25 Sep 2009

Pyrrhic Victory in McCloud?

Food and Water Watch joined local activists in celebrating Nestle's decision to build a bottled water plant near Sacramento instead of in McCloud, CA.

I am not a fan of FWW's hysterical anti-capitalist rhetoric (see this and this), and I am also familiar with the situation in McCloud, a small community with little to offer besides splendid nature and lovely water.

So, I am sad to see this "triumphalism" on Nestle's withdrawal. Although I criticized the terms that Nestle offered the people of McCloud (about five to ten percent of the price they should have offered), I think that they could have made a deal. Instead, Nestle's ham-handed "negotiating" created an alliance between those who dislike capitalists and those who dislike being ripped off. Bad news for Nestle but worse news for McCloud.*

So what's McCloud going to do with its fantastic water? How are the citizens going to use their asset to improve their lives? Although they can surely enjoy the cleanest, freshest showers around, they are going to have a hard time getting more money for their water then Nestle was capable of paying.

My bet is still on "McCloud" branded bottled water, but I'll wait to see what they do.

Bottom Line: It's one thing to negotiate for your interests, it's entirely another to throw your interests (and those of your neighbors!) out the window in the name of ideological purity.
* I submitted a consulting proposal on how McCloud could use its water for economic development, but we were unable to work together because of their categorical rejection of any option that included Nestle. I was unwilling to take that option off the table -- how can the community choose without knowing all the options -- so I declined further negotiation. (Note that the people who rejected Nestle were not representative of the community but of a local environmental group.)


  1. WaterSource/WaterBank25 Sep 2009, 13:43:00

    200,000,000 ( 2 hundred million) gallons ... per year Approx. 5.5 million gallons per day. 16.8 AF/day or 8.5 cfs.

    Enough water for 614 families X 3.5 persons = 2149

    892 gallons/day per family ...not

    ( from a supporting article)

    $24.60 per AF

    300 trucks per day ( Assuming 18,250 gallons per truck = 16.8 AF/day

    240 acre property

    Nestle revised to a 350,000 square feet facility and 200 million gallons of water a year from three of McCloud's springs for 50 years with option for 50 more.

    McCloud has 1300 residents.

    No info found on actual ownership of water, proposed exchanges or downstream damage to prior vested water rights. No info found on potential economic loss/benefit to McCloud.

  2. Pyrrhus would be proud of McCloud.
    Self destruction through ideological purity is common among humans. So is apathy when your interests are threatened but the threat is in the 'medium term', 5 to 10 years out.

    As far as I can tell, ideological purity reinforces a tribal bond that is viewed as more important than even large amounts of money.

    Does economics, including agent based economics, consider tribal solidarity as a driving force especially where the 'rational' action negates a long held belief of the tribe?

  3. @Ray -- McCloud "owns" the water from the spring. The trucks would be carrying bottled water, not bulk. Besides that, feel free to push the numbers around...

  4. WaterSource/WaterBank25 Sep 2009, 22:21:00


    You are probably right ... however, professionally it was my job to prove to the Court who owned water rights ... not just who claimed them. Surprisingly, things were not always as they seemed ...

    Case in point and off the page ... morgagees are finding it difficult to foreclose because they cannot provide the necessary signed note ... KS Supreme Court ruled just last week that there is no standing without the proof ... and yes, I am a birther, because I believe in the law to which no one is exempt.

  5. Eric:

    Market economists do not like things like "tribal solidarity," because everything must have a price no matter who is willing to pay. I mean seriously, how can anything be more important than money, don't they know what that money can do for them? How irrational.

  6. In Saudi Arabia, apartment houses are not more than 3 stories high. If the apartment houses were taller than this, members of another tribe would have to be allowed to rent space in the building in order to fill the rooms.

    So, the apartments are not four stories high. The income from the extra story, assume $6,000 a year for 20 years, is not higher than the tribal cost, $100,000 a year for centuries because the apartment owner is excluded from their tribe and not allowed into another tribe.


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