Nestlé’s water grab: All a big misunderstanding?

Read what has Charlie Ashford has to say about Nestlé’s new scandal
Apr 26, 2013 9:30 AM ET

“It’s a question of whether we should privatise the normal water supply for the population,” says Peter Brabeck-Letmathe, Chairman of Nestlé. “One opinion, which I think is extreme, is represented by the NGOs… As a human being you should have a right to water. That’s an extreme solution.”

The interview, which made the rounds on the Internet this week, is certainly an interesting watch. Taken from a 2005 documentary, Nestlé’s then-CEO goes on to outline why he believes that water is “a foodstuff like any other… And like any other foodstuff it should have a market value.”

There has been a predictable outcry. Brabeck-Letmathe has an obvious interest in privatising water supplies – Nestlé is the biggest producer of bottled water in the world. But has he been misunderstood?

There are good reasons for putting a price on water. Water is increasingly scarce in many parts of the world. Qatar, which provides all of its citizens with free water, has the highest water consumption per person in the world, and uses vast amounts of energy (and oil) desalinating seawater for its thirsty population to drink. Like a carbon price, a price on water may help put a “cap” on its use, encouraging people to save water, invest in efficiency improvements or move to more water-abundant areas.

So Brabeck-Letmathe has a point. But there are misunderstandings on his side of the argument too. The “NGO” position, perhaps best represented by the Millennium Development Goals, is not about providing people with unlimited supplies of water, but rather making sure that everybody has access to the water they need to live.

A free market for water will ensure (in theory) that it is used in the most economically efficient way possible. But from an economic perspective, a Nestlé bottling plant makes far more productive use of water than an African child. Vague talk about protecting the poor is not enough – water should simply never be unaffordable.

In a recent interview, Brabeck-Letmathe is just as enthusiastic about putting a price on water. “If something doesn't have a value, it's human behaviour that we use it in an irresponsible manner”, he says. But he also seems to have backtracked slightly. “I am the first one to say water is a human right”, he proudly states.

Perhaps the NGOs weren’t so extreme after all.