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Someone should start doing this in San Francisco.

People shouldn't be surprised by the bottled water phenomenon. You are buying the bottle, not the water, and a bottle is often worth $1.

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You're buying easy access to the water.

You could just buy a Nalgene and fill it up with tap water. Or if you're really cheap, buy one bottle of bottled water, save it, and fill it up again with tap water later. I do that all the time.

Right, but those are both less convenient than just buying water when you feel like it, and throwing out the bottle afterward. People are happy to pay for convenience (and that seems quite rational to me).

Isn't nalgene that kind of plastic they're talking about? BPA? Cancer...?

Nalgene doesn't use BPA's. They've been focused on a few times specifically because of this. See http://www.nalgene-outdoor.com/technical/bpaInfo.html

http://www.msnbc.msn.com/id/24200402/

The reason this works in NYC is that their tap water is basically mountain spring water, piped in from the Catskills.

San Francisco water is pretty good too - it comes from Hetch Hetchy near Yosemite.

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