Why a New Business Model is Needed for Managing Water
Advances in Low Impact Development (LID) and other treatment technologies are beginning to modernize municipal stormwater systems. At the same time, implementation of stormwater management charges have eased the financial burden for municipalities and public utilities. Yet, cities are still facing challenges related to maintenance and replacement of this ever-growing system, often turning to increased property taxes or stormwater charges to help remedy the situation. As cities continue to expand and upgrade their stormwater infrastructure, costs are perpetually rising and infrastructure deficits grow. Government agencies offering stormwater credits or ‘feebates’, and other financial incentives to encourage application of at-source Stormwater management amongst private property owners in the residential and business sectors are seeing little uptake. This adds to the challenge of achieving sustainable stormwater infrastructure.
Market research completed by Freeman Assoicates was undertaken in the City of Mississauga by Credit Valley Conservation (CVC) and its project partners. This research identified key barriers to uptake of source-level Stormwater management measures by private property owners. The research, which coincided with the City establishing a stormwater charge and credit program, identified the two main barriers to at-source Stormwater management in the non-residential sector: upfront capital costs and an extended payback period on such investments. The research also pinpointed constraints inherent in the current municipal stormwater utility business model impeding the development of holistic, cost-effective, and adaptive SWM infrastructure.
Can we learn from others?
There is a movement across leading North American municipalities such as Philadelphia, San Francisco, and Portland, to evaluate and assess how private property can play a role in municipal infrastructure adoption and planning. The ever growing infrastructure deficit and climate challenges are causing municipalities to see private property as an opportunity rather than a challenge. As a result, Philadelphia has created two programs for private property adoption of green infrastructure. Within 2 years, 298 impervious acres have been retrofitted with green infrastructure at a cost of $83 000/acre (compared to $300 000 /acre for public right of way retrofits). Infrastructure deficit are not increasing, as property owners must take responsibility for the operations and maintenance in order to qualify for grants. Philadelphia’s program requires a 45 year operations and maintenance contract.
Ontario municipalities face similar challenges of growing infrastructure deficit, aging infrastructure and gaps, and uncertain climatic conditions causing urban flooding. So how do we address such challenges? Why can’t we look at these leading municipal programs and do a little R&D (replicate and duplicate)?
The GTA CAs and partners will begin their GRID LID and Economic Model project to address such challenges. The project will:
- Explore potential tool for municipalities to aggregate properties to optimize economies of scale
- Develop a full cost accounting of green infrastructure and economic model to quantify an offset value for the municipality and property owner
- Create a business case that focuses on the return on investment to justify investment or grants for private property owners
- Develop an implementation framework on how to roll a program out that uses and optimizes the tools developed.
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