Fiji Water's CSR Climate Change Issues

The Fijian government and Fiji Water recently played an interesting game of chicken. The two parties were in a standoff over a proposed tax increase for water extraction. The dispute has been resolved, but it raised some interesting questions about just what exactly the price of water should be.

The disagreement arose last week when the Fijian government decided to increase the water extraction tax from F$0.003 (that’s a third of a Fiji cent) to F$0.15. That’s a hefty increase worth over F$22 million annually. Not a bad windfall for a cash-strapped government, especially given the limits of Fiji’s economy.

Fiji Water in turn said it had no choice but to shut down operations. On November 29, Fiji Water told hundreds of its workers that the plant would be shut down immediately. The government stood its ground and the plant reopened December 3 with Fiji Water agreeing to pay the tax.

The issues raised by the water tax in Fiji extend beyond pure economics. There are questions of whether an American company, which was recently nominated for the US State Department’s Corporate Excellence Award, should be dealing with a dictatorship. And there are also questions of local environmental justice. Fijians have scarce water resources yet Fiji Water has sole rights to the aquifer its currently tapping. There’s also the issue of how bottle water contributes to climate change.

Fiji Water claims to be a very responsible corporate citizen in this regard. The company voluntarily discloses its carbon footprint. In 2007, the company was responsible for emitting 85,396 metric tons of carbon dioxide.
The company is also taking steps to be carbon negative in part by investing in a forestry project. The downside is there’s no way to independently verify how real Fiji Water’s climate change bona fides are.

Admittedly, the Fijian government was not interested in addressing climate change when it made the decision to raise the tax. But it does raise an interesting possibility. Increasing the supply side cost of bottled water is one way to potentially decrease consumption by making the water more expensive.
So why not levy a similar tax on the demand side as well? If the US charged a $0.15 tax on not just Fiji Water but all bottled waters, it would address one of the more frivolous causes of climate change. Shipping water halfway around the world that’s no better than what comes out of your tap is outrageous. A tax would be more representative of the actual environmental cost of bottling and shipping water.

In turn, the money earned from the tax could be rolled into educating the public on sustainable water use practices or improving local water facilities. This makes a lot of sense given that one of the effects of climate change will be more erratic rainfall patterns.

Now we just need a snappy name for it to get bipartisanship support. How about America’s Bottled Water Independence Act?

Photo Credit: thenibble