Bulk Water Pricing Framework to Foster Sustainable Water Management in Ontario

Abstract

Amidst rising concerns for sustainability of water resources, the province of Ontario has placed a temporary moratorium expiring on January 1, 2019 on bulk groundwater extraction by new water bottlers while considering broader reforms in water management policies. Given the projected impacts of climate change, coupled with population and economic growth, episodes of water scarcity are expected to rise in Ontario. Even though measures for sustainable water management are slowly gaining momentum, Ontario’s economy is likely to remain water-intensive with a burgeoning water demand. Therefore, to assure sustainability of water resources, proactive policies need to be developed that can effectively communicate water scarcity and change the consumption behavior of all water-using sectors. Bulk water pricing is an effective economic instrument to manage demand, incentivize use-efficiency and conservation by signaling to users the economic value of water. However, current water extraction charges imposed on few industrial sectors are very small, and hence insufficient not only to foster sustainable water use but also to recover the costs of various resource management initiatives undertaken by the Province of Ontario. To overcome the deficiency in current charges, this research investigates global and provincial best practices in order to design efficient bulk water-pricing framework based on actual resource costs that can effectively signal water risks, improve water use-efficiency, and reduce water demand of self-supplied extractive water users. As an output of this research, a bulk water extraction charge calculator is designed starting from cost-recovery principles and based on public water resource management initiatives. Major federal and provincial investments in various quality and quantity management programs are considered along with volumetric data on water intake by different sectors to derive an average volumetric base price for Ontario. Moreover, to reflect spatial and temporal water source vulnerabilities along with sector specific risks, price multipliers have been integrated to provide price differentiation and policy flexibility within a unified framework. Given the moratorium placed and ongoing provincial review on water policies refueling the interest in economic instruments, this research provides a regionally tailored dynamic bulk water pricing framework that can fund future water management initiatives while triggering the transition of Ontario into a more water-efficient economy.