LOWVILLE, N.Y. -- When the Philadelphia Cream Cheese factory here started making string cheese, too, in the summer of 20

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LOWVILLE, N.Y. -- When the Philadelphia Cream Cheese factory here started making string cheese, too, in the summer of 2017, it brought scores of new jobs to town. It also boosted the facility's water usage by hundreds of thousands of gallons on some days -- eventually bringing its overall demand to more than 80% of the town's typical daily supply. The draw sucked the municipality's reservoir to dangerously low levels. Town officials, caught off guard, banned the village's 3,500 residents from washing cars and watering lawns. "People can't believe how much water that plant needs," says Lowville Mayor Joseph Beagle. The incident put the factory, owned by Kraft Heinz Co., at the center of a water clash in one of the most unlikely of places: a farming and cheese-making hamlet in upstate New York that normally gets plenty of rain and snow, and sits just 40 miles from Lake Ontario. Water is unlike any other commodity. Seen as a natural human right, it is available when we turn on the faucet or slurp from the water fountain at the park. Behind that veneer of plenty, though, companies are waking up to a new, water-constrained future -- even in places like Lowville, usually blessed with plenty of it. A potent mix of population growth, surging industrial demand, pollution and climate change is putting relentless stress on water resources all over the world. It is also pitting companies, used to near-limitless water, against other businesses and nearby residents, who need more of it, too. During most of the 20th century, just 14% of the global population lived in conditions of scarce water supplies -- broadly defined as insufficient water to provide for human needs -- according to a 2016 study by a team of water scientists published in the research journal Scientific Reports. Today, that has leapt to nearly 60% of the world's people, a result of surging population growth and dwindling supplies of freshwater. More than half of the world's cities regularly experience water shortages, according to U.S. environment nonprofit The Nature Conservancy. The situation is especially dire in the developing world. Last year, Cape Town, South Africa, implemented severe restrictions for months to keep from running completely dry. Climate change, too, can heighten water scarcity as rising temperatures dry up available resources. Alternatively, it can increase rainfall and flooding. Many companies dependent on public water access are just now coming to grips with the new challenges -- often only after a crippling supply disruption, or the threat of one.
"A lot of companies talk about water being an important issue" but do little to adapt, said Jason Morrison, chairman of the United Nations' CEO Water Mandate, which presses executives to assess their company's water usage across their supply chains and implement policies to make it more sustainable. "Then something happens, and there's a massive supply-chain hit." CDP, a London not-for-profit charity that tracks companies' environmental-impact disclosures, found that between 2015 and 2018, the number of companies reporting water-reduction targets doubled among firms it polls in an annual survey. Underscoring the challenge, though, nearly 50% more companies during that period reported using more water, not less. The new risk is showing up in stock prices, too, according to an analysis by Peter Adriaens, a University of Michigan professor of environmental engineering and finance. Exposure to water risk among energy companies such as oil-and-gas drillers -- which use huge amounts of water and are also exposed to production-halting storms -- translates to their shares being 23% more volatile than the broader market, his analysis shows. Other sectors, like industrial firms and consumer staples, also show heightened volatility. Arjen Hoekstra, a Dutch water scientist, came up in 2002 with the "water footprint," a measure of how much water goes into products, including all the water used along the way. The metric helps quantify what Prof. Hoekstra describes as "the hidden water use behind the goods and services" people consume. That includes the water used to grow the cotton in a pair of trousers, or to feed the cows that produce a gallon of milk. A glass of wine takes nearly 30 gallons, if you count the water that goes into growing the grapes, according to his figures. A pound of cheese: 668 gallons of water. Blame hungry cows eating water-intensive grains. Mr. Hoekstra says a big reason water consumption is expanding around the world is food -- primarily, meat and dairy products. As economies grow and wealth increases, more people are eating meat and cheese, which have far bigger water footprints than fruit and vegetables. By this measure, Kraft's municipal water needs for its Lowville plant are just a small part of its overall water demand in the region. The one million pounds of milk the Lowville dairy cooperative provides Kraft every day takes about 120 million gallons of water to produce, according to Prof. Hoekstra's data. In its 2017 corporate social responsibility report, Kraft said it used 5.8 cubic meters, or 205 cubic feet, of water for every metric ton of product it made in 2016 -- a 1.4% decline from the previous year. The company says it plans to reduce overall its water usage by 15% by 2020 from 2015.
"We're constantly working to strike the best balance between the water intake needed for sanitary conditions and not being excessive or wasteful in our water use," said Brian Shuttleworth, Kraft's head operational risk manager for North America. "We're making progress, but this will continue to challenge us." Nestled near the foothills of the Adirondack Mountains, Lowville is 27 miles away from its closest big-town neighbor, Watertown, population 26,000. The surrounding countryside is known for its dairy farms, lumber industry, maple syrup and cheese. In 1895, Lewis County, where Lowville is situated, had 93 commercial cheese operations, according to a history of the region. The Lowville Milk and Cream Co., established in 1900, housed one of the world's largest cheese cold-storage facilities at the time. By 1928, it was a part of Kraft-Phenix Cheese Corp., a forebear of today's Kraft Heinz. Kraft began producing Philadelphia Cream Cheese in Lowville in the early 1970s. One reason: the village sits in one of the biggest milk sheds in the Northeast. Lewis County says it currently has about 27,000 milking cows and 190 dairy farms, making it the sixth biggest milk producer in New York. Kraft makes the bulk of its U.S. cream cheese here. Last year, it sold $1.2 billion of the stuff, representing over 5% of its total U.S. retail sales, according to Piper Jaffray & Co. Every summer, Lowville celebrates its ties with Kraft with the annual Cream Cheese Festival, which features a cream cheese eating contest, cream cheese mural painting, cream cheese bingo and a cream cheese race. Contestants roll a bale of hay decorated like a brick of the iconic cheese brand. That warm relationship was tested when string cheese came to town. After Kraft's $49 billion merger with Heinz in 2015, Lowville residents were on edge about the fate of the plant. Instead of cutting jobs, though, Kraft decided to move its Polly-O string cheese production from Campbell, N.Y., to Lowville, a move that would bring about 140 new employees to the area. As preparations for the string-cheese facility progressed, Kraft told Lowville's planning board to expect an increased demand for water. Washing the processing and packaging equipment is especially water intensive. Then-mayor Donna Smith said board members didn't realize the plant would need so much. They also didn't realize the spikes in demand from Kraft would often take place in the morning over a few hours, when residential use also jumped as people showered and brushed their teeth.
He said Kraft in 2016 informed Lowville that its average daily usage would be 910,000 gallons, and that peak demand would be "in the morning going into the afternoon." Lowville's water system operator notified New York State Department of Health officials, who performed field assessments of the plant. Days later, they wrote to then-mayor Ms. Smith, calling the plant's water draw "unsustainable and disruptive" and warned of a potential "public water-system emergency." The state threatened to fine the village for not adhering to its emergency response plan. It also said Kraft needed to build water storage on site to provide supply. If it failed to do so, the village should restrict its water during peak demand, state officials wrote. Residents, meanwhile, faced fines if they didn't comply with strict water conservation measures. "You couldn't water your lawn, it was irritating," said Kathy Morse, owner of Kathy's Barber Shop. Kraft's dominant position in the local economy in some ways shielded it from criticism and gave it a leg up in negotiations with angry town officials. Still, to appease them, Kraft agreed to fund a $1.5 million water recycling system that is expected to contribute 90,000 to 100,000 gallons a day when it becomes fully operational this summer. Kraft is working to scale back demand in other ways. It cut back on washing the exterior of milk-delivery trucks and began cleaning its equipment earlier in the day, when most residents are still asleep. It also at times curtailed string-cheese production over the weekends, giving the village a window to recharge its water-storage facilities. "We tried to assist where we could," said Mr. Western. Lowville, for its part, has shelled out $1.3 million to add a portable filtration system that can transfer water to the village more quickly, helping it keep up with Kraft's peak periods of demand. It is also looking at drilling a new well to enhance supplies. Residents and other water users, including Kraft, got hit with a 10% rate increase to help pay for the upgrade. It added another 5% increase in May. Then, in the summer of 2018, drought hit. Temperatures topped 90 degrees in July, unusually hot for the northern climate. With their own wells running dry, dairy farmers turned to Lowville's municipal water system. They filled up water tankers at Lowville's dairy cooperative, drawing from local supplies already under strain from Kraft's new demands. This year looks better. Heavy snow and rain have recharged the region's water table. But local farmers worry another hot summer could unwind all that.
2. Did Heinz create this problem? Why are they having to pay?