Ethos Water: Solution or Scam? Or, Looking For Real Water Solutions

This past week several Claremont McKenna students encouraged me to save the world and children by spending $1.80 on a bottle of water. It seemed too good to be true and so it is. Naturally, I assume those students paid tax on every bottle...

When Peter Thum CMC '90 developed Ethos water, he wanted to change the world by providing water to poor, dying children. The tagline on the bottles shows his life's mission: "Helping children get clean water."

Thum has a worthy -- and pressing -- goal. After all, who doesn't want to help children?

At the cost of a nickel per $1.80 bottle, it sure doesn't seem like a lot, but Thum says it goes a long way to helping the children.

Thum teamed up with Starbucks, became its VP, and has helped build water sources across the globe. Starbucks, enjoying the favorable corporate PR, has promised ten million dollars over the next few years to help tackle the problem, provided, of course, that Ethos water sells.

There's only one problem: It won't solve the problem and may, in fact, make it worse. If Starbucks plans to give away $10 million in nickel increments, it will have to sell 200 million water bottles. Something tells me that we're going to be waiting for a long time, seeing as most other water bottles don't cost anywhere near that much. In fact, if you bought a bottle of Ethos water every week ($93.60 a year!), you'd only be donating about 4 bucks.

Let's really think this one through. If Ethos were so insistent on saving children, why don't they have a donate feature on their website? Might they be more interested in moving product than in saving lives? Might it be then that Ethos water has an incentive in keeping the world's poor without water at all? What would happen to its business model if tomorrow all the world had access to water?

I'm not suggesting that Ethos has some nefarious plot that keeps the poor from their water, but the net effect of some its policies end up doing more harm than good in the long run.
Like most in the political correct NGO community, Ethos Water doesn't want to privatize the water supply. Effectively all of Ethos Water projects are nothing more than collectivist undertakings that often end up wasting more water than is necessary to provide the service.

Contrary to what polluting protesters argue, we know that water privatization is the only way to discourage the waste that occurs once water is collectively owned. In part, we know this truth from the research of none other than Dr. Rod Smith, a former professor of economics at Claremont McKenna College, who has written extensively on using market mechanisms to allocate water resources. Dr. Smith works for the Water Strategist Community and has written for Regulation magazine.

Smith and others show that once water becomes state run it becomes part of the political process and there are few incentives to keep the quality up as Fredrik Segerfeldt makes all too clear in his masterful book, Water for Sale: How Business and the Market Can Resolve the World's Water Crisis . Segerfeldt rightly notes that 97 percent of all water distribution in poor countries is public and yet contrary to popular assumptions, we use a mere 8 per cent of all the water available for human consumption.

As it currently stands, the poor are some of those most hurt by public ownership of water. Ronald Bailey notes in a review of Water for Sale for reason.com.

Segerfeldt points out that public water systems in developing countries generally supply politically connected wealthy and middle class people, whereas the poor are not hooked up to municipal water mains. Segerfeldt cites one study of 15 countries that found that in the poorest quarters of their populations, 80 percent of the people were not hooked up to water mains. Of course, the poor don't just die of thirst; they just pay more—generally a lot more—for their water.

"Contractors often drive tankers to poor districts, selling water by the can, in which case the very poorest of the world's inhabitants are already exposed to market forces but on very unfair terms, because water obtained like this is on average twelve times more expensive than water from regular water mains, and often still more expensive than that," notes Segerfeldt. A survey of major cities in developing countries found that the poor in Lagos, Nigeria pay four to 10 times more for their water than people who are hooked up to water mains do; in Karachi, Pakistan they pay 28 to 83 times more; in Jakarta, Indonesia, four to 60 times; and in Lima, Peru, 17 times more. Essentially, the rich get cheap tap water while the poor pay the moral equivalent of Perrier prices.

Well, at least Perrier is cheaper per fluid ounce than Ethos... .09 cents ($2.00/22 fl oz) versus .11 cents ($1.80/16.9 fl oz).

In fact, it's almost two whole cents cheaper, or roughly half the cost of what Ethos offers to the poor each time you buy a bottle.