McCloud, Calif.

It’s already late morning, but the wide streets are empty. Patty Ballard pulls her ’88 Chevy van into the parking lot of the Shasta Sunset Dinner Train, where she lugs bus tubs for a scant living. Back in the days when McCloud was a booming timber town, the train was laden with logs. Now it’s a mainstay of the local tourism economy, winding diners around the flanks of Northern California’s imposing Mount Shasta.

When the ailing timber industry toppled in 2002, McCloud turned to tourism. But the economic statistics remain as bleak as an empty sawmill: Since the 1960s timber heyday, the town’s population has dropped by half. Per capita income is less than $16,000. Last year, the graduating class at McCloud High School totaled one. Despite the hopeful sheen of espresso shops and bed and breakfasts, McCloud sometimes feels like an emptied-out museum. But things could be different.

In September 2003, the unincorporated town’s governing body — the McCloud Community Service District — signed a contract with Nestlé Corp. allowing it to build a million-square-foot plant and bottle up to a half-billion gallons of local spring water per year for its Arrowhead brand. The plant, which would sit on the old mill site, would employ 240 people, and Nestlé’s fees and payments of $300,000 per year would increase the town’s operating budget by one-third.

In a place where water is so abundant that residents hose their driveways in winter to melt snow and ice, cashing in on what was going to waste seemed like getting something for nothing. Ballard was enthusiastic: “I’ll be first in line for a job,” she said.

But four years later, Ballard still works on the dinner train, and the bottling plant remains no more than a blueprint. Soon after the contract was signed, a group of local citizens questioned the plant’s potential effects on their community — its water supply, its quiet character and its world-class fishing streams. And they were outraged at the terms of the contract, which bound them for the next 100 years. The group won a lawsuit in Siskiyou County Court, and the contract was nullified because it was signed prior to the completion of an environmental review and therefore violated the California Environmental Quality Act. But Nestlé appealed, and won. In May, the California Supreme Court refused to hear the case. But the controversy refuses to die. Now the opponents are attacking the proposal from other fronts. And this little town in Northern California, still traumatized by the timber squabbles of the past, has become the opening battleground in a West-wide war over bottled water.

Americans drink more than 8 billion gallons of bottled water every year, spending more than $11 billion annually on Dasani, Aquafina, Evian and other brands. With a growth rate of 10 percent per year, bottled water is the fastest-growing segment of the beverage industry, surpassing milk and likely to outpace soda in the near future. Bottling plants are popping up everywhere, many in rural areas that boast of pristine spring water.

Though often heralded as a clean industry, water bottlers have not been welcomed in some communities. In Mecosta, Mich., citizens won a lawsuit against Nestlé after proving its operations harmed nearby streams and wetlands. Similar battles have erupted in Florida, Texas and Maine. Activists routinely attack the industry as a whole because of its contribution to landfill overflow and because it commercializes what many see as an essential human right. Still, the fight has been slow to ignite in the West, where communities, often reeling from the loss of one extractive industry or another, have generally welcomed the economic promise of bottlers with wide-open arms.

California is now home to more water-bottling facilities than any other state in the nation. Some suck water directly out of springs; others filter the municipal water supply. Nestlé alone has plants scattered from Calistoga, in Napa County, to the Morongo Indian Reservation on the fringes of Los Angeles. In the northern part of the state, Crystal Geyser, Mt. Shasta Spring Water and Dannon are already in operation.

So, when Nestlé’s natural resource manager Dave Palais first arrived in McCloud four years ago, the stage seemed set. His affable nature and casual dress went over well with locals. But when the five-member district board unanimously signed the contract without public review, the love affair abruptly ended. The town was split down the middle like firewood.