Canada’s Ecofiscal Commission’s latest report, Only the Pipes Should be Hidden, assesses how well-designed user fees can improve the financial and environmental sustainability of our municipal water and wastewater systems. These systems treat and deliver water for millions of Canadian households and businesses, and are vital to our health, the economy, and the environment. Building on the progress that many municipalities have already made, the report provides a set of 10 best practices that encourage water conservation, fund infrastructure, and improve our water quality. In this webinar Jonathan Arnold will go through the findings and recommendations of the report, and answer questions.

1. 1
Only the Pipes Should be Hidden
Best practices for pricing and improving municipal water and
wastewater services
Canada’s Ecofiscal Commission
October 5, 2017

2. 2
Overview
1. The complicated world of municipal water and
wastewater
2. The economic and environmental case for user fees
3. Case studies
4. Best practices
5. Recommendations

3. 3
Municipal Water and Wastewater Systems
• Vital to the economy, the environment, and
human health
• ~90% of Canadians get their water from
municipal systems
• Three main components to municipal water and
wastewater systems:
• Water flows
• Financial flows
• Water quality
1. The Complicated World of Municipal Water and Wastewater

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1. The Complicated World of Municipal Water and Wastewater

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Canadians are heavy water users
1. The Complicated World of Municipal Water and Wastewater

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Water use varies across provinces
1. The Complicated World of Municipal Water and Wastewater

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1. The Complicated World of Municipal Water and Wastewater

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Underfunded Infrastructure
1. The Complicated World of Municipal Water and Wastewater

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1. The Complicated World of Municipal Water and Wastewater

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Water Quality Depends on Several Factors
• Clean drinking water requires infrastructure as well as
regulations
• Wastewater treatment is improving but remains a
leading cause of water pollution
• Water quality affects the cost of infrastructure
• Climate change may exacerbate water quality threats
2. Key Challenges Facing Municipal Water and Wastewater Systems1. The Complicated World of Municipal Water and Wastewater

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1. The Complicated World of Municipal Water and Wastewater

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User Fees as a Conservation Tool
2. The Economic and Environmental Case for User Fees
• Encourage households and businesses to use less water
• Reduce operating, maintenance, and capital costs
• Conservation gains from user fees depend on design

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2. The Economic and Environmental Case for User Fees
Pricing Signal Depends on Design

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User Fees as a Revenue Generator
2. The Economic and Environmental Case for User Fees
• User fees can help municipalities reach full-cost recovery
and pay for much needed infrastructure
• Revenues must be ear-marked for water and wastewater
systems
• Tension between cost-recovery and conservation
objectives

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Improving Water Quality Through User
Fees
• Revenues from user fees help pay for infrastructure
improvements
• Over-strength charges can reduce industrial wastewater
and recover costs
• Conservation gains can reduce pressure on natural
ecosystems
2. The Economic and Environmental Case for User Fees

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3. Case Studies
• Several challenges in moving closer to full-cost recovery
• However, regional planning serves as a model for
medium-sized Canadian cities

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3. Case Studies
• Despite recent improvements, the city still faces challenges
• Adopting user fees could help improve both financial and
environmental outcomes
• Fairness matter

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3. Case Studies
• Illustrates the importance of full-cost recovery, user fees,
and asset management
• Highlights issues facing small resource-based
communities

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3. Case Studies
• Recent reforms: advanced metering and multi-rate user
fees
• Source water protection is essential to maintaining water
quality and critical for cost recovery

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3. Case Studies
• Progressive approach to managing its water and
wastewater system
• Asset management, full-cost recovery, valuation of
natural assets

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Laying the Groundwork
1. Installing water meters for all residential and commercial
users
2. Estimating all private and social costs using a life-cycle
approach
3. Estimating existing and future revenues from all sources
4. Identifying the funding gap and developing a full-cost
recovery strategy
5. Relying on user fees to help close the funding gap
4. Best Practices

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Designing User Fees
6. Using a multi-rate user fee to achieve multiple objectives
7. Tailoring fees to the local context
8. Integrating relief for low-income water users
9. Making adjustments over time—in a predictable, transparent
way
10.Complementing user fees with other tools, especially for
small municipalities
4. Best Practices

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Governance Considerations
• Important role of provincial policy
• Striking the right balance between stringency
and flexibility
• Different in each province
4. Best Practices

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Our Report Makes Six 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
5. Recommendations

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Our Report Makes Six Recommendations
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
our report
6. The federal government should reinstate the Municipal
Water and Wastewater Survey
5. Recommendations

26. Thank you
Jonathan Arnold
Research Associate
jarnold@ecofiscal.ca
26

27. Contents
1. Title 14. User fees as a revenue generator
2. Overview 15. Improving water quality through user fees
3. Municipal Water and Wastewater Systems 16. St. John’s
4. Water flow layer 17. Montreal
5. Canadians are heavy water users 18. The Battlefords
6. Water use varies across provinces 19. Ottawa
7. Financial flow layer 20. Gibsons
8. Infrastructure is underfunded 21. Best practices: laying the groundwork
9. Water quality layer 22. Best practices: design
10. Overuse and poor infrastructure threaten water
quality
23. Governance
11. User fees at the nexus 24. Recommendations 1-3
12. User fees as a conservation tool 25. Recommendations 4-6
13. Pricing signal depends on design