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Case: Coca-Cola’s Water Use in IndiaOn December 29, 2005, officials at the University of Michigan sent a letter informing The Coca-Cola Company that, effective January 1, 2006, all purchases of Coke products for on-campus sale in vending machines, cafeterias, restaurants, residence halls, and sport arenas would be suspended.907 This suspension was the latest development in an ongoing campaign by student activists to support high standards of corporate conduct around the world through enforcement of a university Vendor Code of Conduct, which had been adopted in the spring of 2004 to address issues of human rights and environmental protection. Coca-Cola, whose contract with the university was worth $1.4 million, became a target in this campaign after Amit Srivastava, the founder of India Resource Center, spoke on campus to raise student awareness about the depletion of groundwater around the plants producing Coke products.908According to the Wall Street Journal, activists had accused Coca-Cola of “sucking local Indian communities dry through excessive pumping of groundwater.”909 The greatest attention was focused on a plant in Kaladera, an impoverished community in the arid Indian state of Rajasthan, where water was supplied entirely by underground aquifers.910 The local watershed, which covered about 120 square miles, had been officially declared “overexploited” in 1998. The groundwater level had dropped from 30 feet belowground to 128 feet over a period of 20 years, and since 1996, the rate of the drop had increased to 4.5 feet per year. This lowering of the groundwater level had forced farmers to drill ever deeper wells and install more powerful pumps, and the resulting difficulty of obtaining water limited crop output and the number of acres under cultivation.The causes of this reduction in the water supply were disputed. Although Rajasthan receives little rainfall and suffers from periodic droughts, weather conditions had not worsened in recent years. However, urbanization, population growth, and higher incomes had increased the demand for water to the point where annual usage exceeded the natural recharge rate by 135 percent. In recent years, farmers, who used 91 percent of the water—the other nine percent went to household and industrial consumption—had drilled more wells, enlarged their fields, and shifted to more water-intensive crops. Because electricity was supplied at little or no cost and was subject to frequent outages, farmers often left their pumps running constantly, thereby wasting large quantities of water. Farmers had also resisted adoption of drip irrigation systems, which, although costly and difficult to maintain, reduce the amount of evaporation by releasing water directly into the soil.When the Coca-Cola plant in Kaladera opened in 1999, it drew approximately 52.8 million gallons annually from the local aquifer, which was approximately 0.4 percent of the amount of underground water being consumed. Improvements in water efficiency—including a switch from refillable glass bottles to single-use plastic containers, which do not require washing but create landfill waste—eventually cut water use in half, so that in recent years, the Kaladera plant had accounted for only 0.2 percent of local water consumption. The impact of this relatively small usage on the water table was exacerbated, however, by heavy consumption in the summer months, which coincided with the period of least annual rainfall.Although several other industrial facilities in the area, including a paper pulp plant, were also water-intensive producers, Coca-Cola was probably the largest single user of water. However, the fraction of 0.2 percent is miniscule in comparison to total water use, most of which occurred in agriculture. Agricultural use alone exceeded the natural recharge rate, so the water table would have been lowered to some extent regardless of household and industrial use. Moreover, Coca-Cola claimed, though proof was lacking, that the 140 rain water harvesting structures built by the company returned more than 15 times the amount of water to the aquifer than the Coke plant drew. However, many of these structures—which consisted of deep shafts dug in the ground—were found by a study to be in dilapidated condition, and their efficacy in returning rain water to the aquifer was also questioned.911Critics of Coca-Cola’s water use also considered how much water the company was “entitled” to use based on an equitable sharing of resources in proportion to the economic benefit of water use.What do you think was determined to be Coca-Cola’s “fair share” of the water?Although most of the water consumption occurred in agriculture, farmers constituted 15 percent of the local population (not counting family members who work on family farms), and the whole population depended critically on the food produced by local farms. By comparison, the highly mechanized Coca Cola plant employed between 70 and 250 people, depending on the season, who constituted a very small portion of the population. On the basis of employment alone, one observer calculated that the company’s “fair share” of water use would be only 0.15 percent.912 This figure would be further reduced by considering the importance of agricultural to the welfare of the people in comparison to other uses of water. The government had prioritized water use in the order: clean drinking water first, followed by agricultural use, power generation, and, finally, industrial production. In the category of industrial production, soft drinks are unlikely to be rated very highly by the Indian people.The University of Michigan campus remained Coke-free for the first three months of 2006. During this time, Coca-Cola engaged in discussions with TERI (The Energy and Resources Institute), a highly respected research university in India devoted to environmental protection, to undertake an independent study of the impact of the company’s operations.913 On April 11, 2006, an agreement was reached in which the sale of Coca-Cola products was allowed to resume pending the findings of the TERI study, which would be released to the public without any interference by the company. Although the TERI report confirmed many basic facts about Coca-Cola’s role in groundwater depletion and recommended some changes that were never implemented, the university was satisfied with the findings and, on October 13, 2008, a university official declared the student complaint “resolved to our satisfaction.”914 In 2011, the Coke’s chairman and CEO, Muhtar Kent, affirmed, “At The Coca-Cola Company, we are transforming the way we think and act about water stewardship. It is in the long-term interest of both our business and the communities where we operate to be good stewards of our most critical shared resource, water.”915ReplyForward