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Claim

Jewish towns often were built on privately owned Arab land, and divert water from Arab towns

Fact

The facts reveal a different situation. Israeli is a net exporter of water to both the West Bank and to Gaza. The main problem has been the contamination and ruin of the water supply through neglecting sewage treatment. This is a result of the Palestinian refusal to cooperate with Israeli projects for political reasons. With the recent advances in desalinization Israel is now an exporter of usable water.

Source

http://www.camera.org/index.asp?x_context=2&x_outlet=78&x_article=3354