After Thanksgiving wrapped up last week, Americans headed out to a time-honored tradition – “Black Friday” shopping. As unfortunately is usual for this season, some shoppers got a bit rowdy as they fought over flat screen TVs, electronics and other on-sale items. Video footage from stores in Texas and Kentucky showed a few unruly store patrons throwing fists over discounted electronics and items on their holiday wish lists. So what do brawls over Black Friday deals and a water blog have in common? In this post, I will discuss an item that you may buy every week, but is in some areas fought over – bottled water. The impacts of the drought have put an increased focus on the uses for our limited water supplies, and the bottled water industry has not been immune to the discussions over whether bottling water in drought-stricken areas is appropriate. I will discuss the sometimes surprising places where bottled water comes from, provide a few examples of communities where there is debate over the appropriateness of bottling water from municipal sources, and potential policy implications for the industry going forward.
Where does your bottled water come from?
California has experienced drought conditions for the better part of five years. The most recent US Drought Monitor shows that 44.84% of California is still in exceptional drought, the most severe category. The drought has taken a significant economic toll on the state, and farmers and citizens alike had to reduce water usage, in some cases dramatically. As I mentioned in a post last month, some farmers that rely on the Central Valley Project have not received water supplies for the last two years. Some cities in California had to reduce water usage by as much as 36% to comply with Governor Brown’s Executive Order to reduce statewide average potable water use by 25%. But despite the drought conditions and the mandatory water reductions in many cities, the bottled water industry has not had to cut back on water diversions. This has caused consternation among citizens and environmental groups who argue that bottling companies should not be able to use limited water resources during the drought while citizens are forced to cut back use. In California, Arrowhead brand bottled water, a division of food conglomerate Nestle has been in the news this year over both of these issues.
Looking closely at Arrowhead’s water sources, (listed on Page 3 here) the company draws water from a few sources that I can easily identify in Southern California. Arrowhead Springs, the namesake of the brand, comes from a source in the San Bernardino National Forest just north of the City of San Bernardino. Deer Canyon Springs also comes from the San Bernardino Mountains just north of the City of Rancho Cucamonga. The City of San Bernardino had to reduce its water usage by 28% and Rancho Cucamonga (the Cucamonga Valley Water District serves the City of Rancho Cucamonga) by 32%. (View the full list of mandated water reductions here.) While the citizens of Rancho Cucamonga and San Bernardino were subject to state-mandated water reductions, Arrowhead Bottling Company continued to tap these water resources for supplies.
A few environmental groups have also disputed the legitimacy of Arrowhead’s permits to extract water from the San Bernardino National Forest. The US Forest Service is the governmental entity that has jurisdiction over issuing permits to companies such as Arrowhead Bottling Company for water extractions. However, a group of environmental advocacy groups including the Center for Biological Diversity sued the US Forest Service in Federal court, arguing that Arrowhead is operating unlawfully because its permit to draw water from the San Bernardino Mountains expired in 1988. The lawsuit asks for a halt on taking water from the National Forest. The US Forest Service argues that it is in the process of reviewing Arrowhead’s permit, and Arrowhead’s the annual permit fee (which costs only $524) is paid. It remains to be seen how this issue will get resolved.
A worldwide supply challenge
The issues over using water supplies from constrained areas is not unique to California. While researching for this piece, I found a few interesting examples outside of the United States where bottled water companies face local opposition that are trying to stop companies from tapping new water supply sources. Nestle Water is also in the news in British Columbia, Canada. The company just inked a deal to access water for 2.25 cents for every 1 million liters extracted. An environmental group has gathered 40,000 signatures on a petition to ask the B.C. government to reverse its decision to let Nestle extract water at such a low cost.
China is also creating a controversial plan to increase bottled water production in Tibet. The government for the Tibet Autonomous Region released a 10-year plan last month to increase bottled water production in the region from 153,000 cubic meters currently to 5 million cubic meters by 2020. Businesses are interested in expanding there because water supplies are more abundant and cheaper than in other parts of the country. Also, Tibet generally has less pollution than other areas of China, so water bottled there is perceived as pure, commanding a premium. But the plan comes at a cost. The effects of global warming will continue to affect the glaciers that the bottled water companies plan to tap. Also, these mountains provide the source for many of the country’s most important rivers. If companies pull more water out of the mountains, it will constrain water supplies for cities further downstream.
The bottled water industry will likely continue to face pressure from environmental groups and government agencies that regulate the industry. I believe that there are a few important policy implications for the industry and consumers going forward. First, our government agencies should be aware of the permit status of bottled water companies and how much water they extract from public sources. In the case of the US Forest Service, they should not have allowed 27 years to pass since Arrowhead’s permit expired in 1988 to review its status. But most importantly, we the consumer have the power to change this $13 billion industry simply by altering our buying habits. I sometimes buy bottled water for its convenience, but we all should be aware of where the water is sourced and the implications of using these supplies. For example, both Pepsi’s Aquafina and Coca Cola’s Dasani brands are filtered tap water from municipal sources. The bottled water that we buy at the store can also cost hundreds of times more than getting the same amount of water from the tap. The American Water Works Association estimates that the average American tap water source costs $0.004 per gallon, about 300 times less than the $1.22 average that a gallon of bottled water costs. For smaller-sized bottles such as a half-liter, (which average $7.50 a gallon in the US) the bottled option can cost thousands of times more than tap water. The American Water Works Association is working with local utilities on a campaign called “Only Tap Delivers” to make consumers aware of the cost of bottled water and communicate the value of tap water and the need for infrastructure investment.
Any company simply responds to the demands of its customers. We all must be aware of the policy implications surrounding the bottled water industry and make the decision to support it through continued purchases or stop buying bottled water. Only then will the industry respond to meet the demands of the customers it relies upon.