Water and Business in Canada Part IV: How to Price Blue Gold? More Dollars Makes More Sense

By: Meirav Even-Har, Toronto

Lately, terms such as "blue gold" and "the new oil" have become popularized in social and conventional media. But water is not like gold or oil - it is more precious. Survival is immediately compromised without enough water, unlike our other precious commodities. In Canada, however, water can be found on the cheap: it's plentiful and for the majority of residents, drinkable. It is no surprise then, that Canadians are the world's largest users of water (litres per day per person) and pay the lowest amount [1]. The cheaper, the better - right? For people and companies, the low cost of water is a disincentive to conserve and can lead to risky business when the well dries up.

The price of water doesn't make the news as often as the price of oil or electricity. However, when a major water main breaks, or a "boil water" advisory is sounded, we all pay attention. The maintenance and sound functioning of infrastructure used for cleaning and delivering water is heavily dependent on the money citizens are willing to pay for it. For manufacturing and mining, withdrawal rates depend on the province, but for the most part, the water bill is no competition for gas or electricity. While paying little for what seems to be a plentiful resource makes perfect business sense, it doesn't always amount to being risk proof. After all, even for industrial users, provincial water agencies are dependent on adequate funding to monitor the levels and overall "health" of a given water source. Lack of funding means lack of experts to ensure there is long-term sustainability of a given water source.

Eau Canada

Simply put, a water conservation ethic is not prevalent in Canada-and price is mostly why. How much do Canadians pay for water? According to Environment Canada's website, Canadians pay an average of $1.26 per 1,000 litres (264.17 US gallons). By contrast, Coca Cola costs $850 for the same volume. The website also adds, "Only tap water includes automatic delivery to the user. This figure includes the cost of waste treatment." [2]

But the actual dollar figure is only part of the equation. Pricing structure is also important, and there is an increased call for full cost pricing reforms. A revised cost structure that accounts for the processing, delivery and maintenance required, is a game changer, and for the better. The foremost candidates are municipalities where most of us live and work.

According to a report by Polis Water Sustainability Project based at the University of Victoria: "A better approach, environmentally and economically, is to begin charging households and businesses for the real costs of water services." [3] The report explains that a water pricing should:

1. Generate revenues to cover the cost associated with all services and related maintenance.
2. Be a true cost indicator to incentivise water efficiency and conservation
3. Promote innovation through the development of "water-efficient practices and technologies."

Holding the title of number one doesn't always carry prestige; being the largest consumers of water, most of which is wasteful, is a habit Canadians must rid of. In Canada, water has for the most part been taken for granted, even in our dry prairies. Slowly but surely, things are changing, but until we start paying the true cost of water, people and business will continue to have a disincentive to conserve, or invest in efficient equipment. Some things should never be "on special" and our current price for the most precious of resources has been on the "sale rack" for too long.

This is Part IV of a series about Canada's water resources as it relates to people and business, leading up to UN-Water World Water Day, March 22nd.
Part I: Building A Case For Deeper Commitment
Part II: Managing Water Use in the Supply Chain
Part III: Water Technology & Innovation Gaining Stronger Ground

Next week's Part V will explore Water and Food Security which is this year's theme of UN-Water World Water Day.

NOTES

[1] Polis Water Sustainability Project - Worth Every Penny: A Primer on Conservation-Oriented Water Pricing. http://www.poliswaterproject.org/publication/344

[2] Environment Canada: Withdrawal Uses.
http://www.ec.gc.ca/eau-water/default.asp?lang=En&n=851B096C-1

[3] Polis Water Sustainability Project - Worth Every Penny: A Primer on Conservation-Oriented Water Pricing http://www.poliswaterproject.org/publication/344

Photo Credit: by OpenImageBank