Waterproofing a retaining wall

I'm building a retaining wall in Tucson, AZ, it is about 6' tall and 70' long. I had a structural engineer do all of the design (but he is almost impossible to get a hold of for these kinds of questions). I've been told that I should waterproof the side which will be backfilled otherwise the wall will not last long and the other side will show ugly white stains right away. I bought some Xypex at the local Home Depot and plan to use that.
I was told that I only need to coat the area which is above the finished grade on the low side of the wall (the side that isn't being filled). Does that sound right?
The engineer called for 3" PVC every 8', at 8" above finished grade.
I read somewhere in this newsgroup that the wall needs to let the water through or you'll have so much presure that the wall will burst. So do I really want to waterproof this thing... Isn't that going to cause extra presure if I try and hold back the moisture instead of let it through?
p.s.-This soil is typical for Tucson, AZ, hard as rock and not much moisture anyway.
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It seems your engineer is providing appropriate drainage for future water which may collect behind the wall for a number of reasons which may, or may not, occur. The preventative measures are cheap insurance. Generally, the sealant on the back side of the wall will reduce the chance of staining of the wall while the PVC drains will prevent dangerous buildup of water pressure behind the wall. I presume you were given instructions to place a rock or gravel filter along the level of the drains (back side of course). Be sure to follow those instructions.
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NO Coat the area that is in contact with the earth. It will help on moisture bleed through. For those times like now when it does rain in the desert.

Good idea how far in do they go? Are you using perforated pipe? Like the leach feild pipe.

You will see some bleed through of lime around the joints for the first couple of years.

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That 3" pvc is in a gravel french drain on the back of the wall with ground cloth covering the gravel, yes?
This is a poured concrete wall isn't it? Or is this a CMU wall?
Xypex is a good product, though I don't think you would ever rot out a concrete retaining wall in yours or my lifetimes.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Keep the whole world singing . . . . DanG (remove the sevens) snipped-for-privacy@7cox.net

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Thanks for all the answers, and to answer all of the questions:
1. Yes, the engineer called for crushed rock on the fill side of the wall, around the PVC pipes. I haven't planned how I'll place this yet, I figure I'll do the back-fill to within a couple inches of the pipe, then place the crushed rock, then do the rest of the fill. If I'm renting a tractor or paying helpers by the hour I'll probably figure out a way to avoid the 3 step process by placing the crushed rock before any fill.
2. No, I'm not using perforated pipe, I'm using the gray 3" PVC that is made for direct sunlight, the kind you find in the electrical section of a hardware store.
3. I wasn't planing on having the PVC stick out very far on either side, probably just a couple inches.
4. It is a CMU wall, 8" bond beam, but 100% filled with concrete and rebar in all directions. #5 @ 8" vert, plus #5 cont/horz every 24".
Also, even with the Xypex/waterproofer I'll still see lime on the outside of the wall? I don't have to look at it, and my neighbors could always do something to hide it, but I'm mostly just wondering so that I don't freak out when I start to see it and think that I did something wrong...
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it's a matter of degree. the process is called effloresence, and some amount of it is almost unavoidable in a masonry wall that is not completely protected from the weather. what is happening is that water is migrating through the porous cement, picking up some of the salts that are a byproduct of the cement/mortar hardening process, and depositing them on the outside as it evaporates off the front side of the wall. in and of itself, efflorescence does not harm anything, nor is it necessarily the sign of a bad installation. it can be scrubbed off, or left to fade with time. it is very typical that a new installation will effloresce for a while and then stop, as the salts that are not bonded are "washed" out.
the thing to remember is that efflorescence is a sign that water is moving through a masonry wall. thus it is a great early warning sign when an old brick wall starts efflorescing - it is telling you that there's a leak, and usually it shows up long before other visible signs become apparent. (thus giving you a chance to fix the problem before it does major damage.)
so, the reason xypex was recommended is that it will stop the flow of water from the soil through the wall. no matter how dry your climate, there will always be more water in the soil than on the outside face of a wall, so without the xypex, there will be a flow. since the wall is outside, there is no real reason why moisture moving through the wall is a bad thing, except for the appearance. the xypex will greatly reduce, but not completly eliminate, the presence of moisture in your wall.
bottom line is, yes, a certain amount of "blooming" should be expected.
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