By Eric Crampton 08/04/2016 7

Over at the Christchurch Press, I went through the current controversies about an Ashburton water bottling plant. New Zealand allocates water drawing rights through a consenting system. Government allocates drawing rights for water, but those rights aren’t really tradeable other than by selling the land that goes with the consent.

All over the Canterbury plains, farmers have drawing rights for water for irrigation. New ones don’t draw that much ire, but there are growing worries about nitrates leaching into groundwater and about streams drying up in Christchurch.

If another typical-sized dairy operation opened up, though, there wouldn’t be much hoo-hah.

But open up a water bottling plant to ship water directly to China instead of running it first through a cow to turn into milk to dry and turn into powder and waste water, well, folks get upset.


The plants draw water from the aquifer, put it in bottles, and sell it in Asia. Because New Zealand awards consents to draw water but nobody puts a price on water, critics see this as profiteering on an unpriced resource.

​At the same time, over a thousand Canterbury dairy farms put water into cows. Dr Daniel Collins estimated that it takes about 250 litres of river and aquifer water, through irrigation, to produce a litre of Canterbury milk. That will not be a net measure, as some of the irrigation does flow back into the aquifer.

But it will take many more litres of water to produce a litre of milk than it takes to produce a litre of bottled water. The milk is collected, the water extracted, and the powder is sold in China.

And so we come to what might be the Canterbury Trabant plant. Does anyone really know whether water from Canterbury’s aquifers is more valuable when put directly into bottles and sold to Asia, or when it routes through a cow along the way?

How low does the price of milk have to be before it would make more sense to leave out the middle-cow?

It is a tough question to answer, and especially where water allocation is set by consent rather than through markets. East Germany allocated iron by something not that different from consents, rationing scarce resources across various industrial uses, and wound up making cars that were worth less than the inputs that went into them.

New Zealand allocates scarce water by consents, and hopefully does a better job of it. Trabants were ghastly; New Zealand milk is delicious.

I argued for a water trading scheme. Fritz Raffensperger designed one when he was at Canterbury, when Canterbury had an operations research team.

Main point of the article: why are y’all getting so upset about water being put in bottles and shipped to China when it takes (ballpark) 250 times as much water to make a litre of milk, which is then dried out and shipped to China? They’re both selling water.

Main critique of the comments section: Selling water is wrong.

I’m constantly amazed that policy isn’t worse than it is..

7 Responses to “Bottling water and cutting out the middle-cow”

  • The water involved in making the milk or milk powder that is exported is not lost to the local system.

    Exported water is removed from and lost to the local system

  • I presume that Fonterra (and Synlait) both allow the water extracted from milk in the manufacture of milk powder to escape to the atmosphere. In that sense the water from milk powder is also lost to the system.

    (Image of the alternative: condensing the water and returning it to farms in tankers – farmers purchasing water from Fonterra or Synlait!?)

  • The local atmosphere is part of the local system.

    In the end, the system is the whole world. But export of water from a local system can have unfortunate consequences. For example, the Aral Sea which has shrunk to 10% of its previous size due to diversion of water for irrigation projects.

    • What I’d be more interested in knowing is how much of the 250 litres winds up recharging things, and how much is lost. If more than 1/250 is lost, diary still loses more per litre milk than is lost from bottled water.

  • Depends what you mean by “lost.”

    But export of 1 litre of either milk or water from a region could be considered approximately equal real losses. I imagine the other water used in producing milk is retained in the local system (aquifer/soil/atmosphere) and is only “lost” in the short term – although that will have short term importance.

    • I don’t have enough sector knowledge here. But a few assumptions, which could be wrong, then tell me whether I’m getting the wrong conclusion from the assumptions or if the assumptions are out:

      1) The estimate of 250 litres of blue water to produce 1 litre of milk is right, but it’s a gross figure;
      2) Much of the irrigated 250 goes back into the aquifer, but not all. There are losses to evaporation and to run-off that winds up in the ocean;
      3) No water is ever really “lost”, but evaporation loss in a small windy place next to an ocean is different from evaporation loss out on the North American plains. The amount of local rainfall doesn’t really vary with the amount of local evaporation. It’s all big external weather systems that whoosh over. Milk drying plants vent steam that’s lost; wastewater then used in irrigation also have associated evaporation losses.

      I then conclude that it’s awfully likely that more than a litre of water is lost in the production of the milk solids associated with a litre of milk.

      Am I missing something there?

      Am absolutely not anti-dairying or anything like that. I’m just wondering whether there’s any way of making sense of anti-bottled-water critiques that focus on that New Zealand loses water when exporting bottled water, and that seems to reckon there are no such losses when we export milk (or ignores them).

  • I would be happy to pay for the water that comes out of my tap. As long as the revenue raised goes into conservation of waterways and securing long term water quality.
    Plus selling our water overseas is only going to increase its value and that’s a good thing. It’s time we realise how important water is.