Water Underpriced and Overconsumed in Canada; Pricing Reform Needed: C.D. Howe Institute

    TORONTO, Feb. 5 /CNW/ - The current state of municipal water pricing in
Canada is significantly flawed, with costs that include underfunded water
agencies, aging infrastructure, excessive consumption and stifled innovation,
according to a study released today by the C.D. Howe Institute. In Wave of the
Future: The Case for Smarter Water Policy, author Steven Renzetti argues that
increased infrastructure funding for municipal water agencies will not address
the underlying problem of flawed water pricing. Reforms are required in the
pricing of water, he says, that include the expanded use of water meters and
seasonal surcharges that better reflect costs.
    On average, says Professor Renzetti, municipal water agencies lose or
cannot account for 20 percent of the water leaving their treatment plants.
They face a significant backlog of infrastructure repairs, and replacement
costs have been estimated to be billions of dollars. They do not know how much
water is consumed by one-quarter of their residential customers whose water
use is unmetered. And, in 2007, the revenues they earned represented only 70
percent of their recorded expenditures - which by most accounts understates
the costs of their operations.

    Potential reforms include:
    -  expanding the use of water meters;
    -  moving to a full-cost-accounting approach for water pricing; and
    -  using seasonal surcharges to better reflect the marginal costs of
       water use during peak summer months.

    Such reforms would help establish an efficient and sustainable water
industry in Canada, says the author.
    For the study go to: http://www.cdhowe.org/pdf/commentary_281.pdf

For further information:

For further information: Steven Renzetti, Department of Economics, Brock
University, (905) 688-5550 x3121; Colin Busby, Policy Analyst, C.D. Howe
Institute, (416) 865-1904, email: cdhowe@cdhowe.org

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