Regional Oped | David Zetland: Nicely Nestle?

Published on Apr 11, 2008 - 9:53:16 AM

By: David Zetland

Here's an update on Nestle's deal to export water from far Northern California [previous post] It points out the outrageous mark-up that bottled water makers achieve as well as the foolish naivite poor bargaining of communities that have something valuable to sell:

Nearly one-third of bottled water sold in the United States in 2006 came from the 23 Nestle plants in the United States, earning the company $3.57 billion.

McCloud would receive about $305,000 the first year, based on residential water tariffs, which equals $191 per acre foot, or 15.5 cents per cubic meter. By comparison, Nestle is paying $2,183 per acre foot to Pure Mountain Spring in Maine for its water, according to an economic study conducted by ECONorthwest, a consulting firm.

[snip]

Jane Lazgin, a spokeswoman for Nestle Waters North America, said: "I think it's appropriate that communities would have questions and concerns. In most cases, we're welcomed because we're able to offer a rural community an economic benefit, while harvesting responsibly a natural resource and providing jobs that otherwise have been lost."

Oh no, it's the "lost jobs" argument again. So, how many workers does it take to run an automated bottling plant? Not very many, I take it.

Nestle is really running a mining operation, and the natives -- as usual -- are not getting a very big piece of the pie. Instead of thinking "wow, Nestle is going to build a 1,000,000 sq foot plant and run 600 trucks/day through our town of 1,350 people -- we'd better give them a good price," they should get a BIG share of the pie -- more like $5,000/AF, since that's still only about 1.5 cents/gallon. To their credit, many people in the town are opposed to the contract as written and the plant is not yet built.

Bottom Line: They should fire/tar and feather the fools who signed the original contract and start again, or, better yet -- cut out the middleman, bottle "McCloud water," and sell a lot less of it for a lot more. Even if they charged 10,000 times the price they are getting now (for water, not bottling and transport)-- that's still 10 cents/gallon. (Hmmmm, 10,000 times Nestle's price is ten cents/gallon? Holy cow!)

Editor's note: Check out David Zetland's blog, Aguanomics, The Economics of Water, at www.aguanomics.com.

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