When it Comes to Water, Can Corporations and Community Really Coexist?

When drought brought a critical shortage of water to Kerala, India, anti-globalization activists placed part of the blame on Coca-Cola, which operated a plant there.

Critics contended that Coca-Cola failed to involve the local community in its plans, and the activists began building a substantial global movement against water privatization, employing the tactic of "brand-jacking" of the world's No. 1 brand -- Coke -- to make their point.

Coke's Kerala plant has since ceased operations, making it a casualty of the global pressure placed on the company. But the campaign against privatization of water resources by activist groups has only grown stronger on the campaign front.

Today, the focus is on bottled water, which critics point to as a wasteful, expensive example of water privatization -- companies taking public water, repackaging it and selling it back to us for a profit.

But the water wars have just begun. Bottled water may be today's popular target, but that battle has peaked. Now, activists are beginning to look beyond bottled water, setting their sights on much bigger objectives.

At stake, they believe, is whether water is recognized as a basic human right, or becomes simply another commodity controlled by giant corporations.

While the bottled-water controversy may have helped propel fresh water issues into the limelight internationally, the current hottest buzz phrase among water-policy-reform advocates, and a topic galvanizing the debate over privatization of water, is the wonky phrase "free prior informed consent" (FPIC).

Jonathan Kaledin, director of The Nature Conservancy's (TNC) global freshwater certification program, said: "Water has been so abundant. There has been an out-of-sight, out-of-mind attitude about it. As the risks of water shortages become more public, corporations that use a lot of water need to become more aware of the concept of FPIC."

In a nutshell, FPIC recognizes that communities have the right to self-determination. They have a right to give or withhold their consent for new production facilities that may impact local water supplies or prices.

From a legal point-of-view, FPIC is an evolving concept that is gaining wider acceptance by nongovernmental organizations, as well as a few private corporations. FPIC is now incorporated in some forms of international treaty law, especially when it comes to indigenous peoples and extractive industries such as oil and mining. What's new is that FPIC is now being applied to water.

In fall 2007, the United Nations General Assembly adopted the principle of FPIC for development projects, and momentum is building globally toward establishing FPIC as a principle of customary international law. The two key challenges for FPIC is an apparent conflict with the sovereign rights of nations to exploit their own natural resources (as they deem fit), and a lack of clarity about how to implement FPIC.

Among the key issues yet to be resolved are:

  • How is "the community" defined? Is there a strict geographical limitation to "community," and are elected officials given greater or equal status to local citizens?
  • If there is a lack of consensus within the "community," what process validates any decision-making (i.e. majority vote of local governing body; a referendum?)
  • Absent a political process, what exactly represents an adequate level of consent?

David Shilling, a water expert with the Interfaith Center on Corporate Responsibility (IRRC) argued that FPIC is quite important in order for government and companies to make deals, because it is at the community level where water impacts will be felt. He went on to say:

The community involved has to be part of that conversation. The underserved deserve a place at the table, too. And human rights -- not technical issues -- should be the focus. Otherwise, the corporation will not have a social license to operate. Unfortunately, companies and government have a hard time with this sort of thing. Need to put these issues about water into a larger context, a tangible framework to get a buy-in and to help elevate discussions to the level of community consent.

Bridge Over Troubled Water?

Nestle Waters has had its fair share of controversies over siting production plants. In Michigan, for example, private wells were allegedly impacted by withdrawals. In early July, a settlement between Nestle Waters and Michigan Citizens for Water Conservation was reached, reducing the company's per-day pumping limits, with additional restrictions during spring and summer months.

Alex McIntosh, Nestles Water's director of corporate citizenship, doesn't hold back when assessing how critics view his company's products. "Bottled water has become symbolic about the issue of who actually owns water. Is it fair for water to be priced and sold, and then shipped to us in plastic?" is the way he paraphrased how critics see his company's products. Bottled water is "literally a drop in the bucket," he said, pointing to stats that show bottled water represents a fraction of 1 percent of total water consumption.

Nevertheless, Nestle Waters is moving forward on developing and implementing a "Siting and Community Commitment Framework." A key element to be examined is the notion of FPIC.

This move by Nestle was prompted by a public outcry from the community on the McCloud River in Northern California when the County Community Service District invited Nestle to explore a water operation, and some residents were concerned that the deal allegedly gave the firm a 50-year contract and priority rights to water that feeds one of California's premier rainbow trout and steelhead streams.

To its credit, Nestles Waters has withdrawn the deal and is working with the community to come up with something better.

Community concerns typically revolve around fears that "the company will use all of our water, destroy the aquifer and change our way of life," McIntosh said. "The power differential is also an issue, as communities want balanced deals. Many have almost spiritual views of local water supplies and are just opposed to someone bottling local water and selling it."

Mark Hays, senior researcher for Corporate Accountability International (CAI), a 20-year-old organization well experienced with boycotts and a fierce critic of bottled water, is not very sympathetic to beverage companies such as Nestle Waters or Coke.

"We see FPIC as being about democratic control of water," Hays said. "The impacts of bottlers on any local community are a tricky thing to deal with." But he put forth a few principles that could shape a FPIC protocol for water: 1) A full accounting of a project's impacts; 2) No undue influence on the general public's access to water; 3) No secret economic or political agreements with public agencies.

"We have a ways to go before asking for FPIC," Hays said. "Most of the times, the question of whether a facility will have impacts should be simple and clear. Absent good data, some 'stickiness' can occur." Hays's bottom line question on FPIC was this: "Will Nestle Waters or other corporations accept 'no' for an answer?"

A Good Step Forward, But No Panacea

Without the kind of substantive participation that FPIC mandates, the tenured security of rural communities is always at the mercy of decisions made by others with more perceived power. It is well documented that such insecurity perpetuates poverty.

In contrast, with the bargaining power that FPIC provisions bring them, communities can demand direct compensation for damages or a continuing share of the profits of resource extraction. They can even require the backers of development to invest part of the profits from these ventures to meet community needs. In this respect, FPIC is a tool for greater equity and a natural pathway to a co-management role for local communities in large development projects

But FPIC is not a panacea. Consider these comments from Anil Naidoo of the Council of Canadians:

I do think that it is good to bring the community in on the first level of discussions about water. And the notion of water as a human right cannot be disassociated from these discussions. But even if employing democratic means, any consent or decisions should not give away the human right to water or the health of the environment for future generations. How do we respect intergenerational rights?

This whole process is still operating from an anthropomorphic view ... It is very important to have more transparency and to develop a set of guidelines of what is appropriate. But if you still give away all of the water to Nestle Waters, what good is that? I still have reservations about how FPIC will be used and for what.

Other NGOs, such as Amazon Watch, are much more open to making the business case for FPIC. "To give people and communities the fundamental right to have a say about what happens on their lands under FPIC is a good thing," Kevin Koenig of Amazon Watch pointed out. "To date, many companies are adhering to ILO 169, so companies are consulting with local communities. But sitting at the table and consulting is not enough, when the choice is 'yes or yes.' The community needs to have the right to say 'no,' they need to be able to have veto power."

Koenig says FPIC just makes good business sense. "If oil companies or other extractive industries do not have a social license to operate, they will experience project delays, bad PR, both of which aren't good for business. So far, no company has been able to say 'no.' "

But FPIC is at the heart of current U.N. declarations on the human right to water, and the new barometer of how companies will be judged in terms of CSR and the human right to water.


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