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California drought can't stop production of bottled water

Source: Arrowhead Mountain Spring Water | Facebook

California's severe drought—now in its third year—has led to major hardships in the state.

The list includes dwindling water sources, declining revenues for water districts from conservation; and mandatory fines up to $500 for hosing down driveways or for overwatering lawns. Not to mention the loss of agriculture crops and related jobs.

But what the drought hasn't done is stop the use of California's water supply for making bottled water products.

"Water is essential and if people weren't drinking our bottled water, they'd be drinking tap water or soda or beer," said Jane Lazgin, director of corporate communications at Nestle.

Read MoreCalifornia drought: Ground water has 'saved our bacon'

Nestle owns and operates Arrowhead Mountain Spring Water, which has been bottling water from a spring in Millard Canyon, California, some 80 miles east of Los Angeles.

It also makes water under its Pure Life brand from the same source, which is located on the Morongo Indian Reservation. Nestle pays the tribe for the water.

Because the reservation is considered a sovereign nation, it's not under any obligation to comply with state laws concerning the drought.

However, at least one state water supplier said Nestle is getting an unfair break.

"The restrictions we have here should be felt statewide regardless of the water source," said said Kurt Born, general manager of Clear Creek CSD, located in the northern California town of Anderson.

(Calls by CNBC to a representative of the Morongo tribe for comment were not returned at the time of publication.)

'No restrictions on tap water'

Tech fights the California drought
Tech fights the California drought

As of 2008, there were more than 100 bottled-water facilities operating in California.

Each must report the amount of water extracted from groundwater sources to the state Department of Public Health, but that information is not made available to local and state officials responsible for water planning efforts.

"We have not been given any restrictions on tap water use for producing our bottled water," said Ken Uptain, founder of Essentia.

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Essentia uses tap water from a source in Southern California, which it pays for through a third-party bottler, for its enhanced bottled water.

"I don't see any situation going forward that would stop us from producing bottled water," Uptain added.

Uptain explained that Essentia is basically "taking the same amount of municipal tap water that people would otherwise drink out of the tap."

$22 billion industry

Bottled water is a $22 billion annual business in the U.S.

According to the latest statistics, total bottled water sales in the U.S. reached 9.1 billion gallons in 2011. That's 29.2 gallons of bottled water per person, according to the Beverage Marketing Corporation.

But it takes water to make bottled water.

About 1.39 liters of water is needed to make one liter of bottled water, according to the industry trade group, the International Bottled Water Association.

However, that's less than the average of other bottled drinks.

A liter of soda requires 2.02 liters of water to make. A liter of beer needs 4 liters of water, wine uses 4.74 liters. Liquor products like scotch and bourbon need 34.55 liters of water for every liter made.

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"We feel comfortable with the amount of water we're using for our product," Uptain said.

Dwindling water supplies

But with California's drought, now reaching historic proportions, some critics say it may be time to stop using dwindling water supplies.

"Bottled water is a massive profit industry for corporations that have limited responsibility to the local communities from which they draw water," said Christiana Peppard, a professor theology, science and ethics at Fordham University.

Peppard added it's not only the water use that's troublesome but the plastic bottle it comes in, as they are environmental hazards.

Rather than being recycled, about 75 percent of the empty plastic bottles end up in landfills, lakes, streams and oceans, and fail to decompose, according to the nonprofit group, The Water Project.

However, those in the industry say changes in packaging has improved the situation.

"Thanks to today's BPA-free, PET-1 recyclable bottles, purchasing bottled water had minimal effect on nature's footprint," said Essentia's Uptain.

He added that because Essentia adds electrolytes to the water, that makes it "superior to tap water."

But those types of claims don't carry much weight, said Lynn Wilson, academic chair at Kaplan University and an environmental researcher.

"Health wise I don't think there's any difference between tap and bottled water," she said. "Minerals are put in bottled water for taste."

Bigger issue

Nestle's Lazgin said the company closely monitor's the use of water from its California source.

"If there's a change in the amount of water in the spring or the quality, we won't use it," she said.

Essentia's Uptain said his firm produces its product at a bottling company which carefully monitors water usage.

But whether it's bottled water or just out of the tap, the country needs to focus more on conserving the water it has, said Shahzeen Attari, professor of public and environmental affairs at Indiana University.

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"People have no idea how much water is used to make food or other products," said Attari, who's done research on public perceptions of water use.

"Because of the drought and climate change, we have to change our behavior," she said.

By CNBC's Mark Koba