ARE OUR WATER SYSTEMS AT RISK? ASSESSING THE FINANCIAL SUSTAINABILITY OF BC'S MUNICIPAL WATER SYSTEMS
The BC Water & Waste Association (BCWWA) recently partnered with Urban Systems Ltd. and JW Infrastructure Planning Ltd. to revisit the financial sustainability of water systems in British Columbia.
In 2015, we published the research paper, Are our Water Systems at Risk? Assessing the Financial Sustainability of BC's Municipal Water Systems , studying the financial reports of municipalities across BC and how communities are preparing for infrastructure renewal.
In 2023, with support from the Federation of Canadian Municipalities, we have updated this report which follows a similar methodology but adds contextual factors, such as a climate change lens. The aim of this work is to empower municipalities in understanding and achieving financially sustainable water and wastewater systems, considering changes and trends in the municipal context.
The report answers the following questions:
1) Are fees covering the full cost of service delivery, including infrastructure renewal?
2) How vulnerable are we to unexpected events?
3) What is our infrastructure deficit?
4) What is our capacity to finance renewal using debt?
5) What are public opinions about water and wastewater systems?
6) What actions can we take to address findings?
1. Most communities have incrementally improved their financial positions in comparison to 2015, but significant gaps remain.
2. Smaller communities (<1,000 pop.) generally saw a decline in financial sustainability in comparison to the 2015 results.
3. Significant additional investment will be required to address the eventual infrastructure renewal.
4. There are opportunities to build awareness among the public on the criticality of these issues.
Climate change
Climate change poses risks to water systems, requiring increased costs for accessing, treating, and conveying water.
Nature-based solutions
Natural asset management practices are gaining momentum and have the potential to significantly contribute to the resilience and sustainability of our water and wastewater systems.
Inflation
Inflation has escalated capital costs, challenging affordability.
Changing workforce & technologies
The changing workforce demographics and introduction of new technologies present new risks and opportunities for the operations of our water and wastewater systems.
Actions for local governments
Although the analysis in this report is limited to municipal governments, the following recommendations for improving financial sustainability are also applicable to regional districts:
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Take stock of your situation
Assess the financial sustainability of your water and wastewater systems using your own data and the four ratio calculations included in this report. What are the results, and based on current trends and practices, are the results likely to improve or decline? What are the implications of these results on delivery of water and wastewater services? What other significant risks to service delivery exist, and are there plans for managing these risks?
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Set targets for financial sustainability
Work with leadership and your council or board to set targets for financial sustainability. Begin by communicating the current state of financial sustainability with leadership and council or your board. Discuss the results in the context of current trends and practices that are relevant to your community – based on the current context, how do you anticipate the financial sustainability will change? Discuss the implications of the results on sustainable delivery of water and wastewater services and implications for the broader community. Identify areas for change and establish targets and timelines.
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Select and implement strategies to achieve your targets for financial sustainability
These strategies may include:
a) Implementing or improving asset management practices and systems, including the identification of risks related to changing climate and actions to manage these risks.
b) Identify and quantify the natural assets relied upon to deliver water services and the risks to these natural assets and the services they provide. Implement approaches to managing these risks.
c) Develop long-term financial plans and align fees accordingly.
d) Raise public awareness of the value of water services and the risks to be managed.
e) Inform land-use planning and decision-making with consideration of infrastructure costs, appropriate levels of service, and potential impacts to natural assets. Additional strategies for improving financial sustainability of water systems are included in a Canadian Water Network study from 2018 called Balancing the Books: Financial Sustainability for Canadian Water Systems.
CONDUCT YOUR OWN ASSESSMENT
As part of this report, we have also made a Financial Indicator Tool (click to download) available for calculating the financial sustainability of your community's water system. VIEW THE LATEST WEBINAR
On October 11, 2023, Jody Rechenmacher and Devon Kraan from Urban Systems Ltd. hosted a webinar to discuss findings from the report, recommendations and opportunities.WATCH NOW
This report has been prepared by the BC Water and Waste Association, with consulting support from Urban Systems Ltd. and JW Infrastructure Planning Ltd. Funding support has been provided through the Municipal Asset Management Program (MAMP), a program administered by the Federation of Canadian Municipalities and funded by the Government of Canada.
