It’s not often senior corporate executives are compared to Bond villains. This happened to the Chairman of Nestlé, Peter Brabeck – compared by some media commentators to antagonist, Dominic Greene in the film Quantum of Solace (Greene wants to control the water supply of Bolivia) – after he infamously declared that water was not a “human right.” Brabeck has since dialled back – or at least clarified – the statement, and deserves some credit for drawing our attention to the subject. Problems of clean water have been well signalled in the developing world and in environmental blackspots like China. But are we really aware about just how many problems we have in our own backyards?
I thought of Brabeck’s comment, and the famous line of Coleridge’s Rime of the Ancient Mariner poem in the title of this piece, when a record fine (£126m) was imposed on Southern Water in the UK at the end of June. The UK water regulator, OFWAT, described “shocking” failures at their sewage treatment sites that polluted rivers and beaches across southern England. Not only had the company chronically underinvested and failed to maintain equipment properly, but they had deliberately manipulated the sewage sampling process to imply all was well when it was not. The regulator’s chief executive, Rachel Fletcher, said: “…the company was being run with scant regard for its responsibilities to society and the environment.” For good measure the UK Environmental Agency added “we expect to commence court proceedings soon.”
Infrastructure investments have been very fashionable amongst investors in the last decade. This was something of a wake-up call. Southern water is owned by the interestingly named “Greensands Consortium”, which was set up by JP Morgan Asset Management, along with UBS, Hermes (then BT’s pension fund arm) and a series of Australian investors including the Challenger infrastructure fund. Investors must be alarmed by the growing number of water pollution cases in the UK, and the steadily rising levels of fines. As one judge observed when fining Thames Water £20.3m some years ago after huge sewage leaks “I have to make thefine sufficiently large that [Thames Water] get the message.” The previous decade had seen over 1,000 (yes, one thousand) pollution incidents by the UK’s ten water companies. The UK example is indicative of a growing realisation that massive population growth and creaking infrastructures across the globe make clean water an increasingly rare commodity. This is well appreciated in developing countries (where Nestlé sell all that bottled purified water). China is a particularly black spot: 85% of the surface water in Shanghai is deemed unfit for drinking by official standards (56% is deemed unfit for any purpose!). In Tianjin (home to 15 million people these days) a mere 5% of water is drinkable.
Professor Joan Rose of Michigan argues that the rapid growth of the world’s population is leading to a global sewage problem: “There has been a great acceleration since the 1950s of human and animal populations, water withdrawals, pesticide and fertiliser use. At the same time, there has been a deceleration, or shrinkage, in wetlands.” She points out that sewage contains over a hundred different viruses, and that new ones, Cycloviruses, are emerging and spreading through this route. Cycloviruses are linked to neurological problems in children. She believes over 1.5 billion people do not have access to adequate sewage treatment.
What may come as a shock to many readers is that the US and Europe are heading in the same direction. Even where there is proper treatment, some new elements of human waste cannot be eliminated and enter into our water and on into the food chain. London water has been shown to contain a level of Prozac. The same has been detected in salmon. In Suffolk, UK, shrimps were found by a King’s College team to contain cocaine.
Fortunately, these are at levels that can only concern those with particular allergies. More serious is the growing evidence of pollution from agricultural chemicals. Agricultural pollution was the root cause of one particularly horrible disaster in Canada. Half the population of Walkerton, over two thousand people, suffered appalling health problems (kidney failure etc.), and seven people died after cow manure entered
the human water chain. The Science of the Total Environment Journal recently published the results of a survey of European waterways. This found that nearly half the streams contained at least one banned pesticide. One particularly bad stream in Belgium contained no less than seventy. Anyone living in rural France can now access a map which indicates the pollution from agricultural chemicals in the local water supply. No wonder Evian sales are booming.
And it is agricultural and industrial pollution that is behind the growing crisis in America’s drinking water. California is one of the worst affected states, with the population struggling with the level of nitrate pollution. More than a million Californians are without clean drinking water. Chemical fertilizers and dairy manure seep into the ground and cause nitrate contamination. According to the California State Water Resources Control Board some three hundred different community water systems are compromised. One recent study in San Francisco even suggested that a lifetime of drinking California tap water might be cited as a major cancer risk in health assessments.
An even more troubling issue is the growing concern around two industrial pollutants polyfluoroalkyl and perfluoroalkyl substances (PFASs), the so called “non-stick” chemicals, linked to cancer. Although largely discontinued by manufacturers they keep showing up in drinking water.A 2016 Harvard study found that nearly six million Americans’ water had been affected. More than 1,500 drinking water systems across the country may be contaminated. Rather like the French water map, there are similar useful ones now published by the Environmental Working Group for this contamination in the States.
And then there’s Flint, Michigan, a town of over 100,000 people. In 2014, hapless officials switched the city’s drinking water source to the Flint River in an effort to save money. The pipes doing this leached lead into the tap water. Health officials assured people there was no danger from their odorous, discoloured water. They lied. The health of children across the city was damaged, and some twelve people died in a Legionnaire’s outbreak. Sadly, the outstanding prosecutions against officials were dropped recently. For the largely black population of Flint, they rightly feel they will never get justice. People only drink bottled water there now.
Bottled water (hopefully glass) is often the only solution in these outbreaks, but even that needs careful monitoring. It is important to look for that magic word “mineral.” Poland Spring, familiar to all New Yorkers, is subject to a court case that alleges that its Maine Spring source ran dry over 50 years ago, and that the water is not in fact spring water but “common groundwater.” The owner of Poland Spring? Nestlé.
Christopher Walker is a writer on business and politics. He has worked for many years in the area of institutional investment and ESG.