August 28, 2008

May 15, 2008

Economic Snapshot - May 16, 2008

Most provinces have refreshed their water-supply systems

By John Clinkard - Consulting Economist, CanaData

Clean drinking water is not something that can be taken for granted. Recognizing this, many local municipalities have been investing more in their water-supply systems, including water pumping stations, water filtration and water distribution systems, since 1982.

Consequently, the average age of this vital public asset has been trending steadily lower. Since 2001, however, two factors appear to have pushed the value of the gross stock of this infrastructure asset up at an annual rate of just over 5%, which is ten times faster than the rate for roads and bridges.

First, municipalities — particularly those in British Columbia, Alberta, Saskatchewan and Ontario — are spending more to add new water treatment facilities due to strong growth of their urban populations.

Second, the deaths of seven people as a result of e-coli contaminated drinking water in Walkerton, Ontario and a similar incident during which 5,800 people fell ill in North Battleford, Saskatchewan in 2001 have rendered municipalities painfully aware of the need to ensure their drinking water is pure.

Over the past five years, the average age of water supply systems in Canada has fallen in all but two provinces. Particularly large declines have occurred in Prince Edward Island, where the average age has fallen by 24.5%, from 19.6 years to 14.8 years, or 40% of useful life.

Ontario has also invested heavily in upgrading its water supply systems. Since 2002, the average age has fallen by 22% to 13 years, the second lowest in the country. (The 13 years is 36% of useful life.)

However, despite the increased public attention on water quality and water supply systems in Canada, the average age has increased over the past five years in both Newfoundland and Labrador (by 5% to 14.3 years) and in Québec (by 3.9% to 18.5 years, the oldest in the country).

John Clinkard has over 30 years experience as an Economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.

Data Source: Statistics Canada/Chart: Reed Construction Data, CanaData.

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