Blue Gold: The Global Cost of Water Privatization

BY FRANCES FAGAN

Major shifts in the availability and purity of water have already begun to affect the health of the Earth’s water cycle and water-dependent ecosystems. Through carbon emissions and other unregulated business practices, we spew large quantities of harmful pollutants into the atmosphere that leech into our soil and limited groundwater reservoirs. This contamination increasingly threatens the potable water supply of our planet, creating a growing ecological concern that requires more effective and sustainable water management practices.

As the lead contaminated drinking water of Flint Michigan illustrates, governments and corporations have historically failed to limit pollution or to orchestrate the balanced distribution of essential resources to those most in need. As a global population faced with unreliable organizations, we must become informed advocates of sustainable water management and consumption practices. Citizen advocacy is often the most successful method for ensuring continued access to drinkable water, a singularly precious resource.

The World Health Organization estimates that, by 2025, more than one half of the global population will not have access to safe drinking water.⁸ As our populations increase and water-dependent industries (such as fracking) expand, the 1% of water on Earth that is currently safe for consumption will become increasingly scarce – and all the more valuable. The production of water bottles, the environmentally damaging bulk transport of water from origin to market, and the effect of unsustainable water management practices will only increase global health concerns. Due to privatization or pollution, access to, as the World Bank now terms it, “Blue Gold,” may well become a luxury during our lifetime.

Increasingly, global corporations including Nestlé and Coca-Cola, as well as more powerful agencies such as the World Bank, have already begun the slow march towards the global privatization of water resources. Looking into any grocery store or recycling bin you will see that bottled water is big business. Bottled water is one of the fastest growing industries in the world. In 2008, in the United States alone, companies dealing in water made a profit of 77.6 billion dollars.² We can safely assume that through marketing and consumer demand these numbers have only increased. Interestingly, the highest demand for bottled water stems not from developing countries with limited access to safe drinking water, but from developed nations whose water supplies are likely to be of similar quality to the bottled water they purchase. A quick Google search will show that bottled water quality tests consistently reveal, ironically, in regards to bacterial contamination and chemical content, that the quality of bottled water often falls below that of local state-mandated tap water standards.

Experts have proven that pollutants created by water bottling operations are detrimental to global health. The process of packaging and transporting water is tremendously resource-intensive. Some research indicates that current production methods require three liters of water to produce one liter of bottled water.⁷ Estimates calculate that the fossil fuel required not only for the production of the plastic bottles, but also for global transport to distribution centers, with the ultimate destination of our stores and cafeterias, reaches more than 17 million barrels of oil a year.³ The United States alone produces almost 29 billion disposable water bottles annually. Statistics have shown that only 15% of water bottles are recycled globally, meaning that 85% of water bottles end up, at best, in landfills. Many are simply incinerated, releasing more toxic chemicals into the air.³ Considering that those with access to safe tap water consume the lion’s share of bottled water, this mostly unnecessary environmental cost is staggering.

Beyond the environmental consequences of water bottling and distribution, the legal precedents for turning public water rights over to for-profit agencies have historically caused damage to local communities and governments. Canada has clearly demonstrated the dangers of treating water as a business commodity. University of Toronto researchers Keith Hipel, Obeidi Amer, Fang Liping and Mark Kilgaur examine the multi-faceted aspects of water privatization in their article on the politics of Canadian water management.⁴ In 1995, McCurdy Enterprises proposed a large-scale water export project at Gilbourne Lake, a water basin located in a wilderness area on the coast of Newfoundland. The company stated that it would pump a maximum of 80 million gallons of water each week from the lake, shipping this “blue gold” to foreign markets in China and the Middle East.⁴ The organization appealed to local agencies by claiming that their operation would benefit the local economy, which had lost its traditional fishing industry and was suffering from an economic recession. The bottling plant proposal was set to move forward until it met with protests from environmental stewardship advocates such as First Nations representatives and the Department of Environment and Labor of Newfoundland and Labrador. Those resistant to the bottling plant feared that large-scale water removal and transport would have far-reaching effects on both aquatic and terrestrial ecosystems, especially since the sheer amount of water removed would exceed the rate at which the basin could naturally replenish itself each year.⁴ The local economy would again find itself without a sustainable industry, however positive the temporary economic benefits, as McCurdy Enterprises would ultimately drain the basin dry.

Environmental advocacy groups also feared that the precedent of turning water into globally traded commodity could interfere with the rights of local governments to control access to necessary water resources. This fear was quickly justified. During the same timespan as the protests against McCurdy Enterprises, Snowcap Water Ltd., a Canadian company that had paired with the investment group Sun Belt, sued the Federal Government of Canada when they were denied permission to go forward with their own large-scale water bottling and export project. The legal basis for their lawsuit centered on Chapter 11 of the NAFTA trade agreement, which the Canadian government had signed in 1992. Sun Belt argued that according to the NAFTA agreement, water could be considered a commodity rather than a public property, therefore the Canadian government had no legal right to block investors from their projected profits.⁴ The case, which is still pending, indicates the sheer political power of these multi-national for-profit agencies who seek to benefit from human thirst.

Despite these dramatic examples of clashing environmental and business interests, valid arguments for the privatization of water management exist as well. Public utilities, because they lack competition, may be less motivated to function as efficiently (and therefore profitably) as commercial firms. Those who support the idea of private ownership suggest that if we treated water like a commodity, competition would incentivize efficiency and benefit both producer and consumer. We cannot ignore the fact that the global supply of drinkable water is shrinking even as the global population expands. Water management practices, therefore, must improve, and may benefit from competitive management strategies. Any shifts in the status of water as a free resource available to all citizens, to a privately owned yet necessary product, must consider the likelihood of sustainable and ethical water management practices under profit-based businesses, which often operate beyond state control.

These abstract arguments may suggest that, aside from the presence of bottled water in our stores, issues of water privatization remain geographically distant concerns. This is untrue. After being rejected by several other communities in California and Oregon, Nestlé Corporation, the world’s largest food and beverage manufacturer, has been worked diligently to set up a large-scale water bottling plant in the town of Cascade Locks, less than 100 miles from Portland, Oregon. Located in the Columbia Gorge, the town of Cascade Locks is economically struggling. Much like the small town in Newfoundland, its traditional industry has evaporated and the creation of water bottling jobs could provide economic stability. Nestlé’s primary argument for its new plant is the 53 jobs it would provide to local residents. In 2011, researchers Kristen Sheeran and Feng Zhou examined the Nestlé proposal in depth.⁷ They found that, in return for these 53 jobs, primarily in construction and maintenance, Nestlé would gain private ownership over Oregon water rights and the ability to drain nearly 200 million gallons of water per year from Oregon’s watershed and groundwater reserves.⁷ This almost incomprehensible amount would result in the loss of 225 gallons of water, per minute, of currently public water supplies.

The annual loss of 200 million gallons of water would affect both biotic and abiotic aspects of Oregon’s habitats. The plant’s detrimental operations would strain Oregon’s already shrinking groundwater supply. The most recent report by the U.S. Geological Survey Groundwater Resource Program measured changes in groundwater levels from 1984-2009. The report found that groundwater levels had declined in 85% of all wells, with levels decreasing by 25 feet in 30% of wells in the region.⁶ The Nestlé plant would draw a portion of its annual 200 million gallons from these already declining wells. The bottling plant would also drain water from terrestrial and aquatic habitats that rely upon the regular flow of water to thrive.

According to Nestlé’s proposal, the majority of water bottled by the company would come from freshwater streams, some of which feed Oregon hatcheries currently supporting endangered fish species. Responding to protests about the reallocation of water from fish to bottle, Nestlé proposed shipping in water taken from local wells to supply the hatchery.⁷ Nestlé argues that this solution works, and that its research has found that the fish are unaffected. Because Nestlé itself oversaw the study, the validity of the food giant’s findings are questionable at best. In a public hearing with the Oregon Department of Fish and Wildlife (a surprising supporter of the Nestlé plant), many protested the inaccuracy of the findings. A key critique lay in the narrow scope of the study. Although a majority of fish in the hatchery, such as the endangered steelhead and salmon, live in both fresh and saltwater during their life cycle, the test only looked at freshwater rainbow trout. These trout may better adapt to the warmer temperature and the increased sediment levels found in well water.⁵ Water management studies in the U.K. have concluded that any valid effort to maintain the health of a local population, specifically that of fish, must be “approached by applying the standards of the most sensitive.”¹ In order to accurately determine the success of their water-replacement strategy, Nestlé would need to test their hypothesis on the actual fish residing in the hatcheries.

The Nestlé bottling plant would adversely affect the economic health of Oregon’s Columbia Gorge. Peak production would require 200 semi-trucks daily to transport water and supplies up Oregon’s interstate I-84.⁷ In addition to releasing CO₂ into the atmosphere, this heavy traffic would negatively affect a tourist economy reliant on the scenic view of the Columbia Gorge. Dave Palais, a representative for Nestlé, has publicly stated that the company will not reimburse the state for the additional road wear this convoy of semi-trucks will cause, resulting in increased road maintenance costs falling to local taxpayers.⁷ Water privatization would therefore not only draw water from Oregon’s natural habitats, but would also divert local tax dollars from other public services. When one considers the increased state costs of maintaining Oregon’s transportation infrastructure, as well as the individual cost of buying back formerly public water resources, possibly under the name of “Arrowhead,” the arrangement clearly falls short. Nestlé’s efforts to tap into Oregon’s resources represent only one of many of such global water privatization efforts. In many ways Oregonians are fortunate. Environmental watchdog groups and private citizens in many nations have far less ability to challenge governments and corporations seeking to profit from public resources.

Some water bottling companies, aware that consumers may question water-bottling practices, have actually begun to use decreasing access to clean drinking water as a marketing strategy. Volvic, a water brand that claims to donate some proceeds from water sales to water-focused charities, implies that your purchase helps poor African communities gain access to clean water.² This sales pitch, an example of a popular form of environmental marketing referred to as “green-washing,” suggests that the consumer actually contributes to global health with their purchase. Whatever the emotional outcome, this marketing strategy does not diminish the waste produced by the water-bottling process.

While local organizations may actively monitor the activities of corporate entities like Nestlé, as well as the actions of elected officials and wildlife agencies, they mainly rely on volunteer effort. We, the public, must remain active advocates of public water rights. Only continued public engagement can maintain the health of our watersheds and legal rights to our own public resources. Two ways you can get involved in successful stewardship include contacting state representative and remaining informed of how our resources are managed. Another effective tool, our power as conscientious consumers, is even easier to wield. Global water shortages indicate a significant need for sustainable water management and consumption practices. How strongly we advocate for accessible water and environmental accountability will determine the health of this precious resource, and therefore the health of all living species.

Frances Fagan is a sophomore in Silliman College double majoring in Ethnicity, Race, and Migration (ER&M)/Film and Media Studies. Frances is particularly interested in the development and maintenance of technically efficient and culturally supportive spaces for refugee populations. She can be contacted at frances.fagan@yale.edu.

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References:

1. Bowles, F. J., Henderson, P. (2012). Water Resource Management – The Water Utilities View. Fisheries Management and Ecology. 19(6), 484-489.
2. Brei, V., Böhm, S. (2011). Corporate Social Responsibility as Cultural Meaning Management: A Critique of the Marketing of ‘Ethical’ Bottled Water. Business Ethics: A European Review 20(3), 233-252.
3. Dolesh, R J. (2014). The Problem with Bottled Water. Parks & Recreation. 49.5(36).
   38. 36-38.
4. Hipel, K., Obeidi, A., Liping., F.,Kilgaur., M. (2008). Adaptive Systems Thinking in Integrated Water Resources Management with Insights into Conflicts over Water Exports. INFOR: Informatioanal Systems and Operational Research. 46(1). 51-71.
5. Joseph Miller Testimony to the Oregon Water Resources Department Opposing Water Exchange Between the Oregon Department of Fish and Wildlife and the City of Cascade Locks September 2011. (2011). Oregon Water Resource Department. Retrieved from http://www.psr.org/chapters/oregon/assets/pdfs/miller-testimony-water-cascade-locks-     nestle-9-10.pdf.
6. Snyder, D., Haynes, J. (2010). Groundwater conditions during 2009 and Changes in Groundwater levels from 1984 to 2009, Columbia Plateau Regional Aquifer System, Washington, Oregon, and Idaho.S. Geological Survey.
7. Sheeran, K. A., Zhou, F. (2011). The Proposed Nestlé Bottled Water Facility In Cascade Locks: A Preliminary Analysis of the Economic Issues. Bark. Retrieved from http://bark-org/sites/default/files/bark-docs/Final_Econ_Impact_Report_with_Exec_Summary.pdf.
8. World Health Organization. (2015) Retrieved from http://www.who.int/mediacentre/factsheets/fs391/en/