ORGSTUDY 208 Lecture Notes - Lecture 6: List Of Lakes By Volume, Produced Water, Water Scarcity
15 Jun 2018
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Questions:
1. How does the case of Coca-Cola’s Kaladera plant showcase the “tragedy of the commons”
issue? Please address the dynamic among the different groups of people impacted by Coca-
Cola’s actions.
2. What do you think Friedman would recommend to Coca-Cola? Why? What do you think the
authors of the McKinsey report (Redefining Capitalism) would recommend to Coca-Cola?
Why?
Notes in Relation to Questions:
● Intro
○ Prediction of Tragedy of Commons assumes that all individuals are inherently selfish
● Coca-Cola and Tragedy of the Commons:
○ Main problem -
■ Sucking local indian communities dry through excessive pumping of
groundwater
■ Coca-cola has made efforts to present themselves as a water stewardship
company
● Global Water Crisis:
○ 200 scientists in 50 countries identified water shortage as one of the two most worrying
problems for this millenium
■ 1 in 7 does not have access to safe drinking water
■ 1 in 3 lacks proper sanitation
● Kaladera’s Water Crisis:
○ Watershed comprising an area of 209 sq. kilometers was designated as overexploited
→ withdrawal rate exceeds the natural recharge rate
■ At least 1.35 times the natural recharge rate
■ Exploitation ratio was 2.47 in 2004
○ Groundwater level has been declining .5 meters per year in 84-96, then accelerated to 1.4
meters per year during 1996-2006 (keeps going)
○ The farmers state their livelihood had been affected due to increased cost of irrigation
because they had to dig deeper wells and purchase more powerful pumps to attain water
■ More land was left fallow because of inadequate water supply
● Causes of Water Crisis:
○ Stakeholders felt that a cause for water crisis was reduced rainfall in recent years, but the
empirical data does not support this explanation
■ Even though there has been mild droughts, this is not abnormal given longer-
term pattern of droughts
○ High variance in annual rainfall
○ Water demand has grown along with population growth in the region of about 2.6% per
year
■ Higher household incomes/changes in lifestyles
○ Urbanization
○ Kaldera is still mostly a rural area, and agriculture = predominant occupation
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○ Agriculture accounts for about 91% of total groundwater extraction
○ Domestic/Industrial 9%
○ Problem has been exacerbated by the spread of free or vastly discounted electricity for
farmers, who often pump out more water than needed
● Kaladera Coca-Cola Plant:
○ Not the only water dependent factory in the park
○ Coca-Cola is one of the largest users of groundwater in the Kaladera area, may be the
single-largest user
○ Water usage ration (volume of water consumed divided by beverages produced) is
2.12 → improvement
○ Peak production (which means peak water extraction) occurs in the summer months of
april-june
■ Coincides with the acute water stress period in that region
○ Coca-Cola plant accounts for less than 2.7% of total water extraction 70% of the time,
and less than .9% for 40% of the time
■ At its worst, it accounted for 8%
● Lack of Regulation:
○ Law in India historically has been that access to and use of groundwater is a right of the
landowner; there are no restrictions at all on who can pump groundwater, nor how much
and for what purpose
○ Plan for govt of Rajasthan State Water Policy: exploitation of groundwater resources
should be so regulated as not to exceed recharging possibilities, and also to ensure social
equity
■ State government should prepare projects for artificial recharge of groundwater
● None have been enacted
○ Lack of coordination between different ground water agencies
● Coca-Cola’s Plant Location:
○ Coke claims to be socially responsible
■ Expected that the company would not locate a water-intensive plant in a water-
stressed area
○ When people told them that they were overexploited → responded by saying:
environmental due diligence was conducted before we set up operations
■ Plant was set up after obtaining all necessary clearances from the relevant
departments of the govt.
○ Head of environment and water resources department was quoted saying: “water is to
coca-cola as clean energy is to BP”
○ Counter Argument would be that the issue of water scarcity, especially in Rajasthan, was
quite obvious even in 1999, and a socially responsible company would not have loaced a
water-intensive plant in that area
■ PR strategies to greenwash
○ State government gave a tax incentive to coke
■ Would be logical to the govt to exclude water-intensive businesses from the
general economic development incentives
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Please address the dynamic among the different groups of people impacted by coca- Prediction of tragedy of commons assumes that all individuals are inherently selfish. Sucking local indian communities dry through excessive pumping of groundwater. Coca-cola has made efforts to present themselves as a water stewardship company. 200 scientists in 50 countries identified water shortage as one of the two most worrying problems for this millenium. 1 in 7 does not have access to safe drinking water. Watershed comprising an area of 209 sq. kilometers was designated as overexploited. Withdrawal rate exceeds the natural recharge rate. At least 1. 35 times the natural recharge rate. Groundwater level has been declining . 5 meters per year in 84-96, then accelerated to 1. 4 meters per year during 1996-2006 (keeps going) The farmers state their livelihood had been affected due to increased cost of irrigation because they had to dig deeper wells and purchase more powerful pumps to attain water.
