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Frothy Battle

BY ROBERT MULLIN

Latest development in Nestlé plant saga sparks debate about the value of water.

BY ROBERT MULLIN

The latest development in Nestlé plant saga sparks debate about the value of water

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It’s a warm Tuesday afternoon in the industrial park at the eastern end of Cascade Locks, and the only sign of activity is a dump truck dropping a load of sawdust into the yard next to the Bear Mountain wood pellet plant. Just across the road, a collection of disused excavators, a rusted forklift, mounds of rubble and piles of twisted steel beams are penned by a chain-link fence topped with razor wire. Standing above this Columbia Gorge scene is a blue-and-white sign mounted on two utility poles, advertising land for sale or for lease in this designated enterprise zone.

“Since the timber industry declined, we need to find something to help us with our economy,” says Cascade Locks city administrator Gordon Zimmerman.

That something  —  a long-awaited deal to land a $50 million Nestlé bottled water plant — could finally be within reach for city officials. In April, the Oregon Department of Fish and Wildlife (ODFW) approved a hotly contested proposal to transfer a portion of its legal rights to water flowing from Oxbow Springs to the city of Cascade Locks in exchange for an equivalent amount of municipal water. The city, in turn, plans to sell the springwater — along with its own groundwater — to the Swiss food and beverage giant.

Opponents of the Nestlé plant are running out of options, but that’s not likely to turn down the dial on a conflict pitting environmental and consumer groups against an extractive industry and proponents of rural economic development — the kind of conflict endemic to Oregon politics. A new wrinkle is that this controversy involves a commonplace albeit life-sustaining  substance, which, until recent years, had more economic value as an industrial and agricultural input than as a consumer product. And the issue is taking shape against the background of deepening drought across Oregon and the wider West.

“Drought changes how folks value water, as opposed to other times of the year, or during years of abundance,” says Todd Jarvis, an Oregon State University hydrologist.

Rainfall is abundant in Cascade Locks, but jobs are scarce, so it’s understandable that some town boosters might value the latter over the former. The town gets 77 inches of precipitation a year, while unemployment stands at 18.8%, translating into 109 officially jobless out of a population of about 1,050.

The Nestlé plant comes with the promise of well-paying jobs, although exactly how many — and at what wages — is still unclear. According to the International Bottled Water Association, Oregon bottling operations pay their workers an average of $59,000 annually in wages and benefits, compared with a state per capita income of $41,681. Nestlé natural resource manager Dave Palais says the Cascade Locks facility could employ up to 50 people with two bottling lines, but it would take a few years to reach that level.

Unclear, too, are what the specific terms of an agreement would be between Nestlé and Cascade Locks, and whether it would sufficiently value the resource the company is tapping. For a consumer group like Food & Water Watch, which has led opposition to the plant, no price is high enough.

“As we face increasing water scarcity, it is imperative that society continues to define water as a public resource and not allow it to be privatized or made into a commodity,” says Julia DeGraw, Northwest senior organizer.

480

number of Oregonians
employed by water
bottling operations

100M

maximum output in gallons
of Nestle's proposed
Cascade plant

$292M

estimated value of output
from Oregon bottlers 

“This is an exchange between two governmental entities,” counters Zimmerman. “By allowing the city to have that water, we’re not privatizing it; we’re selling it.”

While technically true, the issue of who effectively controls the water remains muddled. If Nestlé comes to town, a pipeline must be constructed to divert Oxbow Springs water to the bottling facility. Additionally, the city will be required to drill a new well to provide untreated groundwater to Nestlé, a portion of which will be diverted back to ODFW’s hatchery operations in the area. Zimmerman says the pipelines sending water to Nestlé will be built and paid for by the company, because they require a higher standard than municipal water.

“Whether Nestlé or the city actually owns the Nestlé-placed infrastructure has not been resolved, but Nestlé will maintain the infrastructure to protect the food-grade quality status,” says Zimmerman.

And then there is uncertainty around price. Last fall the Cascade Locks city council passed a resolution setting municipal water rates at $2.50 per thousand gallons, while allowing users of at least 250,000 gallons a month to negotiate a lower contracted rate — one that, in the case of Nestlé, would include the Oxbow Springs water, to which only the company will have access.

“I don’t think they made the change to accommodate Nestlé,” says Palais. “They are trying to attract other industries into their city.”

“We pay $10 per thousand gallons, a fair rate [for springwater],” says Steve Emery, CEO of Culver-based bottler EartH2O. His company taps an artesian spring managed by the Deschutes Valley Water District, which charges big users a higher rate than area residents. Emery says discounting for volume makes sense in a place like Portland, where companies are drawing treated water from a municipal source, but not for spring- water that gets marketed to consumers at a premium.

Bruce Sorte, an OSU economist, co-authored a Nestlé-commissioned 2013 economic impact analysis of the proposed plant, for which he ultimately returned the fee to avoid perception of a conflict of interest. He believes Cascade Locks will benefit from the plant but acknowledges that to get the most out of the relationship, the city must find negotiators experienced in dealing with large corporations. At the same time, Nestlé has far more public scrutiny, says Sorte. “To a degree, the public will have some oversight over the negotiations.”

But at this point, it is difficult to discern the mechanism to give that oversight some teeth. ODFW’s decision to transfer its water rights now goes before the state’s Water Resources Department, which can only reject the arrangement on the basis of damage to intervening water rights, of which there are none. Opponents want Gov. Kate Brown to order ODFW to perform a public- interest review of the transfer, but so far she has declined to take a position.

A better option, Jarvis thinks, would be legislation enabling a public-interest review of all water rights transfers. He believes Brown and Oregonians need to consider the amount of money being made from a public resource like springwater.

“Oregon maintains an international reputation for having abundant clean water,” says Jarvis. “Why not have the companies that are profiting from this reputation pay a fee to Oregon to maintain it and use the sorely needed revenues to shore up budget shortfalls?” But for Cascade Locks officials, the issue is decidedly more local. “It’s a plentiful resource we have, and we should be able to use it for economic development,” says Zimmerman.

The prospect of extended drought is already putting those assumptions into play, confronting the state with the need to put a value on a resource that is increasingly scarce in the face of growing demand.

Click through for story on EartH20


 EartH20 closes the loop

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Culver-based EartH2O has been selling its spring water in bottles produced from 100% recycled plastic for five years, but now the company says it has closed the loop on its manufacturing process by acquiring all the material used in its bottles from plastic recycled in Oregon.

“Our goal is to source as locally as possible,” says CEO Steve Emery.

The advancement came about through a partnership with ORPET, a St. Helens recycling facility that sources used beverage containers from recycling centers throughout the state, then cleans and converts them into a flake material. That flake is sent to Peninsula Plastics Recycling, where it is ground into a resin that is molded into pellets, which are then shipped to EarthH2O for use in the production of single-serve, BPA-free water bottles.

Emery says the cost of recycled resin is running about 10% higher than “virgin” resin derived directly from petroleum, but requires 60% less energy in production. Still, sustained low oil prices could threaten the market for resin from recycled plastic as demand declines.

“The situation may not be viable for suppliers who will lose customers to virgin resin,” says Emery. He says EartH2O is committed to using 100% recycled plastic regardless of increased costs. Later this year, the company will also begin manufacturing bottle caps from fully recycled material.

“It costs a little bit more, but it’s infinitely better for the environment and community,” Emery says.

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