By: David McDonald

Introduction

I recently discovered the miniscule prices that water-production giant Nestle is paying to pump water in Canada and I wasn’t entirely surprised, as I know this is a highly lucrative business, but that doesn’t discredit the amount of questions and concerns it raised for me.
Nestle pays just $3.71 for every million litres of water pumped within Ontario, after they pay a permit fee of $750 for low- or medium-risk water takings, or $3,000 for those considered a high risk to cause an adverse environmental impact.
They go on to sell each bottle of water at prices that range from $.50 a bottle to upwards of $9 a bottle at entertainment venues such as concerts and sporting events.
Hypothetically speaking, if Nestle sells each bottle of water for say, $2.00, they turn an immediate revenue of $3,381,400 before production expenses, just off packaging a million litres of water. To put this in perspective, documents on the Canadian Ministry of Environment reveal that Nestle Canada, has at least half a dozen Ontario permits alone that allow them to drill a staggering 12 million litres of water every day. Not to mention, Other bottled water companies with large water-taking permits in Ontario include Gold Mountain Springs at 6.1 million litres a day, Gott Enterprises at 5.8 million litres and St. Joseph Natural Spring Water at 5.5 million litres.
If we add all of these up and account for total expenditures from Nestle as well as these other companies, we get a figure that has aided controversy over water-drilling in Canada – and for good reason. These companies combined, drill well over 350 million litres of water a day, in Ontario alone. The numbers become mind-boggling when you account for every province. I’m not going to provide a lot of these numbers just to save you and myself the headache.
Okay, so they drill 350 million litres of water a day, yearly, these figures get into the trillions, especially when you include figures from other provinces. Collectively, however, these multinational water companies pay the Ontario government just over $1300/day in drilling charges. When we compare this to the costs applied to the average Ontario consumer, we can visualize the incomparable advantages given to multinational water-drilling organizations within Canada.
According to 2015 water rate statistics provided by the City of Toronto, the average Ontario water consumer pays about $3624/million litres of water consumed, as opposed to the $3.71 paid by Nestle, almost a 1000X markup for Ontario citizens.
It is quite the concerning evaluation, however, this disparity between consumer costs on fresh-water and corporate costs grows even larger when compared to prices in British Columbia, where the province charges only $2.25/million litres of water pumped to multinationals with permits.

Water-drilling Corporation’s purchase water at a price much, much lower than the average Canadian consumer – this disparity grows even further in British Columbia.

You’ve probably paid $2.25 for a bottle of water before, right? To the average consumer, this is a reasonable price. But if I offered you one million litres of water for the same price, you would probably be more than obliged to take the offer. Unfortunately, this is the stark reality for consumers of water in British Columbia, as corporate giants like Nestle, can pump one million litres of water for the same price they pay for a single bottle of water.
The total estimated price of all the water Nestle will bottle in B.C. over an entire year is a mind-boggling $562. What’s even more staggering is the fact that this is an improvement, as until recently, Nestle got their water for free.
These prices demonstrate Canada’s historically poor policies towards multinational water-drilling firms, policies that in this day in age, require change. They require change because Canadians are paying their fair share for water, but corporations aren’t. Our policies grant companies like Nestle insane profit margins. Nestle not only sees huge profits in Canada, but also in California, where they continue to pump through droughts, which was a large concern a few years ago.
According to industry analysts, after all the production, packaging and advertising costs are taken into account, the profit margins for convenience sized bottled water sales are a whopping 35 per cent. For the large home and delivery containers, there is an estimated 60 per cent profit margin. And, for the soft drink giants, bottled water is now twice as profitable as their carbonated drinks.
According to industry analysts, after all the production, packaging and advertising costs are taken into account, the profit margins for convenience sized bottled water sales are   a whopping 35 per cent. For the large home and delivery containers, there is an               estimated 60 per cent profit margin. And, for the soft drink giants, bottled water is now     twice as profitable as their carbonated drinks.
These corporations are only able to reap these benefits because of Canadian policies that allow them to drill for prices that are well, too cheap.

Policies are always subject to change, but what does a change in Canadian fresh-water pumping mean for the market for bottled water in Canada?

I’m learning a lot about how government regulations impact economies and a change in policy usually has a ripple effect on the rest of the economy. In this case, a change in policy that sees higher water-pumping costs for multinationals would mean in turn, a higher cost on water bottles for consumers.
Canada has the largest amount of fresh water on the entire planet. Companies will always want to pump our water because 1. There is a substantial market for bottled water in North America and 2. It is cheap as hell. But to protect these companies by maintaining corporate-friendly policies doesn’t benefit the average Canadian consumer at all (other than keeping prices of bottled water low) and it hurts the environment as low costs on pumping promote pumping.
We don’t have an unlimited amount of water on this planet, and fresh water is even more scarce. With this being said, as well as being widely realized by just about everyone on planet Earth, it baffles me that our government is so keen on providing cheap water for multinationals.
Tony Clarke of the Toronto Star mentions how the bottled water industry in Canada, “is reputed to be one of the least regulated industries in the country.” This lack of regulation could make sense if provincial governments were collecting high tax revenues from drilling companies, but they aren’t. The figures mentioned earlier detail just how scarce monetary collections to the province from these corporations really are. So if we aren’t collecting really any money, and we are giving up literally trillions of litres of water annually, I have come to wonder how in the world does Canada benefit from our current policies on this issue?
It seems that I’m not alone on this conundrum.
Townships and municipalities across Canada have been fighting this issue for many years, without much resolve. Most recently, Mayor David Miller of the city of Toronto as well as the city council, came under fire for entertaining a motion to place a 5-cent tax on each bottled water product sold in the city and a 10-cent tax on all bottled water imported from outside the province.

The bottled water industry promptly unleashed a barrage of email letters and public statements demanding that the proposal be flatly rejected. Later that week, the mayor appeared to be backtracking on the idea, proposing instead that the matter be reviewed.
The thing is, placing a tax on the bottled water itself won’t solve this problem. The tax needs to come from the source – it needs to be placed on the actual amounts of water being pumped, not the final product.
See, if you place a tax on the final product you only raise the price for consumers. But if you tax the process of pumping water itself, you effectively lower the amount of water being pumped, hypothetically.
Say Ontario raises the price per million litres of water pumped from $3.71 to $100, what would this mean for the province? For the market of bottled water?
First, prices for bottled water would rise and supply would drop, fast. Next, the demand for bottled water would decrease because of the increased prices. With a lower quantity demanded for bottled water, multinationals like Nestle would literally be forced to scale back production (in Ontario at least) and look for other means of business.
The process itself would bring much more revenue to the provincial government when you consider how much water is actually being pumped on an annual basis, it would also lower the amounts of water being pumped and thus, help preserve our natural water resources.
It’s a decision that is being widely debated across Canada right now. We as a people need to decide how important bottled water is to us; is it a product that we only require from time to time when we can’t access tap water? Or is it a good that we require consumption of everyday?
We have clean, trusted tap water that will never run out. This tapwater is much cheaper than bottled water and you can put it in a metal container and bring it with you, while at the same time decreasing your carbon footprint.
It seems like common sense, but millions of people still rely on bottled water as their primary source of refreshment, and I find it hard to wrap my head around.
Increasing the costs of pumping fresh water in Canada should be a serious discussion in parliament right now. In a time of environmental crisis, every country should be making an attempt to decrease their carbon footprint. For us, cutting out bottled water would be a huge step in the right direction at least in terms of our environmental impact.
Yes, it will increase costs of bottled water, but the goal of Canadians should be to cut out consumption as much as possible, and just rely on tap water. The thing is, people won’t change their habits unless it becomes economically viable to do so. Thus, the only way to accomplish this is to tax the hell out of water pumping across the country and send these multinationals back where they came from. This is our water, this is our country, if you don’t like the high prices on our fresh water, then go pump elsewhere.
So to answer my first question of how much we should charge companies to pump water in Canada, the answer is a resounding: More, much more.
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David McDonald

David McDonald

David is a 19-year-old Canadian student currently attending the University of Guelph. He currently studies Public Management and economics with hopes of one day becoming an accomplished journalist. David enjoys reporting on global events and actively try to make a difference in the world.
David McDonald

3 COMMENTS

    • You have a point there, the costs of treated and untreated water vary widely, however, this doesn’t discredit my argument one bit. If you think charging $3.71 for one million gallons of fresh water is justified you are exactly the type of person I am arguing against. Regardless of my comparison being faulty or not, you are in the minority if you believe this is a justified price to charge for fresh water…

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