Assessing the Financial Sustainability of BC’s Municipal Water and Sewer Systems
Reliable water, sewer, and storm water systems are essential to public health, a clean environment, and a strong economy. But British Columbia’s systems may be at risk – aging infrastructure, growth, strengthened regulations, seismic risk, and climate change are driving the need for significant upgrades and re-investment in the pipes, pumps, and equipment that are used to treat, deliver and remove water safely, for our homes and businesses. At the same time, fiscal restraint and public complacency impede the ability of local governments and water utilities to secure the financial resources required to sustain our water infrastructure assets.
The BC Water & Waste Association, together with Urban Systems, has assessed the financial capacity of BC’s local governments to maintain, renew and replace our existing water and wastewater infrastructure.
The analysis uses 4 financial indicators, based on data from the 2013 audited financial statements for municipal governments in BC. The focus of the assessment is on existing infrastructure and current levels of service, addressing:
- Are BC municipalities financially well positioned to meet their existing water and wastewater infrastructure investment needs to maintain current levels of service?
- Are water and wastewater rates recovering the full cost of service, including infrastructure renewal and replacement?
- How much investment is needed to sustain our water and wastewater infrastructure?
- Are municipalities financially resilient to withstand sudden or unexpected changes in revenues or costs for water and wastewater systems?
The analysis does not include financial data for regional districts, improvement districts, or unincorporated areas, and does not consider the infrastructure investment required to meet new regulations introduced by senior levels of government, or upgrades to address growth or resilience for seismic or storm events.
Financial sustainability is a key principle for safeguarding water, sewer, and storm water systems so that they continue to protect public health and the environment, and contribute to economic development. It means having adequate funds to pay for the current cost of operating and maintaining our water and wastewater systems, and proactively planning to ensure there will be funds to eventually renew and replace systems as they come to the end of their useful life.
It is possible to meet BC’s water infrastructure needs, for this generation and the generations that follow, by making sound choices today about priorities for existing tax dollars, and setting user rates so that they cover the full cost of operating, maintaining, and replacing systems.
This report is the first of a series of reports that will be used to evaluate trends in the financial position of BC’s water and wastewater systems over time. It is intended to inform dialog among elected officials, utility managers, and the public about policies and priorities for infrastructure renewal and investment, and provides recommendations that are aimed at enhancing the fiscal sustainability of our water, sewer, and storm water systems, to ensure that our public water and wastewater systems continue to protect public health and the environment for generations to come.