israel blames Palestinians for West Bank water shortage
The story said that the pipes Israel is complaining about had been recently installed by the Americans and worked fine. The real issue is that Israel wants quid pro quo construction of water resources for unlawful settlements.
So, Israel is holding back water because Palestinians refuse to give up any more of their land to "settlers". Who said politics had triumphed?
EDIT: And from your linked article, the real issue gets a single mention "The Palestinian refusal to sit down with Israelis, means that the committee has not met for over five years." The article implies a broken pipe keeps everyone from getting water, when it's really a refusal to give any more land to illegal settlements.
And from the BBC: http://www.bbc.com/news/world-middle-east-11101797
> Palestinians say they are prevented from using their own water resources by a belligerent military power, forcing hundreds of thousands of people to buy water from their occupiers at inflated prices.
> Israel allocates to its citizens, including those living in settlements in the West Bank deemed illegal under international law, between three and five times more water than the Palestinians.
But it would get bombed if it was built after not too long, like all good things. And that's assuming Israel let the Palestinians build one in the first place.
In fact Israel ships tons of goods every day.
* a lot the land that is Israel today is bought.
* Jews that left neighbouring countries for Israel lost their property there vut this is never mentioned
* Plenty of people - say, American Japanese had their land, money, and property seized during the second world war - and they haven't received a dollar in compensation for it. That doesn't give them the right to do the same to other people.