The next chapter in the saga that began as the Nestlé Waters North America (NWNA) 1041 Permit hearing before the Chaffee Board of County Commissioners (BoCC) more than a year ago, will continue at 1:00 p.m. Tuesday, May 4, but the name of the permittee organization has undergone some changes. (For the sake of clarity. although the formal name is now BlueTriton this article will refer to them as NWNA). Questions related to that ownership transfer will be a topic of the May 4 session.
“There has been a change of ownership, and it’s unclear [to me] what was transferred or changed hands,” said Commissioner Greg Felt. “We recognize there has been a change. Our current permit does address that in the context of permit assignment.”
This session is continued from the BoCC April 20 hearing, in which a preliminary draft of the Economic Impact report from Harvey Economics, was presented for the first time. The Preliminary economic report presentation slides and the full report were put into the public record on April 21.
The overall timeline:
- Aug. 4 — Earlier, the BoCC extended the permit to Aug. 4.
- 1:00 p.m. May 4 — The topic will be the business structure and transfer of ownership, annual report, public comment, and rebuttal.
- 1:00 p.m. May 18 — Public hearing on the annual report and Nestle rebuttal to the economic impact report…to ask questions of Harvey Economic,
Preliminary Economic Impact Report Findings
The report was broken into two parts; the economic impacts (positive impacts less the negative effects) and how those net economic benefits compared to the utilization of the resources.
Harvey asked the BoCC to think in these terms: What are the alternative uses for NWNA water uses? What would be the economic contribution of alternatives – is there a present or future shortage that would make a tradeoff relevant? And finally, is NWNA’s use limiting future uses?
The report was extensive but led to the conclusion that the presence of NWNA in Chaffee County had a gross positive impact on the county of $1.3 million per year.
- In 2030, assuming 98-acre feet of pumped water, 12-acre feet of augmentation, there is a credit to the river of 12-acre feet of water. The economic benefit of this water for alternative uses (thinking about “use” not in terms of the groundwater pumped, or augmentation water), thus the amount reserved for NWNA – is 196 acre feet; water that could be used for someone else, but currently reserved for NWNA.
- According to the Colorado Water Plan (and a 2019 technical update of that plan) the total water use in Chaffee County from municipal and agricultural uses from 2019 to 2020 … is 127,000 -acre feet of water…that NWNA water reservation of 196-acre feet, divided by the 127,000 amounts to .15 percent.
- According to the Harvey Economic report, the economic activity of that 196-acre feet for the whole county – growing retail sales added by the total sales for agricultural crops and livestock — that .15 percent amounts to a measure of economic activity during that period — of $1.3M/year. If that water only displaced municipal water use, the value would be higher. If it only displaced agriculture use, it would be lower.
“Combined, we believe that $1.3M is the alternative water use-value for this 196-ace ft., said Harvey.
“It seems like there would be an embedded assumption here that we only have just enough water for what we are doing. That isn’t the case, there is more than enough,” said Felt. “The 126-acre feet of water used is not consumed, the water molecules are used more than once.”
The 2030 projection is future demand. Chaffee County’s future water demand for municipal water is expected to increase to 4,600-acre feet in 2050. According to Harvey Economics, that’s an increase of 846-acre feet which is relevant only if the county thinks it is going to need more water.
Harvey says his group spoke with both Buena Vista and Salida and they say they believe they have enough water to meet future demand.
“You’ll need between 358 and 1,300-acre feet more water, depending upon municipal growth versus agricultural use, which can vary,” said Harvey. “Agricultural demand goes up and down – agriculture also deficit-irrigates –they use the water they can get, raise the hay that they can, and call it good.”
The county’s needs are one thing; the state’s future water demand is something else. According to Harvey, the Upper Arkansas is an over-appropriated water source, with several [entities] competing for this water supply.
“One of your challenges here is you went through a long-term period where growth was stable. But now, growth is accelerating – you are seeing a change in the water supply and demand dynamic … it’s a shock to people. We think of it as an urban problem – it’s not just that. However, the district has more than 900-acre feet more water – it has enough to meet water demand.”
He suggested that since NWNA isn’t actually using all the water from the Ruby Mountain Spring, that there might be an opportunity for the rest of that water they aren’t using. That said, he reminded the BoCC of the threats ahead in the water arena.
“The weather thing (short term), then there is climate, long-term drought, growing demand, environmentalists and the Colorado River Compact, which was calculated during a time of water aplenty, and not based on accurate water assumption. It is a threat to the upper basin states,” said Harvey. “It turns out that the Upper Ark Conservancy is a water supply that is vulnerable — it is post-1920’s water rights. The threat for some kind of a call, some kind of an issue coming to us in the Arkansas River Basin is very real.”
The average, annual direct, net economic benefit of the NWNA permit?
According to the Harvey Economic Report it is $764,000; using the +2 percent/year employee compensation and a model multiplier that circulates that money, it becomes about $1.3M for the 2019 and 2020 area – with a projected increase of two percent/year.
Detailed Report Findings:
“First, this is a forward-looking assessment for the period between 2020 and 2030. The first iteration of this special land use permit was 2009 to 2019,” said Ed Harvey. “We are looking at the forecast of future operation, the past is a baseline, a launchpad during this net ten-year period. The second guard rail is this: we are focused on the economic impacts inside the borders of Chaffee County; not impacts on the rest of the workforce, outside the county and in the state. All the dollar figures are in 2020 dollars – what we call constant dollars – we are not inflating them. Third, this is NOT an audit … we took the NWNA information — presented as fact. If that is not fact – you have a different problem. We assume it’s factual.”
Harvey Economic looked at the impacts of things like local employment wages, property taxes, NWNA expenditures, contributions, and the costs of solid waste and recycling. “We explored; is there an economic aspect of taking the water from here and putting it in bottles?” explained Harvey. “We reviewed the conservation easement. We addressed transportation impacts and recreational effects and those issues are quite minor. They have a cap of 25 trucks/day, their impact on county roads is negligible, from a recreation standpoint they add to the river, they are a net plus to the flows of the river and provide increased access.”
Harvey outlined the NWNA water usage; a total of 98-acre feet of production and 89-acre feet of shipments. The difference is water that is discharged back into the river, which he said is quite small due to efficient electricity for pumping.
He reviewed the confusion over what constitutes a local driver, clarifying that it includes drivers within Chaffee county and 25 miles outside the county for a total amounting to $391,000 per year. “The percent of [NWNA] folks living in Chaffee County is a little more than 30 percent; the three local drivers account for an estimated 39 percent of trips, or $196,000,” concluded Harvey. “Our assumption: looking ahead; the two percent increase in production can be handled by existing workforce and they will get more work.”
He said they concluded the NWNA truck drivers’ wages were additive, a net benefit; it did not replace other employers here, compared these local jobs to the Chaffee County employment base; with a labor force in 2019 of 9,900, unemployed of 2.4 percent (which rose in 2020). “In April 2020 the unemployment rate reached 13.4 percent in Chaffee County,” added Harvey.
Local Expenditures and Payments
Unrelated to employment and taxes, in 2020 NWNA spent $135,000 in the county on items such as system operators and maintenance, community relations, utilities, telecom, and waste management.
Contributions to local nonprofits were $63,000 in 2020.
In 2009 NWNA set up an educational endowment for local schools of $309,000, which produces between $10,000 to 20,000/year in grants. While there was some disagreement over who could claim credit for that local economic impact, Harvey told meeting attendees to think of it as “A flow of dollars … the bottom line to me is the economic contribution is $10,000 to 20,000 year from a grant that they created…
NWNA provides a significant local expenditure in the form of payments to the Upper Ark Water Conservancy; $152,000 to the water district, with an escalator clause associated with inflation.
“The contribution supplies the augmentation water to replace the groundwater, to keep the river whole; this is even a net benefit to the river,” said Harvey. “The water has to be trans-basin water – from the outside… so this is new water coming in. It has to flow from above Chaffee County coming all the way through the county, up to 196-acre feet of water a year. This is a significant relationship to both entities.”
According to Harvey, there is another benefit: “They provide info and access to monitoring data, so that the Upper Ark at some point can develop an aquifer (underground) storage facility to avoid evaporation. They are working together and this is an important benefit to both parties.”
The Economic Impact of Plastic Bottles
Among the major reasons given by opponents of renewal of the 1041 permit been the impacts of plastic bottles.
NWNA objected to the inclusion of this topic, but Harvey Economics looked at the issue related to solid waste. Based on an extensive study by GARNA on landfill waste (partly funded by NWNA), it concluded a net cost to the county of 9 percent of compacted waste attributable to plastic bottles (which GARNA clarifies as 9 to 12 percent). Based on a numeric, Harvey Research assigned a cost of $8,900 against the NWNA benefits to the county.
“In terms of recycling, there is an issue here of waste – the county recycles seven percent of its waste, as compared to 12 percent for the state of Colorado. You don’t have mandatory curbside recycling – so going forward, be mindful – this jumped out at us.”
“We’re saying if the bottles weren’t there, the impact would be $8,900,” said Jess Harvey. “The bigger issue is the presence of NWNA … The number of new businesses from 2010 to 2020 and the idea of a plastics company — the image [does not] decrease economic activity.
“We interviewed the Chaffee County Economic Development Corporation (EDC) about his issue – there is no evidence of economic effect, despite the business that NWNA is in,” said Jess Harvey. “There is evidence of opposition, but no evidence that they are coming in to join that opposition.”
County Statistics are Telling
While Colorado’s state population grew 1.4 percent over the past decade, Chaffee County’s population grew 2.3 percent.
The county had an average annual growth of retail sales of 8.3 percent between 2015 to 2019. “It is extraordinary,” said Jess Harvey. “That growth is phenomenal. What happened between 2019 and 2020 with COVID-19 is an aberration.”
While she outlined the tradeoffs and noted that plastics were in conflict with the county’s stated Comprehensive Plan, “All of these indicators point to — we can’t find an effect – I promise you we looked for – we couldn’t find it,” said Harvey.