18 March 2010

Cola companies and groundwater

The Pepsi plant in Kerala has come under censure from the state government for 'overextraction' of ground water, the 'Panel Chairman and state Water Resources Minister N K Premachandran said the key suggestion was to impose restrictions on water extraction by Pepsi at 234,000 litres per day from the current average of 700,000 litres a day.' Palakkad district where the plant is located has been declared a drought-hit area this year.

While the spokesperson for Pepsi said that they were using innovative recycling and recharging techniques and had been able to save about 200 million litres of water in the last four years and has also brought down the water usage by 60 per cent, the point is that usage of groundwater by industrial units, especially for 'nonessential' uses is coming under scrutiny across the world,cola companies are the first to get struck.
In 2004 the Central Ground Water Board in Kaladera, Rajasthan, had held Coca Cola  responsible for depleting ground water level in the region.

As the report 'Watching Water' by JP Morgan put it,  'As water becomes more precious, companies’ real and perceived behavior with respect to water consumption and discharge is also likely to have greater consequences in the marketplace, with an increased risk of consumer backlash against companies judged to be profligate or irresponsible.

Rikki Stancich's article pointed out in 2008,
The need for water mapping and for companies to take the initiative on water management has arisen largely from failure on governments’ part to effectively price water.
But this is likely to change, says Jacob Tompkins, director of WaterWise. “At present, the price of water isn’t representative of its cost – the environmental damage associated with its extraction or its contamination. But the price of water will continue to go up, globally. There will be more regulation and we are likely to see the emergence of voluntary trading of water rights and pollution rights within the next decade,” he says.
In the UK, the Federation House Commitment, coordinated by the Food and Drink Federation, an industry organisation, and Envirowise, a government agency, aims to reduce the water consumption of participating companies by 20% by 2020 (compared to a 2007 baseline). Such schemes are creating a framework for future regulation, says Tompkins.
Water regulation moved up a gear in Australia earlier this year when the Council of Australian Government set the first ever sustainable cap on ground and surface water usage for the Murray-Darling Basin, a land area spanning over one million square kilometres and five jurisdictions. “It’s likely that the rest of the world will not be far behind Australia’s lead,” notes Mattison.

Cola companies will be picked up first as an example and will in all probability take up a lot of media attention; however, watch out for sweeping changes in the way the world uses water in the years ahead.

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