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Ecofiscal Commission Argues for Higher User Fees in Water Use

By Water Canada 10:25AM September 26, 2017

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Canada’s Ecofiscal Commission released a new report today, Only the Pipes Should be Hidden: Best practices for pricing and improving municipal water and wastewater services. The report argues for higher user fees and looks to examples from across the country in how new water management programs are being implemented.

The report addresses the problem that Canadians are some of the biggest water users in the world, and that “our infrastructure deficits threaten both the quality and quantity of our clean water.”

Ecofiscal’s video makes for good public engagement tool on why user fees need to accurately reflect water use.

“Better water pricing is about both covering the full costs of our water services and driving conservation—while ensuring we protect access for low-income households,” said Chris Ragan, Ecofiscal Commission chair and associate professor of economics at McGill University. “Those who use more will then pay more, and those who save water will save money. Better water pricing is fairer water pricing.”

Changing the way Canadians pay for water services can enable solutions to many water management problems, argues the report. “By restructuring and raising water rates—with the help of water meters—utilities can connect water usage to the price users pay, thereby driving conservation, providing funding for much needed infrastructure, and helping to protect our water sources,” stated the Commission in a press release. Further, the Commission believes that the rates can structured so as to prevent barriers to water access for low-income households.

“The latest report from the Ecofiscal Commission shows municipal governments how to design smart water user fees, so that they can build financially and environmentally sustainable water systems,” said Elyse Allan, president and CEO of GE Canada and an adviser to the Ecofiscal Commission. “Getting prices right can fund critical infrastructure but also create incentives for smart, water-saving technologies.”

Ottawa RatesOttawa’s volumetric rate fee wasn’t able to meet the fixed costs of operating water infrastructure. Courtesy Ecofiscal Commission.

The report finds that some Canadian municipalities are succeeding in changing their rate structure to better reflect use and asset costs, including Ottawa and Gibsons, British Columbia. Others, the report indicates, are making progress, but still face challenges.

The report makes six policy recommendations:

  1. Municipalities should rely on multi-rate user fees to recover costs and encourage conservation.
  2. All municipalities should develop an asset-management plan and full-cost-recovery strategy.
  3. Municipalities should include natural assets within their asset-management and cost-recovery strategies.
  4. The Public Sector Accounting Board should identify ways to broaden the financial framework to include natural assets.
  5. Provincial and federal governments should encourage municipalities to adopt the best practices described in this report.
  6. The federal government should reinstate the Municipal Water and Wastewater Survey.

Only the Pipes Should be Hidden helps municipalities tackle the complex challenges of operating their water systems in a sustainable manner. The report also includes:

  • 5 case studies that highlight the progress Canadian municipalities have made in improving the sustainability of their systems. Featured are St. John’s, Newfoundland and Labrador; Montréal, Quebec; Ottawa, Ontario; The Battlefords, Saskatchewan; and Gibsons, British Columbia; and
  • 10 best practices for designing and implementing water rates, drawn from experience across the country.

The Ecofiscal Commission has dedicated the report to the memory of Dr. Steven Renzetti, “one of Canada’s foremost environmental economists.” The full report and executive summary are available at ecofiscal.ca/wateruserfees.

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