fiji bottler military government aquifer

Most Nations Fail to Recover Their Own Worth
extraction tax carbon offset corruption land leases land rent

Fiji Gets More of the Rents for Land & Water

A little island nation gets more of its own worth than do many developed nations. We trim, blend, and append two articles on Fiji, a 2010 one from Triple Pundit, Dec 3, on water by RP Siegel, co-author of the eco thriller Vapor Trails and a 2011 one from Fiji Times, Jan 1, on land by Ioane Burese.

by RP Siegel and by Ioane Burese

The bottler Fiji Water was asked to renegotiate with the military government of the island nation.

Twenty years ago, the company purchased exclusive access to a very large aquifer on the island which ensures them a long term supply and prohibits anyone else from selling the same water. It also keeps the local Fijians, who do not have a lot of other water sources, from tapping this aquifer.

While collecting merely one-third of a cent per liter as an extraction tax, the Fiji government has watched the bottled water company prosper. The company extracts somewhere in the neighborhood of 3.5 million liters monthly.

Recently, the government raised the extraction tax to fifteen cents a liter, forty-five times the previous rate. This would amount to sharing upwards of $6million annually in the company’s good fortune, as compared to around $140k before. The tax applies only to Fiji Water.

Rather than pay up, Fiji Water President and COO John Cochran closed the company facility Nov 29.

According to the Fiji Times, “Workers stood in shocked silence as the announcement was made just after midday. Many openly wept as general manager Paul Davies informed the workers that due to the imposition of a 15 cents per litre tax, the decision was made by John Cochran, president and chief operations officer of FIJI Water, to shut the factory immediately.”

Fiji Water has already taken a certain amount of heat for shipping their water over such large distances. They have taken a number of steps to make amends including, offsetting 20% more than their actual carbon footprint through a forest project that would make them carbon negative, and voluntarily disclosing their annual carbon footprint (it was 85,396 metric tons in 2007). Suddenly, they were facing another public relations nightmare.

The documentary film FLOW highlights issues regarding water rights and how the multi-national bottled water companies throw their weight around and usually get what the want.

The Pacific Institute’s water expert Peter Gleick, wrote, “Should bottlers do business in a country with a military dictatorship, where local communities have little or no say in how local resources are exploited? Does their presence and economic strength in the country help prop up Fiji’s government? How can the company claim to be socially responsible when they operate businesses in regions where political instability, government corruption, and a lack of transparency are prevalent, like Fiji.”

At the same time, the Fiji government was poised to lose their extraction tax revenues, the benefits of numerous investments that Fiji Water had been making in the community, and four hundred jobs with their associated tax revenue. So who was going to back down?

In this case, the Fijian government held their ground. Cochran agreed to pay the tax. The factory reopened and the workers are back to work. Fiji Water is shipping water again and paying offsets in excess of their footprint.

JJS: It’s a dilemma. One good is sanctity of contract and keeping your word. Another good is that the people receive the rental value of the resource beneath the land they live on. In corrupt Fiji, those rental values probably don’t much reach the populace. So the choices are, should the water rent go to the military or to the corporation? And the question is, how do we create a third and right choice?

Besides getting water rent, Fiji also gets even more land rent, unlike many “non-corrupt” nations which recover nearly none of this socially-generated revenue.

The Fiji Government through the Lands Ministry is determined to contribute to economic growth through a greater focus on monitoring of state land leases, says acting permanent secretary Filimone Kau.

He made the comments as the ministry managed to collect more than $12m in land rent and land rental arrears as of December 30 last year.

The Information Ministry quotes Mr Kau as saying, "We are hoping to keep the momentum as we are developing a strategy to ensure the systematic collection of rental arrears as the collection of current land rent continues".

About 4 per cent of the total landmass (18,333km) is administered by the State through the Ministry of Lands with approximately 35,926.80ha leased out.

While the poor monitoring of State land has denied the Government the opportunity for socio-economic development, the ministry is also looking at ways to effectively monitor the 17,231 State leases ranging from agricultural, residential, commercial, and forest development to name a few.

In that regard, the ministry will not tolerate crown leaseholders who breach their lease conditions applying for renewal, mortgage, or other means.

The most common breaches are not limited to the following:
* Non-payment of land rent;
* Non-cultivation of land leased for agriculture;
* Sub-letting without prior approval from the Director of Lands; and
* Absentee of lessee in particular for agricultural leases.

Moreover, the ministry has also discouraged the rezoning of State agricultural leases to other use.

This, according to Mr Kau, is in line with Government's objective/focus in ensuring food security for the nation. The challenge is to ensure the 6305 State agricultural leases are utilized to their full potential.

JJS: Despite all the problems, the good news is Fiji does include some land in the commons and does recover some land rent. They might be able to do a better job if they had an active land market, re-assessing locations frequently, quarterly even. Going a step further, they could pay dividends to citizens, to involve them in the process and keep some of the largesse out of the maw of the military.

While Fiji has a long was to go, they’re still far ahead of most other places. Perhaps if they got more recognition for the good that they do do, they’d do even more. Then the tropics would become known as paradise for another reason, too -- for adopting geonomics.


Editor Jeffery J. Smith runs the Forum on Geonomics.

Also see:

Maine Town Stands Up to Corporations

Tax to improve plans

Solomons Moves Chancery in Australia to Avoid Rent

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