Rural Communities Exploited by Nestlé for Your Bottled Water

By Tara Lohan, AlterNet. Posted May 30, 2007.

Across the country, multinational corporations are targeting hundreds of rural communities to gain control of their most precious resource. By strong-arming small towns with limited economic means, these corporations are part of a growing trend to privatize public water supplies for economic gain in the ballooning bottled water industry.

With sales of over $35 billion worldwide in the bottled water market, corporations are doing whatever it takes to buy up pristine springs in some of our country's most beautiful places. While the companies reap the profits, the local communities and the environment are paying the price.

One of the biggest and most voracious of the water gobblers is Nestlé, which controls one-third of the U.S. market and sells 70 different brand names -- such as Arrowhead, Calistoga, Deer Park, Perrier, Poland Spring and Ice Mountain -- which it draws from 75 springs located all over the country.

Nestlé's latest target is McCloud, located in the shadow of Northern California's snow-capped Mt. Shasta. The town of McCloud has worked hard to try to reinvent itself in recent years. McCloud is a former timber town that is learning how to stand on its own feet again after the lumber companies bottomed out and took off.

The town has less than 1,400 people and a high school of four students. But one thing McCloud does have is an abundance of water -- pristine spring water that comes from Shasta's glaciers and feeds some of the world's best fly-fishing rivers.

The water hasn't just brought outdoors people to the area; it's also brought a new industry that seems strikingly similar to the timber barons who came before -- taking resources, reaping profits and moving on.

Four years ago, residents learned that Nestlé, the world's largest food and beverage company, intended to build a 1 million-square-foot water-bottling facility in McCloud. Without any public input or environmental impact assessment, the multinational was given a 100-year contract to pump 1,600 acre-feet of spring water a year and a seemingly unlimited amount of groundwater.

Although residents were caught off guard by the company's interest, they have been organizing and litigating and educating. As a result, the majority of residents in McCloud are concerned with Nestlé's project. A survey done in 2005 showed that 77 percent of people were against the contract, and public opinion has shifted even more since then as people have learned the details of the plan.

"There is concern about traffic, air pollution, what is going to happen to our water," said Debra Anderson, head of the McCloud Watershed Council, a citizen group that organized in the wake of the announcement. "What if there is a drought? They have the right to continue to pump. What happens to the town of McCloud, the people in it?"

An Unfair Contract

For Nestlé, the deal seems too good to be true. The Ashland Free Press broke down some of the details of the contract:

• A 50-year term, renewable for another 50 years
• The right to take 1,250 gallons per minute of spring water
• The right to take qualified water on an interim basis from district's springs for bulk delivery to other bottling facilities located in Northern California
• The right to construct pipelines and a loading facility
• Use of an unknown quantity of well water for production purposes
• Exclusive rights to one of the town's three springs
• One hundred years of exclusivity, during which time no other beverage business of any type may exist in McCloud
• Use of an undisclosed, perhaps unlimited amount of ground water
• The right to require the McCloud Community Service District to dispose of process wastewater
• The right to require the McCloud Community Service District to design, construct and install one or more ground water production wells on the bottling facility site for Nestlé's use as a supply for nonspring water purposes.

As if all that weren't enough, under the terms of the contract, Nestlé will make out handsomely. The McCloud Watershed Council has reported that Nestlé will pay .000087 cents per gallon for the water it takes from McCloud's springs. Its website explains:

In other words, that's only 8.7 cents for 100,000 gallons. Meanwhile, the rest of us who use a fraction of what Nestlé will, pay almost 20 bucks each month, just for water. On the other hand, Nestlé can sell a 16-ounce bottle of the same water for around $1.29, or $10.32 per gallon.

It's no wonder that Nestlé wanted to rush the current contract through and is fighting so hard to keep it intact. It's a sweetheart deal for Nestlé, but not for McCloud. At a shelf price of $10.32 per gallon, 1,600 acre-feet would gross $5,380,451,712. If Nestlé nets one-fifth of what that water sells for, it would make over $1 billion a year.

For the townspeople of McCloud, the contract is not so fruitful. The contract makes no provision for inflation or change in water flow or value over the course of the hundred-year agreement, and Nestlé maintains the rights to the water, but the legal responsibility for the springs remains with the town. "This would leave the people of McCloud holding the legal bag for any environmental violations resulting from Nestlé's operations and any resulting lawsuits," the Watershed Council's website says.

See more stories tagged with: water, mccloud, shasta, bottle water, nestle

Tara Lohan is a managing editor at AlterNet.

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