Water Pricing by Usage the Way Forward: Pricing the solution for semi-arid Prairies

Commentary, Water, Joseph Quesnel

In 2007, my wife and I travelled to Rwanda to complete an internship with a human rights NGO. While this small African country has made progress re-building itself from the 1994 Rwandan Genocide, it is still plagued with infrastructure challenges.

One major problem was water quality. Tap water needed to be boiled. For the first time in my life, I appreciated the value of clean water. Growing up in Canada, we are blessed with an abundance of surface water and groundwater that is clean when it comes from the tap (with the sad exception of many First Nations), unlike many countries.  

Given the scarcity of this vital resource in Southern Alberta and in many semi-arid areas of the Prairies, it is hear that Lethbridge (smaller city south of Calgary) utility officials are considering new water rates that reward low-volume customers and penalize those who over-use. The Lethbridge Herald reported on September 28th that the new water use rates were proposed before city council. Those who consume five cubic metres or less would pay nearly 24 per cent less on usage.

Setting a price for water is a good means of promoting water conservation, especially in semi-arid regions.

 Regardless of use, numerous households in Canada pay a flat rate for their water. Consequently, Canadians use about four times more water than people do in other countries. We pay some of the lowest water prices on the globe, which give us a false sense of water value. Environment Canada has warned us that our low water price does not cover infrastructure cost of operation and maintenance of its delivery. While many countries within the Organization for Economic Co-operation and Development (OECD) have decreased their water consumption, we have increased ours.

One need not be an economist to know that something cheaply priced and unmeasured will be consumed more.  In Manitoba, subsidized electricity rates result in high usage, defeating any type of conservation. There is no sense that the commodity is scarce.

A 2007 Environment Canada study revealed that Canadian municipalities that charge according to the volume of water used have a lower average daily consumption rate. Market-driven pricing systems are better. They are based on economic incentives and do not involve environmentalist edicts like banning certain activities. They rest on the attractive carrot of a lower bill for lower water use. Nearby Okotoks is a water-stressed community adopting successful measures:  by means of a conservation rebate and a graduated price for domestic water use, it now has the lowest per capita residential water use in the province.

Such economic instruments should be considered in southern Alberta and other water-stressed regions of Western Canada.

However, while emphasizing domestic water conservation is always positive, municipal water use is actually a very small part of our total water usage. In Alberta, irrigated agriculture is the prime user. About 72 per cent of water drawn from South Saskatchewan basin is for irrigation. Municipal use is about 14 per cent. Commercial and industrial is also a smaller, but growing, proportion of water use.

So, while we should promote water pricing at the municipal level, we should not be needlessly alarmist about the water supply. The challenge in Alberta is really about sharing what we have and accommodating newer users. Most of Alberta’s water is held by 13 irrigation districts that are senior license holders, as Alberta operates on a first-in-time, first-in-right system. However, in 2009, it was estimated that if all the land granted to the irrigation districts were fully irrigated, 900 million cubic metres of water annually would still be unused. This is enough water for several cities the size of Calgary.  

A sense of a water crisis in southern Alberta is overblown, and progress is continually made.

Irrigated agriculture has improved water use efficiency from 34 % to 71% since 1965. Further gains could be made with effective water pricing on irrigated agriculture as well. Businesses and industries are also lowering their water usage.

Having abundant water is not enough. It has to be clean, as the situation in Rwanda illustrated. Closer to home, most First Nations live near abundant water but have some of the worst water quality. Water pricing at the municipal level is a move in the right direction. Payment for usage is a fair way to make sure treatment, delivery and maintenance continue sustainably. It will go a long way to preserve this precious resource for future generations.