Twice a year, raw sewage spews from the drains and toilet, flooding Sophie Bourassa’s antique store in Montreal. When the water recedes, the basement of Quelque Chose is left with a carpet of “twigs, dirt and human excrement.” A single storm in July left her ankle-deep in sewage and with a $5,000 bill for damages. Bourassa is not alone. Some 100 homeowners and several nearby businesses, including a flower shop, a jeweller, and a high-end baby shop, have gone through the same ordeal. (The florist even tried to staunch the flow by sandbagging his drains with heavy bags of potting soil—to no avail. The bags shot straight into the air from the pressure.) Bourassa’s insurer has left her in the cold, and her landlord cited a no-fault clause against water damage in the lease. The city, which last year denied 2,697 claims after major overflows, called the July storm an “act of God” and dismissed Bourassa’s claim, leaving her to foot the bill. “It’s not an act of God,” she says. “It’s an act of the sewers being too old.”
On that point, the city seems to agree, although the blame, it says, belongs with past administrations. “For decades there was no investment at all in water infrastructure,” says city hall spokesperson Bernard Larin, noting Montreal plans to invest $350 million in sewer and water infrastructure this year. It’s a good start. Currently, a staggering 40 per cent of Montreal’s water is being lost through cracks and breaks in antiquated water mains and pipes. Cracks aside, every day Montreal wastes the equivalent of Paris’s daily drinking water supply, and residents share part of the blame. Montrealers are billed for water through their property tax; by design, the system encourages waste. Residents don’t see a bill and no matter how often they fill the pool or water the lawn, their rate stays flat. No surprise, Montrealers use more than double what most other Canadian cities do.
In fairness, it’s not just Montreal. Vancouver still does not have household water meters, and has no plans to get them. There, residents pay a flat annual rate of $360 for water, about $30 a month, per household. British Columbians—routinely treated to gushing praise for their green taxes, green jobs, green buildings and green mayors—are the biggest pigs in the country when it comes to water, beating even Quebec in a tight race for the ignominious national title for household water use. More than a third of Canadian cities, meanwhile, use decreasing block rates. The more you use, the less you pay for the unit of water. “It’s madness,” says law professor Robert Glennon, author of Unquenchable: America’s Water Crisis and What to Do About It.
In fact, Canadians are the heaviest water consumers in the world, the direct result of having some of the world’s cheapest water prices, says Brock University economist Steven Renzetti. Canadians pay roughly one-fifth what Germans do, and a quarter what the French do. “The reason for the price difference,” says Renzetti, “is that European water agencies don’t subsidize water agencies to the extent we do.” The average Canadian, meanwhile, uses almost three times the German average, and more than twice the French. Swedes use five times less water than us—with no discernible impact on quality of life. And our consumption is increasing—a full 25 per cent over the past 30 years, five times higher than the OECD average increase of 4.5 per cent. In some developed countries, the U.S. and Britain included, water use has declined. Not in Canada. Our freshwater withdrawals more than double the OECD average, according to the Conference Board of Canada, which awarded us a D for water consumption in its recent environmental report card.
Public subsidies fund much of that waste. And even with all the subsidies, municipal utilities, experts explain, are so woefully underfunded they can’t afford to maintain the system. Nationally, 20 per cent of the country’s treated water is being lost to leaks. But don’t pity Canada’s utilities their aging infrastructure. They account fully for neither their costs nor their impacts on the environment, and they don’t signal to consumers the true cost of providing service. The result? High rates of consumption, crumbling infrastructure and a steep and growing environmental debt.
It’s much the same story with energy consumption. Canadians, with some of the cheapest electricity rates in the developed world, are also among its highest per capita energy users. Costing taxpayers billions in subsidies, energy prices, like water prices, are so low as to be virtually symbolic; in places, utilities cannot cover the full cost of production. And as long as government maintains prices at artificial levels, waste will continue.
As it is, global electricity use is soaring from power-hungry gadgets like laptops, iPods, cellphones, video game consoles and flat-screen TVs—even bigger energy hogs, it turns out, than some refrigerators. In the U.S., households have gone from three to 25 consumer electronic products in the past 30 years, driving galloping consumption. Energy use by computers and consumer electronics is predicted to double by 2022, and increase threefold by 2030, imperilling efforts to reduce greenhouse gas emissions, according to the Paris-based International Energy Agency. Currently, the average Canadian consumes more than twice the rich-country average for electricity use. And already our electricity sector is responsible for 16 per cent of our CO2-equivalent greenhouse gases, which have increased by 22 per cent since 1990 (transportation, by comparison, is responsible for 25 per cent).
Canada’s current low-price/high-subsidy resource policies also lead to higher public debt and taxes. They are an inefficient subsidy to big consumers—the more you consume, the larger the subsidy—and undercut the environment. A growing number of economists and environmentalists argue that in an era of climate change, energy challenges and fiscal restraints, Canada should rethink this design. By lowering public assistance and sending price signals to consumers, we could encourage more sustainable resource use.
The pattern is clearly visible within the country, too: where prices are low, consumption is high. Quebec, which has Canada’s second-lowest electricity prices (after Manitoba), has the highest rate of per capita consumption. True, other factors help to explain higher rates of consumption, including industry—which is lured to the province by its cheap rates. P.E.I., which lacks energy resources and has to buy and import electricity, pays the highest rates in the country—almost 2½ times what Quebec does—and records the country’s lowest per capita consumption. Steep electricity costs have pushed some P.E.I. businesses to install wind turbines on their property; 18 per cent of the province’s electricity now comes from wind. The pattern can also be seen with water. The country’s heaviest water consumers, B.C. and Quebec, pay the lowest rates.
In Canada, most electricity prices are based not on the value of electricity, but its cost. In all provinces except Ontario and Alberta, prices are determined by energy boards. (With the exception of Alberta, power is provincially owned; in four provinces, investor-owned companies also generate some electricity.) The boards approve rates based on the estimated cost of supply, including a “reasonable” rate of return—a “highly inappropriate” way to set pricing, says noted Montreal economist Marcel Boyer. “If you want Hydro-Québec to realize a 9.5 per cent rate of return on its capital, you simply fix the price in such a way that they can cover expenses, plus the 9.5 per cent return.” Sure, Quebec may be rich in hydro power, but Ontario, which, in the ’60s ran out of low-cost hydro power, is not. Currently, the province subsidizes electricity to the rate of $7.9 billion annually, roughly 10 per cent of total government expenditures, according to Jack Gibbons, head of the Ontario Clean Air Alliance. Why? Because “they’ve always done it this way,” says Gibbons, a past commissioner of Toronto Hydro. This has two immediate consequences: electricity consumption is inflated by its artificially low price, and investments in energy-efficient equipment and use of alternative energy are deterred by electricity’s low cost and availability. In Australia, by way of contrast, water scarcity was a key driver behind the invention of the Corona dual-flush toilet, now used around the world.
