Are Increased Prices Enough to Change Corporate Behaviour?
by estelter on October 5, 2017 - 7:20pm
The conflict between the water company Nestlé and Elora residents has been a major topic of interest in local and provincial news over the past five years. The management and use of groundwater, specifically from a shared aquifer, has been the central focus of the debate and controversy.
Kate Bueckert's article "Nestlé 'fully supports' proposed changes to Ontario's water taking pricing" highlights problems and discrepancies in groundwater resource management. The main issue is that Nestlé was charged significantly less than Elora residents for water extraction or taking. As of January 2017, Nestlé was charged $3.71 per one million litres of extracted water. However, Elora residents paid $2.14 per one thousand litres, 576 times higher than Nestlé's rate.
Water advocates and the Ontario government are proposing a price jump to $503.71 per one million litres drawn for companies like Nestlé. Nestlé states that they are "encouraged by the direction the government is taking" to support research regarding the protection of groundwater resources.
The new price will allow the provincial government to breakeven with their costs of managing and monitoring water permits and processes.
There are certainly conflicts of interest and behaviour between Elora residents and Nestlé. The two parties have historically disagreed about who should benefit and who should pay for the costs of water withdrawal. Today, Nestlé is starting to take a different approach, which may be a result of increased costs proposed by the Ontario government. Jennifer Kerr, a spokesperson for Nestlé, stated that they "believe all groundwater users should be treated equally, but we understand and appreciate that opinions differ regarding the rates various water users should pay".
On the other hand, many water advocates highlight that raising the extraction price will not protect the aquifers from over extraction, or removal of that water from its native watershed. Aquifers are not recharged by precipitation, instead they take thousands of years to replenish. Water is withdrawn from the aquifer and consumed. It is not returned to the watershed, and is therefore lost. In terms of uncertainty, risk is easily calculated for aquifers with considerable confidence. Since we have enough information on sustainable withdrawal rates, the government should have more regulations in place. Residents are concerned that the proportion of withdrawal is significantly unequal and are concerned that the water will be unsustainably withdrawn.
Many actors are engaged in the governance and management of the aquifer. The provincial and municipal governments, Nestlé, water advocates and ordinary residents are starting to work together. The growing use of collaborative management suggests a shift away from top-down regulation. This multi-actor approach helps legitimize state governance by allowing society to make decisions about how water is managed and how use is governed. Raising rates for corporations is a positive step towards water management, but alone is not enough to secure sustainable extraction rates. More regulation and co-management between actors is required to maintain the longevity of the aquifer. Increasing prices is a step in the right direction, but alone is ultimately not enough to change corporate behaviour. Advocates are shifting governance methods by becoming involved in co-management practices. A combination of increased prices and changed management strategies will be the most effective strategy in ensuring the longevity of the aquifer.
Bueckert, Kate. (2017, Janurary 18). Nestlé 'fully supports' proposed changes to Ontario's water taking pricing. CBC News Kitchener- Waterloo. Retrieved from http://www.cbc.ca/news/canada/kitchener-waterloo/Nestlé-waters-ontario-water-taking-permit-review-1.3941395
MccLearn, Matthew. (2015, November 27). Who owns water? Nestlé's ambitions in Southern Ontario raise big questions about an essential – and finite – resource. The Globe and Mail. Retrieved from https://beta.theglobeandmail.com/report-on-business/Nestlé-water-ontario-dispute/article27509298/
Mitchell, Bruce. (2015). Conflict and Uncertainty: Issues, context, challenges, and opportunities. Oxford University Press.