August 23, 2004

New panel will advise Ontario on best ways to manage water, wastewater systems

The Ontario government has appointed a three-person expert panel to advise it on how best to manage municipal water and wastewater systems in the province. The panel will consider all aspects of organization, governance, investment, financing and pricing related to these systems.

"The most important thing our government can do is to lay the groundwork now for safe and clean drinking water through the proper long-term management of Ontario's water and wastewater infrastructure," said Public Infrastructure Renewal Minister David Caplan, noting that "Dr Harry Swain has agreed to lead the panel's work on this important issue." Jim Pine, chief administrative officer for the county of Hastings, and Fred Lazar, associate professor of economics at York University and the Schulich School of Business, are the other two panel members.

The Ministry of Public Infrastructure Renewal (PIR) is the lead agency in the development of a strategic water and wastewater infrastructure investment and financing plan to ensure the safety of Ontario's drinking water. As the first step in this process, the Ministry commissioned eight expert studies on a range of water and wastewater issues, in order to avail itself of the best research and information available. Completed in winter 2003, the studies indicate that very large capital investments in water and wastewater infrastructure are needed and will continue to be needed for a considerable period of time.

The creation of the expert panel is the next step in the plan. Its task will be to develop a solution which will maintain public ownership while ensuring that the investment needed to improve Ontario's water and wastewater infrastructure is made, that water and wastewater systems are financially sustainable and that water rates are affordable.

The panel will consult with a variety of stakeholders over the coming months, including large and small municipalities, municipal and environmental organizations, plant operators, engineering and public works experts, economic and financial experts, business and industry groups, individuals and consumer and user groups. Its report to the government is due by end of the year and will contain recommendations on Ontario's long-term water and wastewater infrastructure investment and financing strategy. The report will be released publicly.

Panel chair Dr Swain headed the Walkerton research advisory panel and has expertise in water provision and governance policy issues. He is also a former Deputy Minister of Industry and Deputy Minister of Indian Affairs and Northern Development with the federal government.

Pine was a member of the implementation committee within the Expert Source Water Protection Committee, advising the Ontario government on tools and approaches to implement watershed-based source protection planning. He has extensive experience in municipal management.

Lazar, who has a PhD from Harvard University, has written extensively on a wide variety of economic policy issues, including water industry investment and regulation, and employment and trade.

Since the Walkerton crisis of 2000, Ontario has introduced new regulations to help ensure safe, clean drinking water, and has made significant progress on watershed-based source protection planning. It is also moving forward on other initiatives linked to drinking water protection, such as greenbelt protection and Planning Act reform.

The next step is to invest in the systems that treat and distribute water, and collect and treat wastewater. Changes are needed to make these systems more financially sustainable. There are nearly 1,200 municipal water and wastewater plants in Ontario. Together, these facilities serve over 90% of Ontario residents.

The provincial water and wastewater system is made up of a few large treatment plants and many small ones. Ten per cent of all water plants provide 87% of Ontario's municipal water, and 10% of all wastewater treatment plants provide 84% of wastewater treatment. It is also important to note that municipalities with fewer than 2,000 people are nearly five times as expensive to service as communities with more than 100,000 people.

In general, users are not paying the full amount that it actually costs municipalities to provide water and wastewater services on a sustainable basis. Although there are variations across Ontario, an average household pays less than $50 per month for water services in almost two-thirds of municipalities.

Currently, limited funds are available for investment in rehabilitation, renovation and expansion. Some municipalities do not have the resources to invest in needed renewal; for others, the cost of making the improvements would make water too expensive. Multi-billion dollar capital investments are required for an extended period to bring distribution and treatment systems into a state of good repair and to allow for expansion.

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