Legislative Action

Canada: Opening up the floodgates

Mcleans. By Jonathon Gatehouse -

The day of reckoning was at hand. Licence renewal time for a giant multinational that pumps 3.6 million litres of water a day from the ground virtually free of charge, packages it in environmentally unfriendly plastic bottles, then sells it back to the public at a huge profit. Local opposition in Guelph, Ont., was strong, with more than 8,000 residents signing a petition expressing fears that Nestlé's "Pure Life" bottling plant south of the city was damaging waterways and depleting aquifers that provide much of the fast-growing community's drinking water. Add in a provincial government that came to power vowing to end the "reckless giveaway" of water, and it seemed like David had Goliath on the ropes.
But in mid-April, Ontario's Environment Ministry quietly renewed Nestlé's ground- water extraction permit, with no reduction of its daily limit. True, it was for two years, instead of the usual five, and new conditions were imposed requiring stricter monitoring of impacts on the water source and local wildlife habitats. The government also tacked on a $3,000 processing fee, and as of next January, the company — like all heavy water consumers — will be subject to an additional charge of $3.71 per million litres extracted. (In Nestlé's case that will work out to $13.36 a day on production worth close to $4 million.) Considering bottled water's new status as an eco-evil, it was hardly the resounding victory green campaigners had hoped for. Even Ontario Premier Dalton McGuinty expressed frustration, calling it a "token" fee and blaming legal constraints for the outcome. But what really should give the public pause are the reasons why things turned out the way they did. Because when it comes to protecting what is often called Canada's most precious natural resource, token fees and promises of good behaviour might be the best that anyone can do.

Water, it seems, defies legal boundaries as easily as it does physical ones. Under the Constitution, it is the provinces who have responsibility for its management and use as a resource, but Ottawa exercises control over things above and below the water's surface — shipping, navigation and fisheries — as well as its international trade. Agreements like NAFTA and the WTO have limited the power of governments at all levels to charge taxes or duty on water, or limit its export. And while fees can still be levied and limits imposed on the grounds of environmental protection, actual harm has to be demonstrated — often a difficult proposition given how little we know about where our groundwater comes from, and how much there actually is.

"The kind of expertise necessary to stay on top of this on a regulatory basis just isn't there," says Tony Clarke, executive director of the Polaris Institute, an Ottawa public policy group that champions water issues. "We've mapped less than one-half of the groundwater sources in this country. We are way behind." In Canada, water management and surveillance mostly happens at the local level, notes Clarke, shifting the burden to the sector with the least resources. And while the federal Environment Department has convened an expert panel to advise it on what scientific knowledge is needed to create a comprehensive groundwater management plan, there seems to be little momentum toward a new national policy. It's a lack of urgency that mystifies Clarke, given the growing worries about drought and climate change. "There are some serious, serious problems on the horizon," he says. "And governments don't even know how much water is being used."

Ontario (along with P.E.I.) finds itself in an even trickier situation. Unlike the other provinces, where the Crown has vested ownership of water, Ontario's water is simply held in common and managed by the government. In practical terms this prohibits the province from treating water like gas or oil and charging a royalty on extraction. (Changing water's legal status would involve long and messy negotiations with a variety of rights holders, including farmers and First Nations.) Various court decisions have further tied the province's hands by determining that its water fees can't recoup more than the actual administrative cost of management programs. Factor in the nationwide legal confusion as to whether water is a commodity or a product — do you have to furnish it to all businesses, or can you pick and choose who gets to use it? — and even environmental activists feel a little bit sorry for the decision-makers.

"I see them in a kind of Catch-22 situation," says Anastasia Lintner, staff lawyer at Ecojustice (formerly the Sierra Legal Defence Fund) and adviser to the Guelph group that opposed the Nestlé permit renewal. "They can't make it a tax, because that would commodify water and jeopardize trade agreements." But at the same time, the new "management" fees, which will pull in an estimated $18 million a year, are insufficient to fund the type of oversight that's necessary. "They are setting their charges to fund an inadequate process," says Lintner. "It's not just about the quantity you are taking; it's where you are taking it from." (Ecojustice actually gave Ontario the highest grade, an A-, on its latest national "Drinking Water Report Card.")

The bottled-water industry, the focus of so much of the extraction debate, rightfully points out that it is hardly the biggest user, accounting for just 0.2 per cent of Ontario's annual groundwater pull. And bottled-water imports — which eventually find their way back into the ecosystem — far outstrip their exports. In 2004, the industry had 31 permits to extract 20 million litres a day (not including bottlers like Coca-Cola's Dasani or Pepsi's Aquafina, which use treated municipal tap water). As of April 2007, there were more than 6,600 permitted groundwater users in Ontario — each taking at least 50,000 litres a day. And the province is receiving 1,300 new requests every year. Food canneries, the cement industry, breweries and beverage-makers are also being targeted with the new fee as "highly consumptive" users — businesses whose end product takes 30 to 100 per cent of the water used in the manufacturing process. In the future, the charge will be extended to "medium" users like mines, golf courses, and pulp and steel mills.

Linda Nowlan, the author of "Buried Treasure," a landmark 2005 study on Canada's groundwater, works for the University of British Columbia's program on water governance and says the provinces are engaged in a delicate balancing act, trying to reconcile environmental protection with the needs of industry. "Generally speaking, governments are able to regulate water use more than they currently do," she says. "But I think governments see it as a good economic development opportunity." All the focus on bottled water may be a little unfair, she says, noting much greater environmental threats like Alberta's tar sands projects, which need two to five barrels of water to extract one barrel of crude. One way forward would be for governments to start comprehensively looking at all the environmental costs of industrial sectors — pollution, packaging, energy use. But H²O will always be a hot-button issue, even in water-rich Canada. "It's not like other commodities," says Nowlan. "It's essential to life."