Bottled Water Crisis

bottledwater.jpg Well, it finally happened. After years of tremendous marketing, bottled water is taking a hit. Drinking bottled water is being equated with smoking cigarettes and drinking alcohol as an undesirable social activity. Chicago is the first major city to levy a sin tax on each bottle of water sold within city limits. Starting yesterday Chicago will charge a 5-cent tax on each bottle of water sold. Officials predict the tax will yield $10.5 million annually.

The Daily Green lists the seven sins of bottled water:

1. Plastic bottles are made from petroleum.

2. The bottles often go into the trash, rather than the recycle bin (in part because many states don’t offer five-cent deposits to encourage recycling, as they do on soda and beer cans and bottles).

3. The water is pumped far from where it is sold, creating needless pollution as trucks and barges transport it across the country or around the world.

4. Some local communities have objected to the sale of their water, arguing that the water underground or flowing from natural springs is publicly owned and should not be exploited for profit.

5. Bottled water is rarely as closely monitored as tap water.

6. Tap water in the United States, when provided by a municipal system, is the most highly monitored and safe supply in the world.

7. Some of the water sold in little plastic bottles is tap water, but it costs an awful lot more per gallon.


As a result of some of these considerations, I have been trying to get off of bottled water for some time. Bottled water is an excess I can do without. The tap water in Philadelphia is just fine and I am happy to carry around a reusable water bottle. But I know that some people love their bottled water. So let’s consider whether this tax makes sense.

The tax could be aimed at the pollution created by plastic water bottles. If so, the tax is too narrow, because there is no reason to stop at taxing water drinkers. I suspect that more bottles of soda are consumed than bottles of water. And many products come in plastic packages. So why not create a tax on all plastic packaging? Furthermore, it misses some of the pollution because it seems to target the bottles rather than the pollution caused by the transport of water. On the other hand, it may result in fewer bottles being purchased and thus less water being transported.

If the tax is aimed at eliminating the use of an unnecessary and wasteful product given the public water supply, the tax may be better designed, but may not go far enough. Will a 5-cent surcharge really change consumption habits? I don’t know. If it does, how will those habits change? Will people buy larger water bottles or buy less water altogether?

In any event, the tax succeeds on one front. It likely forces consumers to internalize some of the externalities created by bottled water. Professor Annette Nellen from San Jose State has a nice summary of some other considerations about this tax.

I assume that Chicago is constrained by certain state and federal constitutional limitation in what it can tax, but I like this as a first step. I would love to know whether this generates the expected revenue and/or changes any behavior in Chicago. I guess we’ll have to wait and see.

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10 Responses

  1. David S. Cohen says:

    How about taking the plastic out of it – cartons or cardbox squeeze boxes?

  2. ken says:

    I hope this doesn’t catch on outside the cities. Where I live well water is the norm and its quality varies tremendously. Personally, I get water that comes out of the tap slightly brown and tasting awful. My Pur filter helps most of the time, but it still tastes strange and if it rains heavily the filter can’t hack it. Consequently, I drink a good amount of bottled water and could care less if it came from a tap.

    Of course, that justifies buying the gallon jugs of water from the Dollar Store, not the 16 oz., $1.39 bottles sold at the Quick Stop.

  3. Flash Gordon says:

    Bottled water is not my thing but I want everybody to be able do what they decide for themselves. If others’ rights are trampled on by nanny state taxes it won’t be long before something I care about becomes a target.

  4. Waterlily says:

    The tax that Chicago has implemented is not only innovative, but extremely critical in addressing a growing challenge for public water suppliers. As demand grows for potable water, and funding sources dry up, paying for the infrastructure needed to serve communities across the country becomes increasingly difficult for water systems. Contributing to the problem are consumers who on the one hand proclaim their desire for safe, consistent drinking water, then turn around and purchase billons of gallons of bottled water, thereby diverting funds for their local water provider. In lieu of delivering non-potable water to homes and businesses and relinquishing drinking water to bottled water companies, water systems need to compensate for the paradox in the public’s behavior. I love the concept, and hope others will soon follow.

  5. KipEsquire says:

    This tax was enacted for one reason and one reason only: To punish residents for not using (and therefore not paying for) government-provided tap water.

    All else is disengenuous environmentalist sophistry.

  6. Nate Oman says:

    Given that municipal water systems are generally subsidized, the fact that tap water is cheaper doesn’t tell us that consuming bottled water is economically wasteful. Also, there may be benefits — status, idiosyncratic tastes, etc. — that bottled water provides. Also, some municipal water really does taste nasty.

  7. Jens says:

    4. Some local communities have objected to the sale of their water, arguing that the water underground or flowing from natural springs is publicly owned and should not be exploited for profit.

    In Germany, there is a water tax (Grundwasserentnahmeabgabe).

    Municipal water systems are subsidized? No wonder the Colorado has dried out …

    As for punishing them for not drinking tap water: I don’t think the amount is relevant compared to the tap water used e.g. for showering.

    Btw, this forced deposit:

    http://en.wikipedia.org/wiki/Container_deposit_legislation#Germany

    had the contrary of the desired effect …

    “Tap water in the United States, when provided by a municipal system, is the most highly monitored and safe supply in the world.” – the same statement is given for German tap water. For old buildings with lead pipes, I doubt it …

    “Some of the water sold in little plastic bottles is tap water, but it costs an awful lot more per gallon.” – For example, Coca-Cola’s Bonaqua – it’s nothing more than a brand …

  8. @Flash Gordon… I’m as much of a libertarian as the next guy, but a hard-core hands-off philosophy government ignores the tragedies of the commons. Maybe the free market will eventually take care of some problematic behaviors, but in the mean time damage is done. And because of complex externalities and unnatural concentrations of power, there will never be a truly free market or a true democracy. Now will always be favored over the future, and those in power will act to maintain that power.

    I say go ahead and tax consumption, particularly consumption that has ill effects for the general population.

  9. reader says:

    Kip: Unless residents are using bottled water to take showers, flush their toilets, water their lawns, and fill their pools, I doubt using bottled water has any direct correlation to a big reduction in overall use of public water. You use more water in one toilet flush than you would drink out of the tap in 2 or 3 days.

  10. konrad_herb says:

    KipEsquire – I like your sentiment, but I disagree.

    the amount of tap water used for drinking water compared with for cleaning or other purposes is still miniscule, so I would bet that every study out there would say that there is no relationship between the amount of bottled water consumed and the amount of tap water used.

    the exception might be for households who use the drinking water services (with the big 5 gallon bottles) and for people who wash their hair in bottled water.