February 18, 2016

Deteriorated Groundwater Conditions Lead to Closure

The Coca-Cola company has stopped production at its disputed bottling plant in Kala Dera in Jaipur, and has no plans to resume operations, according to documents (in Hindi) obtained by the India Resource Center and interviews with workers.

Coca-Cola’s plant in Kala Dera has been the target of a sustained community-led campaign since 2003 accusing the company of exacerbating water shortages in the area as a result of indiscriminate mining of groundwater for its operations.

In 1998, the area’s groundwater was declared as overexploited – the worst category of groundwater in India, yet Coca-Cola built a new bottling plant in 2000.

Groundwater levels have plummeted ever since Coca-Cola began operations, and the increased difficulty in accessing groundwater from the depleted aquifer is one of the main reasons given by company officials for the plant’s closure.

The plant in Kala Dera has also incurred financial losses and will now serve solely as a storage and distribution center, according to a petition filed by the company.

Coca-Cola’s irresponsible business practices in Kala Dera – mining groundwater in a water scarce area which aggravated the water shortages for the farmers and residents in the area as a result – have been well documented.

In 2014, Dr. Aneel Karnani from the University of Michigan’s Stephen M. Ross School of Business found Coca-Cola’s corporate social responsibility claims around its bottling plant in Kala Dera in India to be lacking merit, and concluded that the company’s extraction of groundwater in the water stressed area lead to the “tragedy of the commons.”

In 2008, Coca-Cola paid for an assessment of some of its bottling plants in India, including Kala Dera, as the result of a student-led campaign at the University of Michigan. The Energy and Resources Institute (TERI), which conducted the study, recommended that Coca-Cola shut down its plant in Kala Dera because “the plant’s operations in this area would continue to be one of the contributors to a worsening water situation and a source of stress to the communities around.”

Coca-Cola ignored the recommendation.

Rameshwar Kudi, a retired government official who led the local campaign to shut the plant, welcomed the closure of the bottling plant but remained concerned about who will be held responsible for the loss of earnings for thousands of farmers in the area who were unable to farm successfully as the groundwater levels dropped sharply.

“We have campaigned for shutting the plant and we welcome the closure”, said Mahesh Yogi of the Kala Dera Sangharsh Samiti, a local group that has led the campaign. “However, Coca-Cola must also be held accountable for the damages it has caused to the farmers, to the watershed and to the community”.

“We have always known that Coca-Cola’s plant in Kala Dera would shut down one day because it would run out of water, as it has now. We would have preferred that Coca-Cola have acted responsibly and never operated in a highly water stressed area, or at the very least, shut down the plant when its own study asked it to eight years ago”, said Amit Srivastava of the India Resource Center that has campaigned internationally to bring pressure on Coca-Cola for water mismanagement in India.

“Coca-Cola and its investors must take responsibility for the depleted watershed and the financial loss to farmers because of the company’s complete lack of respect for the communities’ right to water which has led to the tragedy of the commons. Allowing Coca-Cola to just walk away after completely devastating the groundwater resources is not ethical, sets a bad precedent and the company must be held to account.”

The India Resource Center is also in touch with the workers – both permanent employees and contract workers – to ensure that the demands for a just transition for the laid off workers is met by the company.

Coca-Cola continues to face crisis in India due to their mismanagement of water resources, including the forced closure of their bottling plant by government authorities in Kerala in 2005, the closure of its 15 year old plant in Varanasi, the refusal by government authorities to allow a fully-built expansion plant to operate in Varanasi in August 2014, a proposed plant in Uttarakhand cancelled in April 2014 and the withdrawal of the land allocated for a new bottling plant by the government in Tamil Nadu due to large scale community protests in April 2015. The company is also currently the subject of a court ordered investigation as to whether its second largest plant in India has been illegally discharging untreated effluents.

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