Ecological Governance and Sustainable
Water Management in Canada

Urban
a. Water
I . Demand
Management

1%

 

For more information, or to receive a copy of this publication please visit our Web
site at www.waterdsm.org or contact:
The POLIS Project on Ecological Governance
PO Box 3060, University of Victoria
Victoria BC, V8W 3R4
Phone: (250) 721-6388 Fax: (250) 472-5060
www.polisproject.org

POLIS Project
on

Ecological Governance
University

of

Library and Archives Canada Cataloguing in Publication Data
At a Watershed: Ecological Governance and Sustainable Water Management in
Canada / Oliver M. Brandes ... [et al.].
Includes bibliographical references.
ISBN 1-55058-290-9
1. Municipal water supply—Canada—Management. 2. Water conservation—
Canada. 3. Watershed management—Canada. I. Brandes, Oliver M., 1972- II.
POLIS Project on Ecological Governance
HD1696. C2A8 2005 333.91'2'0971
C2005-902089-X

The Urban Water Demand Management
program at the POLIS Project is made possible
by the generous financial support of the
Walter and Duncan Gordon Foundation.
www.gordonfn.org

POLIS Project

Victoria

 At a Watershed:
Ecological Governance and Sustainable
Water Management in Canada
Oliver M. Brandes, UWDM Project Leader, POLIS Project
Keith Ferguson, Research Associate, POLIS Project
Michael M’Gonigle, Director, POLIS Project
Calvin Sandborn, Legal Director, Environmental Law Centre Clinic
Editing and additional research by:
Ellen Reynolds, UWDM Project Communications Director
Background research by:
Natasha Kisilevsky
Danielle Lemon
May 2005

 Acknowledgements
The authors wish to thank everyone who assisted in
the preparation of this report. In addition to those
mentioned below, many others—water managers,
policy analysts, activists and experts from across
Canada—generously contributed their time to help
develop this project.
UVic law student, Natasha Kisilevsky, and ELC
student researcher, Danielle Lemon, relentlessly and
enthusiastically pursued background research. Ellen
Reynolds helped throughout the project, including
supplementary research, editing and proofing. Tony
Maas, as always, shared his insights and offered advice
and encouragement throughout the report. Claire
Abbott and Jessica Boquist provided unfailing administrative support, Naomi Devine assisted with proof
reading and Maeve Lydon of Groundworks assisted with
initial administrative support. Brad Hornick provided
the creative flare for the report’s layout and design.
Finally, this report has been made possible through
the generous financial support of the Walter and
Duncan Gordon Foundation. The authors would
specifically like to acknowledge foundation director,
Patrick Johnson, for his support and offer special thanks
to project officer Brenda Lucas for her patience, support
and encouragement throughout the project.
About the project
At a Watershed is a collaborative project involving both
The POLIS Project on Ecological Governance and the
Environmental Law Centre at the University of Victoria.
Urban Water Demand Management Project
(UWDM) is an initiative that began in January 2003 at
the POLIS Project on Ecological Governance at the
University of Victoria. The UWDM Project seeks to
understand the structure and dynamics of urban water
use, and to provide mechanisms to reorient Canadian
water management from supply to demand-side
approaches. In the context of "Governance for
Innovation"—a term that promotes the adoption of
innovative and alternative solutions—the UWDM
Project works towards developing a comprehensive legal
and policy framework, and decision making tools, that
are of national and regional significance.

i   POLIS Project

The first two reports by the UWDM team, Flushing
the Future? (August 2003) and What the Experts Think
(December 2003), laid out the examination and diagnosis of Canada’s ailing urban water management
system. The third report, The Future in Every Drop
(April 2004), provided the prescription—practical
action plans for all levels of government to implement
demand management for urban water in Canada. At a
Watershed goes beyond the urban environment
presenting detailed solutions from around the globe to
"operationalize" the prescriptions laid out in the third
report. This report examines sustainable water management in the broader context of governance and provides
a blueprint for a national water management strategy.
Web site: www.waterdsm.org

Environmental Law Clinic (ELC) is operated by the
non-profit Environmental Law Centre Society, in
collaboration with the University of Victoria’s Faculty of
Law. Staffed primarily by law students who get course
credit for their work, the ELC is Canada’s only handson academic program in public interest environmental
law. The ELC provides legal representation and legal
assistance to community/conservation groups and First
Nations; produces citizen handbooks and other public
legal education materials; and advocates on a wide range
of environmental law reform issues. The Clinic is
working to help create the next generation of public
interest environmental lawyers in Canada.
Web site: www.elc.uvic.ca

 Executive Summary
Critical to life in all its diversity, water is the lifeblood of society and a foundation
of civilization. In addition to drinking water, freshwater ecosystems provide other
fundamental “ecosystem services” such as irrigation water, habitat for wildlife,
reserves for biodiversity, flood control and drought mitigation, mechanisms for
environmental purification, and sites for recreation. All these functions are essential
to the ongoing health and development of society.
As cities grow and environmental problems escalate,
managing human demand for fresh water presents an
immediate challenge. In Canada’s cities, scarcity of
supply, wasteful use, pollution, climate change and
other factors combine to increase the stress on aquatic
ecosystems and water supply systems. The habits of a
profligate past are colliding with ecological and
economic limits—the need for innovative water
management is acute.
Water is the strategic resource of the 21st century. As
we write this report, Canada stands “at a watershed” in
freshwater management. Attitudes, institutions and policies are changing, but an outdated supply-oriented paradigm still dominates. This paradigm treats fresh water as
a virtually limitless resource; forecast demands are met
by endlessly seeking additional sources of supply. A new
approach is needed.

Demand management: The new
water paradigm
Demand-side management uses less water to meet the
same human benefits, through conservation and a
dramatic increase in water use efficiency. Demand-side
practices include conservation pricing, smart technologies, public education, and regulation that forces innovation by promoting efficiency, conservation and recycling.
Comprehensive demand management programs integrate diverse activities such as consumer behaviour, water
provision, waste disposal, energy use, and land use to
redirect social development onto a new “soft path.” This
path focuses on meeting underlying human needs, for
example, for sanitation and agriculture, instead of
supplying more water. It requires water planners to
satisfy demands for water-based services, rather than

simply delivering more water as the product.
A “soft path” for water moves away from “forecasting” the future by simply extrapolating from the past.
Instead it relies on “backcasting”—a planning approach
based on a future scenario that integrates human needs
within ecological limits. After determining what water
might be available (ecologically), planners then work
backwards to find feasible paths to meet long-term social
and economic needs. To reach a sustainable future, the
soft path relies on policies and programs that change
behavior and promote greater water productivity. At the
core of this process are structural changes that embed
conservation, complemented by technologies and practices that increase efficiency.

Water in Canada
The myth of abundance is firmly entrenched. This
myth impedes Canada’s ability to change water use
habits. Water prices in Canada are the lowest in the
industrialized world, which encourages our pattern of
excessive use and waste. Lack of consumer awareness and
conservation incentives, a dearth of effective policies and
innovative regulations, and limited strategic planning all
reinforce the supply-side paradigm. Profligate water use
not only causes environmental damage, but also inflicts
huge and unnecessary infrastructure costs on already
overburdened municipalities and taxpayers.
Structurally, myriad public agencies share authority
in “a bewilderingly complex administrative galaxy” that
fails to address the underlying problems. From coast to
coast, Canada’s water management is in need of sober
reform. The ultimate solutions are local in nature, yet
those solutions are unlikely to be widely implemented
unless situated within a broad national strategy.
At a Watershed   ii

 Ecological governance to address
water scarcity

ordinate with other local institutions, and participate in
broader collective actions.

At a Watershed focuses on the enabling environment
that ensures holistic water management is institutionally
embedded. Ultimately, the goal is “ecological governance,” where natural ecosystem processes are carefully
considered at all levels of decision making, up and down
the watershed. All three pillars of governance—government, business and civil society—must participate to
fully incorporate sustainability into the very nature of
our government, our industry and our civil society.

4. Adaptive management
Plans and policies should be continually modified to
respond to ecological, economic and social feedback
through an ongoing process of informed “trial and
error.” Decisions that are provisional and reversible can
create and apply critical knowledge to refine decision
making in an uncertain world.

Developing Sustainability
By definition, sustainability respects biophysical
limits. However, while sustainable development merely
imposes constraints on traditional economic development, developing sustainability seeks to liberate new
processes for social and economic transformation.
Developing water sustainability requires a shift that
embeds ecosystem integrity in the fundamental basis of
all planning. This approach limits the expansion of
supply-oriented infrastructure, addresses cumulative
effects at the watershed, and unleashes the full potential
of conservation-oriented innovation. The best source of
“new” water is not actually new water at all. It is better
use of the water we already withdraw.

Key Concepts
To develop sustainability, four key concepts must
guide water planning and management:
1. Prevention and Precaution
To maintain ecosystem integrity, prevention of harm
is better than subsequent compensation or remediation.
A precautionary approach is the best hedge against an
uncertain future.
2. Ecosystem-based management
Ecosystem-based management adapts economic,
political and social processes to fit within the ecosystem,
instead of the reverse. Rather than managing a watershed
as an adjunct to human needs, ecosystem integrity sets
the context for management decisions.
3. Matching authority to jurisdiction
Watershed governance recognizes that local people
and institutions are best situated to monitor environmental feedback and respond with tailored solutions.
However, local powers must also be “nested” within
higher level institutions that hold them accountable, coiii   POLIS Project

Part II: Key Components of a national
water strategy
Working together, federal and provincial governments can promote the tools and institutions to allow all
local interests—suppliers, businesses, consumers and
local governments—to take effective action in developing water sustainability. Real world experiences in
many jurisdictions can provide signposts for Canadian
authorities along the path to a sustainable water future.
The attached table summarizes these opportunities,
experiences and best practices from around the globe
(with reference to additional details in the full report).
Allocating water in the 21st Century
Ecosystem-based management starts at the source to
protect ecological function and ecosystems. Only after
ecological needs are met can water then be accessed for
human activities. Once the ecological limit of an aquifer,
river basin or watershed is reached, future water demands
must be met through increased water “productivity.” This
liberates the full potential of demand management.
Enabling local water planning and conservation
Senior governments can uniquely address the institutional inertia of the supply-side paradigm that now
prevents the long-term planning and decision making
needed to implement DSM. They can ensure local
governments have a sustainability strategy based on longterm water conservation planning and an integrated
approach to water management.
Patterns of supply and demand, ground and storm
water use, energy and land use decisions can all be
shaped and transformed. Specific tools and practices to
foster such transformation include funding, guidelines,
data and information, building and sharing technical
knowledge, increasing staff resources, providing incentives for innovative management and ensuring widespread public education.

 Facilitating urban water demand management
Demand management programs can reduce infrastructure costs and ecological impacts. However, water
conservation does not just happen. Success requires
coordinated efforts from all stakeholders and an environment where demand management is the primary
focus of water managers.
Senior governments can facilitate a demand-oriented
focus through the creation of model bylaws and standardized Best Management Practices (BMPs). They can
act as a central clearinghouse of information and undertake research, pilot projects and educational programs.
They can also move forward specific DSM opportunities
such as product labelling, social marketing, conservation-based pricing and reuse and recycling technologies.
Thinking like a watershed
Sustainable water management requires managers, in
effect, to “think like a watershed”—to consider the
complex interaction of human activities and natural
processes in planning and decision-making. Ecological
governance is only possible where management focus
shifts away from manipulating the watershed and toward
managing human activities within the watershed.
Demand management is a foundational tool for
watershed managers. When applied not only within the
urban sector but in all sectors—including power generation, industry, manufacturing and agriculture—up and
down the watershed a broader social process of ecological
governance begins to take root.

Learning from other places
The strength of this report lies in the rich mosaic of
experiences and examples from around the world where
theory and concept inform practice. For example, experiences in Australia and South Africa reveal opportunities to integrate ecological considerations into water allocation systems and demonstrate how watershed-based
management institutions can protect ecosystems. In
these jurisdictions, nature is recognized as a legitimate
“user” of water.
In California and some other parts of the United
States, urban water management and innovation go
hand in hand. Conservation planning, increasing water
efficiency and improving water reuse and recycling are

fundamental aspects of water management. Dedicated
government divisions for water efficiency, specific
conservation laws and codes, targets and reporting
requirements, and processes linking infrastructure
funding to best practices ensure continual innovation
and improvement.
In the European Union, integration at the watershed
level is an important part of a “nested” planning
approach promoted through the EU Water Directive.
For many European countries the watershed is viewed as
the staring point for sustainable water management. For
example, France has created a water parliament system
where government has modified its water management
role from central controller to facilitator of local decisions in the context of river basins and watersheds. A
management authority for the basin develops policies
and plans that address basin-wide problems. These
provide guidance to the management bodies of smaller,
nested watersheds, which develop detailed action plans
tailored to local conditions.
Similar efforts to integrate water resource management at the watershed level are occurring in Washington
State where growing recognition of a need to shift away
from centrally-driven efforts towards more collaborative
watershed-based approaches is creating a dynamic adaptive management framework.

Future directions
A future different from the past is possible for
Canada. Financial, technological, legal and social tools
are available to grapple with water issues before they
reach crisis proportions. But the long-term solution
requires a fundamental shift to watershed governance—
an institutional shift towards ecologically-based water
allocation, innovation in planning, managing water use
with a “soft path” approach, and ecosystem-based
management at the watershed scale.
The challenge now is to ensure that these new
approaches, resources and institutional arrangements are
implemented across the country. Senior government
must provide the leadership to make this happen, taking
steps to ensure water agencies at all levels of government
have the ability and the incentives to implement
comprehensive solutions and programs. The opportunity is here, and the time for action is now.

At a Watershed   iv

 Key elements of a national water strategy for Canada
Practice (BMP)

Purpose(s)

Key enabling requirement(s)

Water allocations that
ensure watershed health

Allocate water to sustain ecosystem integrity

Provincial action on fundamental reform of
water licensing and allocation systems

Adaptive withdrawal
permitting

Avoid future over-allocation of water sources by
allowing permitted withdrawals to be adjusted
over time in response to water availability

Change water licenses and entitlements;
and demand detailed hydrological and
human water use monitoring

Market-based instruments Provide incentives (financial rewards) for desired
behaviour or impose fees on undesirable behavfor water sustainability
iour to reduce water use and provide potential
revenue to subsidize conservation and restoration

Pricing - attention to distributive effects
(i.e. political economy of water)
Trading - property rights with clear ecological water allocations and significant
government regulation
Liability - public access to legal system

Long-term conservation
planning

Overcome short-term decision making that
increases long-term impacts/costs

Water conservation planning guidelines
and incentives that require their use
(conditional funding, legislation)

Environmental management systems

Embed planning in an adaptive management
framework, ensuring regular assessment of business practices and consequential environmental
impacts

Overcome upfront costs for management
process (e.g. plan, do, check, act) and
ensure availability of detailed information

Utility Full-Cost
Accounting

May eliminate perverse subsidies by promoting a
truer value of water to end users, ensuring longterm financial stability for the utility

Local political will or provincial legislation
as in Ontario. Citizen/end-user education

Developing conservation
capacity

Develop professionals that create and run effective long-term DSM programs

Sufficient financial resources and recognition that DSM professionals are critical to
any water supply team

Best practices clearinghouse

Disseminate information and opportunities to
improve water management and promote innovation

Create one central and credible resource in
collaboration with key stakeholders

Promote market in DSM
planning/implementation

Ensure ongoing innovation and continual integration of conservation technologies

Commitment by local government to link
development with conservation incentives

Labelling

Allow purchasers to identify and select the most
water-efficient products to meet their needs, facilitating a market for conservation technologies

Credible oversight and enforcement of
standards

Social Marketing

Promote behavioural change at community level

Specific training and direct public contact
and involvement

Conservation-based
pricing

Provide incentives to reduce water use and signal
the value of water

Universal metering and public and political
buy-in

Reuse and recycling

Cascade water use to reduce wastewater and
water use

Dual plumbing, enabling regulation, pilot
projects, national guidelines for reused
water and health regulations

Water parliaments

Ensure holistic planning and decision making at
the watershed scale by bodies aware of local
needs and circumstances

Collaboration by key stakeholders and
senior governments; sufficient resources
and delegated decision-making authority

v   POLIS Project

 Leading example(s)

Impact/implications

Governance principle

Water allocated for ecosystems and basic human
needs first; the remainder allocated to maximize
social and economic benefits

Ecosystem-based management

• South Africa National Water Act (Sec 5.3)
• Australia, COAG reforms (Sec 5.3)

May challenge expected long-term specific volume
requirements for fresh water

Adaptive management

• Time-limited withdrawal permits in the UK,
South Africa and Florida (Sec 5.4.1)
• A consumptive pool - Australia (Sec 5.4.2)

Tax shifting and green taxes may impact costs and
individual company/industry competitiveness

Ecological modernization;
full-cost accounting and user
pay

• Europe (Sec 5.6.1)
• South Africa (Sec 5.6.1)

Commodification of water resources and potential
corporate influence requires careful government
oversight

• Australia (Sec 5.6.2)
• Alberta (Sec 5.6.2)
• California (Sec 5.6.2)
• Sweden (Sec 5.6.3)
• Columbia (Sec 5.6.3)

Cost recovery facilitated by environmental bond
requirements
Senior government must provide support (finances
and information) to assist in preparation of plans,
and must enforce penalties if plans are not implemented

Matching principle and deliberative democracy

• EPA guidelines (Box 39)
• California's Urban Water Management
Planning Act (Box 40)

Requires industry or government action to develop
specific EMS frameworks for water utilities and
providers, and requires establishment of indicators

Adaptive management

• ISO 14001 (Box 41)
• North East Water in the State of Victoria
Australia (Sec 6.3.1)
• Sydney Water Corp., Australia (Box 42)

Concern that privatization may result; requires
strong public oversight

Subsidiarity and ecological
modernization

• CRD Victoria (Box 45)
• Ontario's Sustainable Water and Sewers
Systems Act (Box 44)

Changing utility focus from water supplier to service
provider

Ecological modernization

• California - dedicated government division
for water efficiency (Box 40)
• Some Canadian cities have hired full-time
DSM staff (Sec 6.6)

Compliance with practices can be part of criteria for
linking funds for infrastructure expansion or DSM
programs

Ecological modernization and • WaterWiser Clearinghouse Web (Sec 7.2.2)
subsidiarity
• California MOU Regarding Urban Water
Conservation (Sec 7.2.1, Box 47)

May increase developer costs leading to focused
resistance

Ecological modernization

• WASCOs (private entities contracted to plan
and implement DSM program (Sec 6.2.3)
• Arizona Active Management Areas requires
developers to reduce water use before new
building permits are given (Sec 6.4.1)

Can help local water providers select models/brands
for rebate and giveaway programs

Deliberative democracy and
ecological modernization

• WaterStar (Sec 7.3)
• EcoLabel (Sec 7.3)
• WELS (Australia) (Box 49)

Requires detailed planning, pilot projects and evaluation

Ecological modernization

• The Region of Durham, Ontario (Sec 7.1.5,
Box 19)

May effect municipal water revenue predictability

Ecological modernization; full • Irvine Ranch Water District (Box 50)
cost and user pay
• EU Water Framework Agreement (Sec 7.4)

Requires additional technologies and technical
expertise

Ecological Modernization

• California Water Code (Sec 7.5.2)
• Florida Reuse Coordinating C'ttee (Sec 7.5.2)
• Vernon, BC (Sec 7.5)

Changing role of government from central control
to facilitator of local decisions

Matching authority and
subsidiary

• France's Water Parliaments (Box 56)
• COAG and the Murray-Darling Basin
Initiative, Australia (Box 58)
• Washington State, US (Sec 8.2, Box 57)

At a Watershed   vi

 Table of Contents
CHAPTER 1
1.1
1.2
1.3

PURPOSE AND OVERVIEW
ECOLOGICAL SERVICES PROVIDED BY FRESHWATER ECOSYSTEMS
URBAN WATER MANAGEMENT - CURRENT AND EMERGING PARADIGMS
1.3.1 The supply-side approach
1.3.2 Demand management
1.3.3 Soft path for water

CHAPTER 2
2.1
2.2

2.3

2.4

3.2

3.3

URBAN WATER IN CANADA

WATER IN CANADA
3.1.1 Myth of abundance
3.1.2 Limited supply - An emerging reality in Canada
3.1.3 Ground water - The hidden resource
3.1.4 Canadians - High urban water users
3.1.5 Low prices, high demand
3.1.6 Environmental impacts of high use
3.1.7 Canada’s aging supply infrastructure
3.1.8 Climate Change: The certainty of uncertainty
LEGAL AND INSTITUTIONAL FRAMEWORK FOR FRESH WATER IN CANADA
3.2.1 Federal government
3.2.2 Provincial and territorial governments
3.2.3 Municipal governments
3.2.4 Intergovernmental coordinating mechanisms
3.2.5 International co-operation
CONCLUSION

vii   POLIS Project

01
02
02
04
04
04
05

ECOSYSTEM GOVERNANCE

GOVERNANCE
2.1.1 Institutional failure and in-built ‘unsustainbility’
DEVELOPING SUSTAINABILITY - A DEEPER PERSPECTIVE
2.2.1 Maintaining ecosystem services
2.2.2 Uncertainty
2.2.3 Prevention and precaution
2.2.4 Sustainable consumption
THE CHALLENGE OF DEVELOPING SUSTAINABILITY
2.3.1 Embedding nature
2.3.2 Water sustainability - Threats and criteria
KEY ELEMENTS OF ECOLOGICAL GOVERNANCE
2.4.1 From ecosystem management to ecosystem-based management
2.4.2 Matching authority to jurisdiction
2.4.3 Adaptive management
2.4.4 Business and civil society roles

CHAPTER 3
3.1

AT A WATERSHED

09
10
11
11
12
13
14
14
15
15
15
17
17
18
19
23
23
24
24
25
25
26
27
28
28
29
29
34
35
38
39
40

 PART II DEVELOPING WATER SUSTAINABILITY - LESSONS FROM ELSEWHERE
CHAPTER 4
4.1
4.2

4.3

AVOIDING THE WATER CRISIS
COMPREHENSIVE NATIONAL STRATEGIES IN AUSTRALIA AND EUROPE
4.2.1 Australia
4.2.2 Europe
KEY ELEMENTS OF A NATIONAL WATER STRATEGY

CHAPTER 5
5.1
5.2
5.3

5.4

5.5
5.6

5.7

6.3

6.4

6.5
6.6

WATER ALLOCATIONS FOR THE 21ST CENTURY

45
45
45
45
46
47
51
51
52
53
55
56
57
57
58
58
59
59
60
61
61
62

WATER NEEDS FOR ECOSYSTEMS
WATER ALLOCATION IN CANADA
WATER ALLOCATION THAT ENSURES WATERSHED HEALTH
5.3.1 Withdrawal permitting
5.3.2 Integrated management of surface and ground waters
5.3.3 Dealing with urbanization and drought
DEALING WITH OVERALLOCATIONS
5.4.1 Time-limited withdrawal permitting
5.4.2 Awarding shares in the consumptive pool
LINKING WATER CONSERVATION TO PERMITS
MARKET-BASED INSTRUMENTS FOR WATER SUSTAINABILITY
5.6.1 Withdrawal pricing
5.6.2 Tradable withdrawal permits
5.6.3 Legal liability for environmental damage
CONCLUSION

CHAPTER 6
6.1
6.2

A NATIONAL STRATEGY FOR SUSTAINABLE WATER USE

ENABLING LOCAL WATER SUSTAINABILITY

PROMOTING DEMAND MANAGEMENT
LONG-TERM PLANNING FOR WATER SUPPLY AND CONSERVATION
6.2.1 Guidelines, tools and financial assistance for conservation planning
6.2.2 Mandatory conservation planning and conditional funding
6.2.3 Promoting a market in DSM
EMBEDDING PLANNING
6.3.1 Environmental Management Systems (EMSs)
6.3.2 Indicators
INTEGRATING WATER PLANNING WITH LAND USE MANAGEMENT
6.4.1 Conditional development permits
6.4.2 Integrated water cycle management
6.4.3 Water sensitive urban design
FULL-COST ACCOUNTING
WATER CONSERVATION CAPACITY

63
63
65
65
66
67
67
67
69
70
70
70
71
72
73

At a Watershed   viii

 CHAPTER 7
7.1

7.2

7.3
7.4

7.5

7.6

ACTIONS TO PROMOTE AND IMPLEMENT URBAN DSM
7.1.1 Mandatory building and plumbing codes
7.1.2 Model bylaws
7.1.3 Pilot and demonstration projects
7.1.4 Funding
7.1.5 Education
7.1.6 Voluntary green building certification programs
DEVELOPING AND DISSEMINATING BEST MANAGEMENT PRACTICES
7.2.1 The Council on Urban Water Conservation
7.2.2 Clearinghouses
7.2.3 Civil society’s ideas for conservation
7.2.4 Data collection and research
LABELLING
CONSERVATION PRICING
7.4.1 Assistance, collaboration and conditional funding
7.4.2 Citizen input on setting rates
REUSE & RECYCLING
7.5.1 Health and safety regulations
7.5.2 Promoting reuse in California and Florida
CONCLUSION

CHAPTER 8
8.1
8.2
8.3

FACILITATING URBAN WATER DEMAND MANAGEMENT

THINKING LIKE A WATERSHED

FINDING THE PROPER SCALE FOR MANAGEMENT
8.1.1 Watershed management in Canada
COLLABORATIVE GOVERNANCE AT THE WATERSHED LEVEL
8.2.1 Government role in nested watershed management
FROM REACTIVE TO PROACTIVE WATERSHED MANAGEMENT

75
75
75
75
76
76
76
77
77
78
78
78
79
80
80
82
82
83
84
84
86
87
87
88
89
89
91

CHAPTER 9

CONCLUSION AND FUTURE DIRECTIONS

93

CHAPTER 10

REFERENCES

95

ix   POLIS Project

 List of Boxes
Box 1:

Services provided by freshwater ecosystems

3

Box 32:

Water allocations under South Africa’s National

55

Water Act

Box 2:

Soft path choices

6

Box 3:

Key principles of the soft path for water

6

Box 4:

A continuum of water management

7

Box 5:

Water governance

10

Box 6:

Sustainability

11

Box 7:

Wholeness and ecological integrity

12

Box 36:

Limits of water markets

61

Box 8:

Ecological integrity

13

Box 37:

The Public Trust Doctrine in the United States

62

Box 9:

Precautionary principle

13

Box 38:

A range of actions to promote urban DSM

64

Box 10:

Sustainable consumption

14

Box 39:

EPA Water Conservation Plan Guidelines

65

Box 11:

Ecological system in decline

15

Box 40:

Water supply and conservation planning in

66

Box 12:

Threats to freshwater ecosystem services from

Box 33:

Watershed protection in Florida, U.S.

55

Box 34:

Groundwater balance through DSM and land use

56

planning in Arizona, U.S.
Box 35:

59

promote water sustainability

California

16

human activities

The full range of market-based instruments to

Box 41:

The ‘plan, do, check, act’ cycle in Environmental

67

Management Systems (EMS)

Box 13:

Criteria for sustainable use of freshwater resources

17

Box 14:

Abandoning waste

17

Box 42:

The ‘environmental footprint’ as an indicator

Box 15:

Principle of Subsidiarity

18

Box 43:

Box 16:

Democratic experimentalism

18

Water sensitive urban design in the Hammarby Pilot 71
Project, Sweden

Box 17:

Adaptive management

19

Box 44:

Full-cost accounting under Ontario’s Sustainable

Box 18:

The need for public engagement

20

Box 19:

Community-based social marketing

21

Box 20:

Canadian precipitation 1971-2000

24

Box 21:

OECD Comparison

26

Box 22:

Canadians use more water and pay less for it

27

Box 23:

Potential impacts of climate change on water

30

resources
Box 24:

Selected federal and provincial water related laws,

31

Significant federal legislation to protect aquatic

32

ecosystems
Box 26:

Water supply business models in large Canadian

Box 45:

Full-cost accounting in the Capital Regional District

73

(CRD), B.C.
Box 46:

Community building while saving water: The San

76

Antonio experience
Box 47:

California MOU on best management practices

77

(BMPs)
Box 48:

Research institutions for water sustainability

Box 49:

Australia’s mandatory Water Efficiency Labelling and 80
Standards (WELS) Scheme

Box 50:

Conservation pricing in Irvine, California

81

Box 51:

Conditional funding under the National

82

79

Competition Policy in Australia

37

municipalities

72

Water and Sewage Systems Act

strategies and plans
Box 25:

69

Box 52:

Broad participation in setting rates in Los Angeles

83

Box 27:

Prairie Provinces Water Board

39

Box 53:

Closing the loop

83

Box 28:

Council of Australian Governments (COAG) leading 46
water reforms

Box 54:

Closing the loop in St. Petersburg, Florida

86

Box 55:

Watershed management

87

Box 29:

Key elements of a national water strategy for

Box 56:

Water parliaments

88

Box 57:

Evolving watershed management in Washington

90

48

Canada
Box 30:

Freshwater and ecosystem integrity

53

Box 31:

Water allocation models

54

State, U.S.
Box 58:

The Murray-Darling Basin Initiative in Australia

90

At a Watershed   x

 I do not know much about gods; but I think that the river
Is a strong brown god-sullen, untamed and intractable,
Patient to some degree, at first recognised as a frontier;
Useful, untrustworthy, as a conveyor of commerce;
Then only a problem confronting the builder of bridges.
The problem once solved, the brown god is almost forgotten
By the dwellers in cities—ever, however, implacable.
Keeping his seasons and rages, destroyer, reminder
Of what men choose to forget. Unhonoured, unpropitiated
By worshippers of the machine, but waiting, watching and waiting.
..........................................................................
The river is within us, the sea is all about us...
T.S. Eliot, The Dry Salvages, 1941

xi   POLIS Project

 Chapter 1

At a Watershed

Humans consume water, discard it, poison it, waste it, and restlessly change the
hydrological cycles, indifferent to the consequences: too many people, too little water,
water in the wrong places and in the wrong amounts.
Marq de Villiers,Water, (2000: 15)
Water is the lifeblood of civilizations—a critical
component for all life and a necessary foundation for the
growth and evolution of society. As cities continue to
grow and environmental problems multiply, managing
the demands for fresh water becomes a more urgent challenge that affects all aspects of society.
Water is the strategic resource of the 21st century. A
recent poll of 200 leading scientists from 50 countries
ranked lack of fresh water as an environmental priority
second only to global climate change (GEO 2000; Praxis
Inc. 2001; Brooks 2003: 29). Even in Canada, a nation
perceived as rich in freshwater resources, water scarcity is a
growing concern. In many areas, water supplies are limited
and human water use is degrading aquatic ecosystems.
Currently, Canada stands “at a watershed”
concerning freshwater management. Attitudes, institutions and policies are slowly changing, but the old paradigm still dominates. In response to the growing
complexity that is driving this change, water managers
worldwide are slowly abandoning the endless quest for
more water. They are turning away from the traditional
“supply-side” paradigm that has underpinned growth
historically. Out of necessity, these “builders of bridges,”
in T.S. Eliot’s metaphor, are now taking seriously the
need to control our use of “the brown god,” and are
moving incrementally toward a demand-side approach.
This approach emphasizes efficient use of water and
conservation—achieving the same benefit for humans
while using less of the precious resource.
This new demand-side paradigm tells managers that
it is no longer enough just to supply water for public and
economic needs. A demand orientation requires institutions, consumers and others to protect the environment,
restore ecosystems, and achieve social equity—it is only

within these constraints that they can carry out their
function of supplying sufficient water for public safety,
economic growth and ongoing development.
Too many Canadians view the supply of fresh water
as limited only by the technology and infrastructure used
to harness it. Conservation is often seen as a minor addon. The impending collision between a profligate past
and a sustainable future is acute in the urban environment where a range of factors—from increased demand
and scarcity to pollution to climate change—create
significant cumulative pressures on local aquatic ecosystems. Similar issues and limits face water users in agriculture, mining and manufacturing sectors.
Water scarcity presents a challenge for social governance. In looking to the future, this concept of governance expands our focus beyond the decisions and rules
made by government to include other participants in
social decision making—in particular, business and civil
society. This broader focus is critical to moving ecological
principles from the periphery to the core of decision
making.
Incorporating ecological sustainability into the very
fabric of government, industry and civil society represents a
shift towards “ecological governance,” and requires
reform of existing institutions and ways of thinking. One
such reform involves how watersheds and, more broadly,
ecosystems fit into our collective decisions. Such
“ecosystem governance”—a subset of the broader ecological governance—provides the critical context within
which a paradigm shift from supply-oriented to
demand-oriented water management can and must
occur. We are literally, “at a watershed.” The forgotten
river does indeed flow into a larger social sea.

At a Watershed   01

 1.1 Purpose and overview
The fourth report in our series on urban water
management in Canada, At a Watershed, addresses the
enabling environment within which the recommendations, solutions and action plans of previous reports can
be fully “operationalized.” It promotes the creation of a
holistic water management system structured to inherently promote water sustainability, advancing both
demand management and water conservation.
Urban water management is only a starting point.
On the one hand, cities and the infrastructure that
supports them constitute a critical nexus of decision
making. On the other hand, urban areas are often the
most significant feature on the landscape affecting a
particular hydrological cycle. Yet, when one travels up
and down the watershed, other sectors beyond the city—
from agricultural irrigation to power generation for
consumers and industry—must also be involved in the
reshaping of institutional designs.
The case studies and examples of practical and innovative practices presented in this report reveal models
that can be adapted and implemented in Canada.
Institutional reform and ecological governance are
attainable goals. The objective of this report is not to add
more ad hoc programs. Its central goal is to elucidate the
character of the enabling environment that can foster a
long-term, integrated and comprehensive approach to
water management in Canada where ecosystem health
and social sustainability take a primary role.
The report is divided into two parts. Part I reviews the
institutional context in Canada (Chapter 1), and provides
the theoretical foundation for ecosystem governance
(Chapter 2). Chapter 3 offers a snapshot of the Canadian
water resource management scene that grounds our theoretical understanding, reviewing the roles of governments—provincial, federal and local/municipal—in
achieving a comprehensive water management strategy.
The institutional, jurisdictional and legal complexity associated with water management in Canada is a significant
barrier to managing the resource effectively.
Part II reviews a diversity of “best practices” in
ecosystem governance from around the world. Alive
with concrete examples and detailed strategies, the
chapters in Part II demonstrate how, by positioning
ecological principles at the core of social decision
making, Canada can begin to develop sustainability
where it currently does not exist.

Ecological governance cannot simply be designed in the
abstract and then implemented; instead it must evolve out of
the constellation of interests, practices and institutions that
already exist. Part II reveals many common themes amidst
the real-world experience of water providers, regulators,
consumers and civil society around the world. It provides a
platform for institutional redesign—and the beginning of a
dialogue to achieve water sustainability in Canada.

1.2 Ecological services provided by
freshwater ecosystems
Freshwater ecosystems include a range of habitats—
streams, rivers, ponds, wetlands and lakes-linked groundwater systems, and the ecological riparian zones that
connect them to adjacent land. Aquatic systems provide a
variety of “services” to society (Daily 1997: 6).1
The most fundamental of these services is the provision of fresh water itself. The generally accepted
minimum amount of fresh water required for human
survival is approximately five litres per capita per day
(lcd). To meet additional basic needs such as sanitation,
food preparation and bathing, Health Canada recommends 60 to 80 lcd, and Gleick (1996: 83) recommends
a minimum of 50 lcd.
In addition to providing water for broader social
uses—agricultural, industrial and residential—freshwater ecosystems provide habitat for fish and waterfowl
and instream services such as flood control and the
purification of human and industrial waste (Baron et al.
2003). Healthy ecosystems are essential to sustaining
these services for future generations and to ensuring the
ecological capacity to adapt to environmental changes
such as global climate warming (Baron et al. 2002:
1248). Box 1 provides a comprehensive list of the benefits provided by freshwater ecosystems.
Many attempts have been made to quantify the
economic value of aquatic ecosystem services. Based on
functions such as flood control, recreational fishing and
water filtration, Schuyt and Brander (2004: 4) estimate
the global value of wetlands alone at US$70 billion
annually. In Florida, Ruhl (2003: 53) estimates the
natural flow of the Apalachicola River and its floodplain
basin provide services such as flood control, nutrient
regulation, and estuary health, with an economic value
of over US$5 billion per year. Similarly, Postel and
Richter (2003: 10) estimate the value of goods and services provided by the world’s lakes, rivers and wetlands at

Daily (1997) defines these services as “the conditions and processes through which natural ecosystems, and the species that make them up, sustain
and fulfill human life.”
1

02   POLIS Project

 Box 1: Services provided by freshwater ecosystems

Service

Benefits

Provision of water supplies

Greater than 99% of industrial, irrigation and residential water supplies
worldwide come from natural freshwater systems

Regulation of ecosystem
function

Ensures essential ecological processes and fundamental life support systems
continue

Flood mitigation

Functionally intact freshwater systems buffer stormwater flows, reducing
flood damage

Drought mitigation

Functionally intact freshwater systems absorb rainwater, slow runoff and
help recharge groundwater

Maintenance of coastal zones

Freshwater flows maintain the salinity gradients that are critical to the biological diversity and productivity of deltas and coastal marine environments

Recreational opportunities

Freshwater ecosystems are sites for swimming, fishing, hunting, boating,
wildlife viewing, and so on

Hydropower generation

Flowing freshwater ecosystems provide opportunities for both conventional
hydropower generation and more environmentally sensitive micro-hydro
options

Provision of habitat

Rivers, streams, floodplains and wetlands provide habitat and breeding sites
for numerous aquatic, avian and terrestrial species

Biodiversity conservation

Freshwater and riparian ecosystems harbour diverse assemblages of species
that support many of the services in this table and also conserve genetic
diversity for future generations

Provision of food

Fish, shellfish and waterfowl are important food sources for people and
wildlife

Sink services

Healthy freshwater systems possess an ability to absorb and neutralize pollution. For example, micro-organisms play a critical role in groundwater purification breaking down organic wastes, including petroleum hydrocarbons
and synthetic halogenated organic compounds

Water purification

Wetlands filter and break down pollutants, enhancing water quality

Nutrient delivery

Freshwater systems store and transport nutrients within the watershed

Soil fertility maintenance

Functional river-floodplain systems constantly renew the fertility of
surrounding soils

Land subsidence prevention

Groundwater stored in aquifers prevents land subsidence and reduces
erosion through absorption of runoff

Aesthetic, cultural and
spiritual values

Natural freshwater systems are sources of inspiration and deep cultural and
spiritual values
Adapted from: (Postel and Richter, 2003; Moss et al. 2003)

At a Watershed   03

 US$6.6 trillion. Ultimately, of course, these costing exercises are futile. All aspects of the economy depend on
functioning planetary ecosystems; these human values are
at best only rough indicators of economic importance.

1.3 Urban water management Current and emerging paradigms
Generally, water management approaches can be
viewed on a continuum that includes three distinct paradigms—supply-side, demand management, and “soft path”
(Box 4). At one end of the spectrum, supply-side
approaches seek to increase the capacity to withdraw water
through large infrastructure of dams, reservoirs, pumps
and pipelines. In the middle, demand-side management
(DSM) complements the supply-side approach and shifts
thinking to cost-effective measures that aim to reduce the
need for more supply—measures such as consumer education, efficient fixtures and conservation-based pricing. At
the other end of the spectrum, a “soft path” for water takes
the management approach beyond traditional concerns to
consider how we might redesign the underlying systems
that generate supply and demand.2
Both supply and demand strategies are used today
and the balance between them varies depending on geography, geology, culture, and economic and political
choices. Canadian water utilities employ a variety of
demand management techniques, most commonly
education programs, watering restrictions and rebates for
efficient fixtures and toilets. Nevertheless, supply-side
thinking still dominates water management decisions.
1.3.1 The supply-side approach
Historically, the challenge for water managers has not
been to accept limits, but to overcome them. In this vein,
supply-side management treats fresh water as a virtually
limitless resource, focusing policy and practice on
securing sufficient quantities of water to meet forecast
demand. Underlying this approach is the assumption
that current levels of water demand are largely insensitive
to policy and behavioural changes (Shrubsole and Tate

1994: 1; Renzetti 2003: 1). This supply-side orientation
has historically not taken full account of environmental
or economic impacts on municipal water services.
Treated water3 is often subsidized and generally not
priced to recover the costs of delivery. With few or no
incentives for water conservation, and effluent water
treatment managed primarily through direct regulation,4
supply-side approaches are reinforced as the dominant
water management paradigm in Canada (Campbell
2004). Given this history and the extensive amount of
water available in Canada, especially in comparison with
nations like Israel and Australia, it is not surprising that
this approach still dominates. However, Canada is
increasingly vulnerable to the diverse pressures that limit
supply, such as increasing demands, large-scale urbanization, multi-source pollution, global warming, and
dramatically increasing marginal costs.
Large, centralized engineering projects—dams, diversions, pumping stations and distribution systems-are
products of the supply-side approach. Continuing to
depend on expansion of these high throughput systems
puts an increasing, and often unnecessary, strain on the
economic stability of municipal water utilities and the
integrity of the local aquatic ecosystems (Shrubsole and
Tate 1994: 2; Gleick 2000: 128). Duncan Ellison,
Executive Director of the Canadian Water and
Wastewater Association suggests that “simply expanding
supply to meet an unrestrained demand just doesn’t make
sense in most cities” (Maas 2003: 8). Indeed, as more and
more money is needed to achieve each additional unit of
a given resource (a situation where marginal costs are
increasing), supply-side options are less capable of
meeting the needs for water across all sectors.
1.3.2 Demand management
Demand-side management (DSM)5 is a key component of the broad strategy of ecological modernization—
seeking innovation that can simultaneously meet
economic and environmental objectives. It is fundamentally about improving efficiency by doing more of the

Talking about a soft path for water is an approach adopted from the energy field. Amory Lovins first coined the term “soft energy path” in a 1976
Foreign Affairs article, eventually developing a planning approach that carefully calculated requirements for energy services and energy economics.
Environmental considerations were a core value in this analytical work.
3
All municipal water is treated to drinking water standards. This sector is the third highest water user in Canada behind thermal power generation
and manufacturing. Municipal water use encompasses water withdrawn for residences, public services, commercial and institutional enterprises (such
as hospitals, schools, restaurants, and government offices), and some local light industrial uses.
4
Direct regulation provides an incentive to limit harmful activities only to the extent that penalties for non-compliance are perceived as likely and severe.
Regulation does not readily encourage “beyond compliance behaviours, i.e. it does not encourage innovation (Campbell 2004: 3).
5
Curran (2000:18) defines DSM generally as “reducing the demand for a service or resource rather than automatically supplying more of the service
or resource being sought.” DSM is commonly referred to simply as demand management.
2

04   POLIS Project

 same with less (in this case, water).6 Demand management is gaining recognition in a number of resource fields
including energy, transportation and, more recently,
water. In a recent report, the National Round Table on
the Environment and Economy (2003) explicitly recommends demand management as a key strategy for mitigating environmental degradation in Canadian cities.7
In the context of urban water systems, DSM generally involves any measure or group of measures that
reduces water use, or improves the efficiency and timing
of water use. Brooks and Peters (1988: 3) specifically
define water demand management as “any measure that
reduces average or peak withdrawals from surface or
groundwater sources without increasing the extent to
which wastewater is degraded.” Pricing, education,
water-efficient technologies, and regulatory regimes that
promote efficiency and/or reuse and recycling are examples of demand-side approaches.
Opportunities for demand management abound in
areas with high levels of urban water waste, and in a
growing number of municipalities that face the limits of
existing infrastructure capacity. Increasing capital costs for
infrastructure expansion and the growing environmental
impacts of water withdrawals and wastewater discharges
exacerbate these trends. Demand management is not a
panacea, but it can help mitigate such problems in the
short term, and lay a foundation for long-term changes.
Urban water demand management recognizes that
developing new water supply sources may be far more
costly when compared with measures that can influence
consumer demand. Brooks (2003a: 9) suggests that “in
almost every sector, cost-effective savings of 20% to 50%
of water use are readily available.” These estimates are
reinforced when environmental and economic costs of
urban water services are taken more fully into account.
Adopting DSM to urban water management can help
reduce or at least cap current urban water use and wastewater production. 8 In the context of population growth
and urbanization, this means increasing per capita water
use efficiency in order to stabilize or reduce total water
use. Ultimately, DSM programs mitigate the pressures of
excessive urban water use on municipal finances, infrastructure and the aquatic ecosystems that they rely on.

1.3.3 Soft path for water
As demand management programs become more
comprehensive, long-term and integrated, they begin to
fall into a more holistic approach to water management—the soft path. Like DSM, the soft path strives for
sustainability and equity in water management by
increasing water productivity rather than seeking out
additional supplies. It also ensures that stakeholders are
engaged in decision making and explicitly recognizes
ecosystems themselves as legitimate users of fresh water
(Wolff and Gleick 2002; Brooks 2003a).
The soft path differs fundamentally from conventional (or hard path) water planning in its conception of
water demand. A soft path approach rarely views water
as the end product, but more often as the means to
accomplish certain tasks such as household sanitation or
agricultural production. With some important exceptions, the demand considered in planning projections is
not demand for water itself, but for services provided by
water. Under a soft path approach, the role of water
planning and management becomes one of a service
provider—the objective is to satisfy demands for waterbased services rather than supplying water per se.
A key feature of soft path planning is the recognition that
many existing water needs can be met with far less water, and
often with water of a lower quality, than is currently used.
High efficiency toilets, for example, reduce the amount of
water used for sanitation; there is also significant potential to
increase water productivity further by using reclaimed wastewater to flush toilets or by shifting knowledge and values to,
for example, dry sanitation systems (composting toilets) that
completely eliminate water use. Similarly, denser urban
development, smaller lawns, and less water-dependent products can dramatically reduce water needs (Gleick 2002;
Brooks 2003a; Brandes and Maas 2004: 11).
An urban water soft path complements and works
within existing water infrastructure to limit or eliminate the
need for further supply-side developments. It relies largely
on demand-side measures such as efficient technologies,
education, regulation, and the use of economic instruments
to increase the productivity of current withdrawals while
ensuring equitable access to the resource. However, demand
management itself does not generally challenge proximate

For a thorough discussion of urban water demand management, including the relationships among DSM tools and barriers to implementation, see
the first three reports in this series: Flushing the Future (2003), What the Experts Think (2003) and The Future in Every Drop (2004) published by the
Urban Water Demand Management Project, The POLIS Project on Ecological Governance, University of Victoria. All reports and project details are available at www.waterdsm.org
7
It is relevant to note, however, that the NRTEE report does not adequately consider demand management in the urban water context.
8
A wide variety of recent publications (Hawkin et al. 1999; Vickers, 2001; Wolff and Gleick 2001; Brooks 2003a; Brandes and Ferguson 2004) demonstrate that in each end-use sector effective water use (the difference between input water and the service it provides) could be cut by factors of two
to five with known, cost-effective technologies.
6

At a Watershed   05

 economic objectives or existing patterns of demand for
water; instead “it treats re-allocation of water among sectors
very carefully, and seldom by more than can be justified by
market or cost criteria” (Brooks 2003a: 10). The soft path
raises fundamental questions about water use.
Box 2: Soft path choices
"As long as basic needs are met, all remaining demands
on water are acceptable as long as they do not impair the
renewable nature of the resources and as long as allocations between both present and future generations are
equitable. The criteria do not provide guidance for how to
allocate the remaining demands; rather, they lay out
guidelines for how to decide among conflicting demands.
Because these remaining demands often conflict, a higher
degree of social value judgment will be required to set
standards or even decide which demand should come
before another.”
(Gleick 1998: 578)

Traditional methods for determining future water
needs rely primarily on long-range projections that
assume an ever-increasing demand based on extrapolating from past growth patterns. These projections
rarely consider changes in technologies, costs, prices,
customer preferences and market forces, and therefore
commonly overestimate future demand (Wolff and
Gleick, 2002: 29). Rather than forecasting future
demand based on past trends, the soft path uses an
approach to planning known as “backcasting”—planners
define a preferred future, then work backwards to find
feasible paths to reach that future situation (Box 3).
Critically important to the soft path approach is an
effective strategy to assess ecological water requirements,
and integrate these requirements into the backcasting
process (Brandes and Maas 2004). The sustainability
boundary, or volume of water required to meet basic
human needs and those of aquatic ecosystems, should be
established for the whole water system (i.e. watershed or
aquifer). Soft path principles and a comprehensive
demand-management approach can then be applied to
ensure that the remaining resource is efficiently distrib-

Box 3: Key principles of the soft path for water
1. Resolve supply-demand gaps as much as possible
through demand-side approaches. Human demand for
water beyond the basic 50 litres per person per day can be
satisfied in many different ways–not only through efficiency gains, but also through changing values, preferences and products.
2. Match the quality of the resource supplied to the
quality required by the end use. It is almost as important to conserve the quality of water as to conserve quantity. High-quality water can be used for many purposes;
low-quality water for only a few. But, happily, we only
need small quantities of high quality (potable) water but
vast amounts of low quality water.
3. Turn typical planning practices around. Instead of
starting from today and projecting forward, start from
some defined future point and work backwards to find a
feasible and desirable way (a soft path) between the
present and that future. The main objective of planning,
after all, is not to see where current direction will take us,
but to see how we can shape our desired goals in ways that
are compatible with current and future water availability.
(Brooks 2003a)

uted, and productivity maximized for not only economic
development and equitable social needs, but to ensure
that this sustainability boundary is not breached.
Despite uncertainties about the practicality and
potential of the soft path for freshwater management in
Canada and abroad, interest is growing in this alternative.9 In the words of Peter Gleick (2002: 37):
The soft path will not be easy to follow. It will
require institutional changes, new management tools
and skills, and a greater reliance on actions by many
individual water users rather than a few engineers. Yet
when compared with the growing cost to society of
continuing down the hard path, it is evident that a new
way of thinking about our scarce water resources is long
overdue (Gleick 2002: 373).

David Brooks, Director of Research at Friends of the Earth (Canada), is generally regarded as the father of the soft path for water. In the past two
years, he has prepared two reports that explore the concept of water soft paths. The first reviews the methodology of soft path analysis to determine
the extent to which the soft energy model can be applied to water. The second explores the feasibility of undertaking water soft path analysis for
Ontario. This study found that the methodology was sufficiently well developed to provide a framework for analysis and that, despite numerous gaps,
enough data is available to permit a preliminary analysis.
The best soft path analysis for any area was undertaken by Peter Gleick and his colleagues at the Pacific Institute in Oakland, California
(www.painst.org). Their sector-by-sector review of urban water use in California showed that cost-effective gains in water efficiency would eliminate
the need for any new water supply projects for the next several decades. The POLIS Project on Ecological Governance—Urban Water Demand
Management Team is currently developing a similar practical urban water soft path feasibility study and pilot project.
9

06   POLIS Project

 Box 4 A Continuum of water management
Supply-Side Approach

Demand-Management (DSM)

Soft path for Water

Philosophy

Water resources are viewed as
virtually limitless; the primary
constraint is capacity to access
new sources or store larger
volumes of water.

Water resources are viewed as finite, to
be used efficiently. Conservation is key
and economic cost-benefit analysis
guides development choices between
increased supply and managed
demand.

Water resource are viewed as finite and driven
by ecological processes. The focus is on a
fundamental re-evaluation of the way we
meet the services that water currently
provides.

Basic Approach

Reactive.

Short-term and temporary.

Proactive.

Currently, the status quo
approach, developing resources
driven by exogenous human
needs and wants.

Generally used as a secondary
approach, complementing and deferring supply-side options often until
future supplies are secured.

Long-term, based on making attitudinal
changes (which are not seen as outside the
process-not “exogenous”) and on fostering
new patterns of resource use.

When used in a comprehensive, integrated and long-term fashion, DSM
represents an incremental step towards
a broader “soft path” approach.

Fundamental
Question

How can we meet the future
projected needs for water given
current trends in water use and
population growth?

How can we reduce needs for water to
conserve the resource, save money and
reduce environmental impacts?

How can we deliver the services currently
provided by water in new ways that recognize
the need for long-term systemic changes to
achieve social sustainability?

Primary Focus

Built infrastructure

Efficiency

Conservation

Tools and Primary
Disciplines

Large scale, centralized, expensive engineering solutions.

Innovative engineering and marketbased solutions focused on any
measure that increases the efficiency
and/or timing of water use.

Encompasses the full suite of social sciences
and generally relies on decentralized distribution coupled with management strategies
aimed at ultra efficient ways of meeting enduse demand. The focus is on measures to
deliver the services provided by the resource
taking full environmental and social costs into
account, and identifying new options to
provide services associated with water use.

Examples include dams, reservoirs, treatment plants, pumping
stations and distribution systems.

Examples include low-flow technologies, drip irrigation, conservation-based
pricing, education and policies and
incentives to reduce use.

Examples include drought resistant native
landscaping, grey water reuse, ultra-low flow
technologies, and dry sanitation. In addition,
the soft path encourages new forms of urban
development (“smart growth”) and industrial
innovation (e.g. new products, changes in
agricultural practices and food preferences)
that are inherently more sustainable.

Planning Process

Planners model future growth,
extrapolate
from
current
consumption, plan for an
increase in capacity to meet
anticipated future needs, then
locate and develop a new source
of supply to meet that need.

Planners model growth and account for
a comprehensive efficiency and conservation program to maximize use of
existing infrastructure. Increasing
capacity would be a final option as part
of a least-cost approach.

Planners model future growth, describe a
desired sustainable future state (or scenario)
and then “backcast” to devise a feasible and
desirable path to that future. Sustainability
built into the economic, political and sociocultural choices made along the way.

 08 POLIS Project

Chapter 2

Ecosystem Governance
A generation goes, and a generation comes, but the earth remains forever. The sun
rises and the sun goes down, and hastens to the place where it rises. The wind goes
to the south and goes round to the north; round and round goes the wind and on its
circuits the wind returns. All streams run to the sea, but the sea is not full: to the
place where the streams flow, there they flow again.
King Solomon
Hebrew Scriptures, quoted in (Jobin 1998: 9)
Increasing demand on resources, ecosystem
complexity and scientific uncertainty pose challenges for
environment management in Canada and around the
world. In response, innovative “best practices” are
emerging to integrate ecological, economic and social
objectives. The quest for innovation has stimulated the
search for new forms of governance that will ensure that
these best practices are comprehensively implemented
(Dorcey and McDaniels 2001; Dorcey 2002).
This chapter proposes an approach rooted in what
the authors call ecosystem governance, a manifestation of
the larger need for what we term ecological governance. It
is no longer enough to simply tack minor reforms on to
existing systems and processes, as is often the case with
“sustainable development.” Instead, society must actually “develop sustainability” where new public and
private arrangements are created with ecological principles systemically embedded.
This discussion provides the theoretical foundation
for the remainder of the report.

2.1 Governance
Governance applies to the broad process of social
decision making. It includes formal government institutions but also non-governmental actors—especially business and “civil society”—that informally establish rules
of behaviour, create processes of exchange, and make
decisions that shape collective life. Governance is a broad
and encompassing concept. A context for social decision
making, it is difficult to define precisely. Stoker (1998)
explains that the term governance is used to:
• refer to a set of institutions;

• identify the blurring of boundaries and responsibilities between public and private actors tackling social
and economic issues;
• explicate the power dynamics of collective action;
• describe autonomous self-governing networks; and
• recognize the capacity to get things done beyond
government authority.
The Commission on Global Governance (1995)
defines governance as:
[T]he sum of the many ways individuals and institutions, public and private, manage their common
affairs. It is a continuing process through which
conflicting or diverse interests may be accommodated
and co-operative action may be taken. It includes
formal institutions and regimes empowered to enforce
compliance, as well as informal arrangements that
people and institutions either have agreed to or
perceive to be in their interest.
This broad structure of governance is inherently
political, and involves bargaining and negotiation, especially as it evolves over time.
Government is only part of governance, since many
decisions that affect our lives are not made by government bodies or through regulatory processes.
Corporations, NGOs, business associations and community groups all take decisions every day that can have a
direct and significant impact on broader society. The
institutions of governance mediate the relationships
between citizens, the economy and the environment,
At a Watershed   09

 and they embody the collective power of citizens to
direct the future. For example, when private companies
provide water-efficient fixtures in response to governmental policies and consumer demand—also influenced
by the activities of environmental groups—the resulting
water use system is a product of the diverse institutions
of governance and not just of the decisions and rules of
government.
Box 5: Water Governance
Water governance is “the range of political, organizational
and administrative processes through which communities
articulate their interests, their input is absorbed, decisions
are made and implemented, and decision makers are held
accountable in the development and management of water
resources and delivery of water services.”
(Bakker 2003: 5)

2.1.1 Institutional failure and in-built
‘unsustainbility’
To achieve ecological sustainability, it is simply not
possible to rely on government alone. A direct link exists
between the character of the institutions of governance
and specific results or outcomes. For example, low water
prices (a governmental decision), a lack of innovative
entrepreneurs creating new technology (a business decision), and apathetic consumers who waste water (an individual decision) can all lead to over-use of water, destructive environmental practices, over-exploitation and waste.
For freshwater resources, the symptoms of poor
governance include over-pumped groundwater sources,
depleted and degraded river flows, inefficient water use,
excessive demand, and inequitable access. In contrast,
where the institutions of “good governance” are well
developed and have sufficient capacity, opportunities
will exist to avoid these problems.
Governance includes the complex connections among
institutions, including formal constraints such as rules,
laws, constitutions, and informal constraints such as
norms of behaviour, conventions and self-imposed codes
of conduct (Berkes and Folke 1998: 5). Spangenberg et
al. (2002: 63) approach governance in a different fashion,
dividing its institutions into three types:
• identify organizations (e.g. government agencies and
NGOs),
• identify mechanisms (e.g. laws, coordination agreements, organisational rules, markets), and
• identify orientations (e.g. social and cultural norms
and ethics, perceptions of problems and the importance attached to them).
10   POLIS Project

Many of our inherited institutions have “unsustainability” built into their character. In the traditional engineering disciplines, for example, an educational framework emphasizes the use of physical capital created by
humans—with minimal consideration of “natural
capital” and ecological processes. This thinking is then
embedded in the structures and processes of water utilities. In turn, publicly-determined mandates reflect the
political expectations of increasing water demands for a
growing population. And so on. The character of this
governance can change with sufficient dialogue, incentives, planning.
Take the case of Canada’s water protection laws.
Existing water laws focus almost entirely on achieving
ambient water quality by setting standards at the end of
the pipe rather than protecting water sources on an
ecosystem or watershed basis. Water protection laws do
not include zero-discharge rules that could force
dramatic technological innovation in industries for
whom environmental externalities represent a large
economic subsidy (Boyd 2003; Pardy 2003). It has been
suggested that Canadian water law fails to address the
underlying unsustainable patterns of production,
consumption and fiscal policy that lie at the root of
water quality and water supply concerns (M’Gonigle and
Ramsay 2004: 335). As a result of the dysfunction of this
complex system of water governance, Pedersen (1993:
970) comments that “[t]o clean the water, our system
would rather impose ten billion dollars in regulatory
costs on the politically vulnerable than achieve a greater
clean up, and save money, by eliminating subsidies and
tax preferences.” Or as Morris (1999-2000) argues, failed
planning processes often result in continued degradation
of water resources despite broad policies attempting to
address social and environmental objectives.
The dominant planning framework is currently a
process of “constrained optimization.” A single objective,
as determined according to some form of monetary
benefit-cost ratio, is optimized subject to the constraints
of other secondary considerations such as environmental
protection. Excluded from this process are strategies that
optimize environmental or social objectives; instead the
focus is on choosing the least offensive outcome. The
planning frameworks of many water agencies rely so
heavily on quantitative analysis that they implicitly
promote a “social choice” that limits the consideration of
non-monetary objectives.
Another governance issue involves public participation. If environmental and social values are to be reflected
in policy outcomes, they must be incorporated in the

 planning process. Too often, however, the planning
process focuses on procedural compliance with participation requirements, rather than substantive evaluation of
environmental and social objectives. Rarely is participation used to promote a genuine discussion of core
community values; often, it becomes a tool to legitimize
pre-existing norms and objectives (Morris, 1999-2000).
At another level, land use planning and water planning are often divorced from each other, resulting in
fractured public and private decision making to the
detriment of ecosystem health. When water demand
increases following extensive residential development,
DSM may be restricted to reducing per capita water use
when, in fact, such land uses may not have been appropriate in the first place given the limited water supply in
the area (Morris, 1999-2000).

2.2 Developing sustainability - A
deeper perspective
The word “sustainability” has become part of today’s
political lexicon.10 It is questionable, however, whether
the popular phrase “sustainable development” actually
describes the process for achieving true social sustainability, rather than describing those incremental and
limited reforms that can instead support continued
economic growth. In contrast, true sustainability
demands that society create new forms of equitable
development that support a high quality of life, now and
in the future—development that really does maintain
ecological health. Firmly grounded in modern ecological
science and an awareness of political and economic
imperatives, achieving sustainability must address the
biophysical limits of the Earth and, specifically, the laws
of thermodynamics.11
Present development practices do not address these
scientific and political imperatives; the challenge is to
create the systemic changes that will (M’Gonigle

1989/90; Taylor 2000-2002: 247). Sustainable development imposes constraints on traditional development,
whereas developing sustainability liberates transformative
economic practices and the potential for innovation
associated with an ecosystem-based approach. This
requires the development of new public and private
institutions that minimize energy and resource throughputs, while creating new forms of economic welfare.12 To
achieve these goals will require that we develop a
network of adaptive institutional arrangements—the
processes of ecological governance—that will lead to an
active advance of new patterns of development.
Box 6: Sustainability
“Sustainability is a relationship between dynamic human
economic systems and larger dynamic, but normally
slower-changing ecological systems, in which
1) human life can continue indefinitely,
2) human individuals can flourish, and
3) human cultures can develop; but in a way so as not to
destroy the diversity, complexity, and function of the
ecological life support system.”
(Costanza 1991)

Four key concepts within this broader concept of
“developing sustainability” combine to offer a comprehensive approach to inform water planning. To maintain
ecosystem services, the inherent uncertainty of our current
activities that undermine ecosystem integrity must be
addressed through prevention and precaution that can in
turn ensure our economy and politics are rooted in a
sustainable consumption.13
2.2.1 Maintaining ecosystem services
Functioning ecosystems are the building blocks of
life. Beyond providing such basics as air and water,
ecosystems are the hidden underpinnings of the human

For extensive examples and discussion of the many differing definitions of sustainable development and sustainability see
http://sdgateway.net/introsd/definitions.htm. The SD Gateway on the Web site of the International Institute for Sustainable Development provides
access to the policy debate in Canada and abroad.
11
The key implication of the laws of thermodynamics is that the more energy and resources consumed by society, the more “entropy” (i.e. disorder in
the form of waste and pollution) will be created. For a detailed discussion of the implications of the laws of thermodynamics on sustainability, see
Nicholas Georgescu-Roegen, The Entropy Law and the Economic Process Cambridge, MA: Harvard University Press, 1971; Herman E Daly, SteadyState Economics: The Economics of Biophysical Equilibrium and Neutral Growth (San Francisco: W.H. Freeman, 1977); J Homberg, K.H. Robert, and
K.E. Erickson. “Socio-ecological Principles for a Sustainable Society” in R. Costanza, O Segura, and J. Martinez Alier, eds. Getting Down to Earth:
Practical Applications of Ecological Economics. Washington, D.C.: Island Press, 1996.
12
The distinction is between marginal reform of an otherwise unchallenged process of economic development (“they got the noun; we got the adjective”) to a fundamentally redirected process of economic growth to a future state for economic/ecological balance (“they get the verb; we get the
noun”). See M. M’Gonigle, “Developing Sustainability: A Native/Environmental Prescription for Third-Level Government” (1989/90) 84 B.C. Studies
65. In a similar vein, Taylor advocates a shift from “the law of nations with respect to biosphere” to “the law of biosphere with respect to nations”
Taylor, P. “Heads in the Sand as the Tide Rises: Environmental ethics and the Law of Climate Change” (2000-2002) 19 U.C.L.A. Journal of
Environmental Law & Policy 247.
13
The four concepts are not exhaustive, but together provide the reader with an idea of what needs to be “developed.”
10

At a Watershed   11

 economy. In addition to current uses, the principle of
inter-generational equity implies that the present generation holds the Earth’s resources in trust for future generations. To avoid creating an “ecological deficit” in the
future, society must conserve:
• options for future generations which require conservation of biological and cultural diversity, and limit
the use of renewable and non-renewable resources;
• environmental quality to ensure the planet is passed
on in no worse condition than when it was received;
and
• equitable access so that each generation will at least
have similar access to natural capital available in the
past (Hunter et al. 2002: 400).
In other words, do not run down the “natural capital”
underpinning the ecological economy that in turn
fundamentally supports human economy.

know” (Song and M’Gonigle 2001).
Given these inter-dependencies and uncertainties, a
central goal of applied ecological science is to maintain
ecosystem resilience, defined as “the buffer capacity or
the ability of a system to absorb perturbations” (Berkes
and Folke, 1998:6). This resilience is important because
stressed ecosystems “tend not to change gradually but in
lurches, through threshold effects and in surprises,
whereby outcomes differ from predictive models not
only quantitatively but qualitatively” (Berkes and Folke,
1998: 10). A sufficient margin of safety must be maintained by, for example, not extracting so much water that
a system is pushed to a threshold that exposes it to significant and possibly irreversible degradation when a relatively minor drought or irregular weather pattern occurs.

2.2.2 Uncertainty
The modern science of ecology is concerned with the
diversity and complex inter-dependencies in ecosystems.
Embedded within this science is the knowledge needed
to maintain functioning and healthy ecosystems. Yet
ecological inter-dependencies and the difficulties of fully
understanding the effects of human activities on ecosystems create pervasive uncertainties (Mitchell 1997: 1719,74-79; Holling et al. 1998: 352-354).
Chaos theory demonstrates how small errors in measurement can lead to actual outcomes that are very
different from those predicted. The ecological effects of
human activities may also follow a “non-linear” path. For
example, unexpected “synergistic” or cumulative effects
can produce relatively sudden, perhaps even catastrophic, changes when combinations occur, or
unknown thresholds are passed. These possibilities challenge managerial abilities, promoting the development
of a “new science,” often referred to as complexity theory
or complex systems thinking (Kay et al. 1999; Jackson
2000; Gunderson and Holling 2002).14 The rational
response to this new knowledge in an increasingly
crowded world is a change in attitude: “the world is far
larger than human knowledge will ever be; certainty is a
futile quest; respect and reverence for what we cannot
know is as empowering as the pursuit of what we can

The notion of wholeness is central to the concept of ecological integrity. As Angermeier and Karr (1994) note,
“Integrity implies an unimpaired condition or the quality or
state of being complete or undivided; it implies correspondence with some original condition.” In this context,
ecological integrity is generally used to describe the overall
condition of an ecosystem relative to that of a natural or
undisturbed system. This includes both biotic components,
such as plant and animal life, and abiotic components, such
as geological structure and hydrological processes. Rather
than focusing on individual species or processes, ecological
integrity reflects the broader structures (e.g. assemblages of
plants, landforms) and functions (e.g. sediment transport,
energy flow, hydrologic variation) in an ecosystem.
Maintaining ecosystem integrity acknowledges that “it is
the integration and interaction among the living and nonliving elements of an ecosystem that enable it to function as
a unit”
(Pardy 2003: 100).

Box 7: Wholeness and ecological integrity

The preservation of “ecological integrity” is an overarching objective to safeguard ecosystem features, such as
resilience, elasticity and stress response, to allow ecosystems
to maintain function and structure under changing environmental conditions (Higgs 2003: 122). For ecosystems to
have integrity they must have the ability to operate under
normal environmental conditions, cope with changes in

This new science is based on the implications of the interrelated theories of complexity, and does not attempt to reduce the uncertainty and
complexity inherent in complex phenomena assuming linear causality nor does it attempt to aggregate, assuming completely chaotic system. Instead,
“complex systems thinking is an explicit attempt to embrace complexity and uncertainty within decision making through the use of complexity-based
descriptive heuristics in the development of context-specific, adaptive, pluralistic and transparent planning and decision making approaches.”
McCarthy, D. 2003. Post-normal Governance: An emerging counter-proposal. Environments, vol. 31(1). For a general review see Kay et al. 1999, and
for application to ecological systems see Gunderson and Holling 2002, and for application to human social/organisational systems see Jackson 2000.
14

12   POLIS Project

 environmental conditions, and continue to evolve and
develop despite these stresses (Kay and Schneider 1994).
Box 8: Ecological integrity
“The condition of an ecosystem where the structure and
function of the ecosystem are unimpaired by stresses
induced by human activity, and the ecosystem’s biological
diversity and supporting processes are likely to persist”
Parks Canada
“An ecosystem has integrity when it is deemed characteristic for its natural region, including the composition and
abundance of native species and biological communities,
rates of change and supporting processes. Ecosystems
have integrity when they have their native components
(plants, animals and other organisms) and processes (such
as growth and reproduction) intact.”
Panel on the Ecological Integrity of Canada’s National Parks

2.2.3 Prevention and precaution
To maintain ecosystem resilience and integrity,
prevention of harm is far better than relying on remedies,
compensation or remediation after the harm is done,
especially as the full consequences of environmental
damage are rarely known and often underestimated.
With rapidly advancing technologies and the
increasing scale of economies, applying the precautionary principle has become an ecological imperative.
This principle requires that when an activity may cause
significant long-term harm to human health or the environment, absence of scientific proof of that harm should
not forestall preventative action (Raffensperger and
Tickner 1999). Precaution has an explicit scientific basis,
but it also reflects the practical limits of managing
natural systems in a changing and economically competitive world.
Central to the precautionary principle is a presumption of consequence in the face of uncertainty—the
opposite to a “wait and see” attitude (Mitchell and
Shrubsole 1997: 82). The approach is proactive, especially in the face of high risk activities, insofar as it places
the burden of proof on those who propose such actions

to show they are safe, rather than on others to show they
are unsafe. In the process, the regulatory burden of
proving harm is shifted from regulators to resource users
and polluters, demanding that such proof attain a fairly
exacting level of probability (VanderZwaag 1993:
47,48,77).
One effect of this shift in thinking is a stronger
emphasis on technological and process innovation to
avoid harm, with a focus on minimizing waste through
DSM and “clean production” that produces no effluent.
This contrasts sharply with a focus on increasing
resource supply and “end-of-pipe” regulation of waste
discharges.
Box 9: Precautionary Principle
“Environmental measures must anticipate, prevent and
attack the causes of environmental degradation. Where there
are threats of serious or irreversible damage, lack of full scientific uncertainty should not be used as a reason for postponing measures to prevent environmental degradation.”
(1990 Bergen Declaration)

Prevention shifts regulation from a negative orientation (i.e. don’t exploit or pollute beyond a certain level)
to a positive orientation that facilitates innovation and
new opportunities. The focus is moving from the traditional regulatory model of “permissive regulation” to one
of “preventative design” in decision making (M’Gonigle
et al. 1994). This preventative design approach is based
on creating new systems that are inherently “precautions” of their ecological context rather than regulatory
systems that rely on an assumed “assimilative capacity” of
the environment. For example, before waste permits and
conditions for disposal are granted, a series of hurdles
must be overcome. Before disposal into the environment
is permitted, options such as waste prevention, on-site
recycling, product reuse, destruction of hazards, and
treatment to reduce or remove hazards would all have to
be exhausted.15 This orientation has obvious implications
for the DSM strategies and the soft path discussed in
Chapter 1.

15
Central to this procedure is the role of an independent technology assessment office. This structure would encourage state-of-the-art source reduction, and government would assume the role of forcing innovation (e.g. new technologies). In this way, the regulatory approach directly encourages
preventative design. Positive economic incentives, such as direct financial and technical assistance, are used to promote the development and implementation of clean technologies. Negative economic incentives are used to minimize hazardous waste by increasing the cost of waste production,
treatment, and disposal. Models of this type of regulation include the Massachusetts Toxic Use Reduction Act, and European Contracting Parties of
the Oslo Commission (OSCOM) policy to reduce and terminate dumping of all industrial wastes into the marine environment. For a detailed discussion, see (M'Gonigle et al. 1994).

At a Watershed   13

 2.2.4 Sustainable consumption
Sustainable scale consumption is predicated on the
fundamental idea that nature is finite, and that
consumers (not just producers) have a responsibility to
alter their behaviour accordingly. Central to determining
the sustainable scale of consumption is the notion of
“carrying capacity,” defined as the “maximum load” of
production and consumption (i.e. population multiplied
by per capita impact) that society can safely continue to
impose on the environment (Wackernagel and Rees
1996: 158). As Wackernagel and Rees (1996) demonstrate in their studies of the “ecological footprint,”
Western societies vastly exceed their carrying capacity.
This footprint analysis means that the continuous
expansion of material production is not possible. A shift
to more efficient and smarter systems of production and
consumption is required. In the following chapters, we
consider how a sustainable scale of resource and energy
“throughput” directly affects how we think about the
critical unit of ecosystem functioning—the watershed.
Achieving a sustainable scale of throughput has
specific policy implications. One is dematerialization to
reduce the flow of materials and energy through society
by improving the efficiency and productivity of resource
use (e.g. low-flow toilets and fixtures). Another is substitution to replace scarce resources with alternatives. This
is exactly the point of including the soft path to shift our
economy from a focus on producing commodities to
providing services (e.g. use of rain water or reclaimed
wastewater for irrigation rather than fresh water). To
achieve sustainable consumption requires broad technological and process innovation that will increase efficiency. DSM is a prime tool to achieve this innovation.

2.3 The challenge of developing
sustainability
Institutions around the globe grapple continuously
with the elusive concept of sustainability. Historically,
economic growth and development have been equated to
increasing material and energy throughput. Holling et al.
(1998: 354) note that, in response, the “political window
that drives “quick fixes” for solutions simply leads to
more unforgiving conditions for decisions, more fragile
natural systems, and more dependent and distrustful
citizens.”
This approach was acceptable in the past when our
political and economic systems had so much open space
that they could undervalue the role of the natural environment in human prosperity. In this frontier context,
economic theory and practice took a largely instrumental
14   POLIS Project

Box 10: Sustainable consumption
“If we are to move forward toward our goal of sustainable
communities … we will need to unlock greater results
from the materials we currently consume. Many experts
believe we must learn how to get 4 to 10 times more
service out of every tonne of steel, every tonne of wood
fibre and every litre of water than we do today. This can
be done. And it will save costs as well as the environment.
We just need to make a more concentrated effort.”
(Paul Martin, Minister of Finance for Canada, 2000)
“A reduction in the volume of goods and services would
be compensated for by sharing, reusing, and recycling
goods and services, by promoting industrial ecology, and
by emphasising ways of being that require minimal material inputs. The social system would be infused with
ecological thinking, an appreciation of the fragility and
magnificence of the natural world and the sanctity of
place. In an ecological society, social wealth would be
measured in terms of eco-system health and the integrity
of the social structure: concretely in terms of high levels of
biodiversity, old growth forests, clean water, adequate
stocks of fish, and clean pollution-free, safe neighbourhoods.”
(Gale 1997: 15)

view of nature: “The dominant development paradigm
sees the planet merely in terms of resources, ‘raw materials,’ to be exploited ‘developed’ thereby ‘adding value’
and exchanged for money on the world market. This
approach aims at the maximization of production, and
disregards the destruction and degradation which attend
it” (Hayward 1994: 104; McKenzie 2002: 20).
As society bumps up against physical limits, ecological
decline accelerates and becomes more visible. The North
American Commission for Environmental Co-operation
notes that these assumptions are no longer valid as the
“prevailing emphasis on consumption—with high levels
of waste, energy use, and greenhouse gas emissions—
jeopardizes the capacity of natural resources and systems
to support future generations” (NACEC 2002).
“The main flaw of sustainable development lies in its
failure to challenge the fundamental assumptions of the
dominant development model that it seeks to replace”
(Rochette 2002). The solution lies less in incremental
reforms of existing processes (e.g. more sensitive supply
strategies) than in innovative new approaches (e.g. transformative demand strategies). This is the challenge of
moving from “sustainable development” to “developing
sustainability.” By embracing the potential of innovation

 and developing sustainability in the context of a comprehensive approach—that maintains ecosystem services,
recognizes uncertainty, is preventative and precautionary,
and promotes sustainable consumption—new possibilities
emerge. And, in embracing these possibilities, it is
important to remember that government is only one
actor within an intricate network of governance. The
challenge for government is to create and guide the institutions and incentives that facilitate this transformation.
2.3.1 Embedding nature
Natural ecological systems are modelled on selfsustaining circular systems that recycle resources. In a
Box 11: Ecological system in decline
“Anthropogenic greenhouse gas emissions have pushed
atmospheric concentrations of carbon dioxide to their
highest level in at least 200,000 years, causing climate
change. Scientists are increasingly concerned that abrupt,
unpredictable climate shifts could occur. The Earth’s protective ozone layer was badly damaged during the 20th
century by man-made chemicals. Vast areas of native
forests, grasslands, coral reefs, and other ecosystems have
been destroyed or damaged, invasive species have spanned
the planet, and industrial pollution is ubiquitous. The
majority of the world’s fisheries are depleted or declining
and large marine fish have suffered population declines of
roughly 90% since 1950. As result of the cumulative
impact of these changes current rates of extinction are estimated to be 100 to 10,000 times the rate during periods
of stasis, and are on par with the cataclysmic epoch when
dinosaurs disappeared from the planet 65 million years
ago. Climate change is expected to accelerate the decline
in global biodiversity in the decades ahead.”
(Boyd 2003)
“Swedish scientists Matts Dynesius and Christer Nilsson
report that 77 percent of the large river systems in the U.S.,
Canada, Europe, and the former Soviet Union–essentially
the northern third of the world–are moderately to strongly
altered by dams, reservoirs, diversions, and irrigation projects. They warn that, because of the extent of river modification key habitats such as waterfalls, rapids, and floodplain
wetlands could disappear entirely from some regions, extinguishing many plant and animal species that depend on
running water habitats. Perhaps the most startling finding
about the scale of human hydrological impacts is that the
weight of impounded waters at high latitudes in the
northern hemisphere has slightly altered the tilt of the
earth’s axis and increased the speed of the earth’s rotation.”
(Postel and Richter 2003: 14)

world of high resource throughput, however, economic
systems have become dependent on linear processes.
This is evident in the water context with large-scale
supply infrastructure that has encouraged high levels of
consumption. The infrastructure has created great
wealth in the past; however, in the future, the potential
lies in bringing these systems into a natural balance with
the emphasis on circular patterns of production and
consumption that “reduce, reuse and recycle.” Despite
the comprehensive and pervasive character of our natural
dependence, these concerns and possibilities are still
largely marginalized into a set of environmental
concerns. In reality, the significant opportunities exist
where we can redesign the way we conduct business, in
order to design with nature. The concept of ecological
governance addresses this situation by embedding
nature, or the environment, within the core of decision
making.
2.3.2 Water sustainability - Threats and
criteria
The scale and intensity of human activity in and
around bodies of fresh water poses major threats to the
sustainability of the aquatic environment. Municipal and
industrial extractions deplete many sources of fresh
water, while discharges of wastewater and pollution
pervasively undermine water quality. Water policy often
fails to address these cumulative impacts on aquatic
ecosystems that threaten the ecological and economic
services Canadians depend on.
Achieving water sustainability in Canada requires a
basic shift to put the ecosystem in the centre of planning,
limit the expansion of built infrastructure, address cumulative effects, and harness conservation. The next source
of “new” water is not new water at all, but dramatically
better management of the water we are already using.

2.4 Key elements of ecological governance
To develop sustainability, a critical place to start is the
immediate context for human activities: the watershed.
Historically, managers have focused on the physical environment of managing the watershed and not the human
activity affecting it. A sustainable future requires that we
begin to manage the whole system, including both
human activity and the physical watershed, with the goal
of maintaining ecosystem processes and functions.
Put another way, to safeguard the watershed,
managers must identify and understand the necessary
“green infrastructure” first, and then look at what activiAt a Watershed   15

 Box 12: Threats to freshwater ecosystem services from human activities
Human activity

Impact on ecosystems

Services/benefits at risk

High or increasing water
consumption

Increases pressure to dam and divert more
water and to drain wetlands; increases
water pollution, aquifer overpumping, and
contributes to climate change

Virtually all aquatic ecosystem values

Dam construction

Alters timing and quantity of river flows,
water temperature, nutrients and sediment
transport, delta replenishment; blocks fish
migrations

Habitat for native species, impacting recreational and commercial fisheries

Dike and levee
construction

Destroys hydrologic connection between
river and floodplain habitat

Habitat, sport and commercial fisheries,
natural floodplain fertility, natural flood
control

Excessive river diversion

Depletes streamflows to damaging levels

Habitat, sport and commercial fisheries,
recreation, pollution dilution, hydropower,
transportation

Interbasin transfers

Alters timing and quantity of river flows,
water temperature, nutrients and sediment
transport, delta replenishment; destroys
hydrologic regime; alters production and
nutrient cycling; introduces exotic species
and eliminates native species

Habitat, recreational and commercial fisheries, maintenance of deltas, productivity of
estuarine fisheries

Deforestation/poor land
use

Alters runoff patterns, inhibits natural
recharge, fills water bodies with silt

Water supply quantity and quality, fish and
wildlife habitat, transportation, flood control

Pollution - water and air

Diminishes water quality, alters chemistry of
rivers and lakes

Water supply, habitat, commercial fisheries,
recreation, human health

Overharvesting

Depletes species populations

Sport and commercial fisheries, waterfowl,
other biotic populations

Introduction of exotic
species

Eliminates native species, alters production
and nutrient cycling

Sport and commercial fisheries, waterfowl,
water quality, fish and wildlife habitat,
transportation

Draining of wetlands

Eliminates key component of aquatic environment

Natural flood control, habitat for fish and
water fowl, recreation, natural water purification

Climate-altering activities
and pollutants

Potential for dramatic changes in runoff
patterns from increases in temperature and
changes in rainfall

Water supply, hydropower, transportation,
fish and wildlife habitat, pollution dilution,
recreation, fisheries, flood control

Deltas and estuarine fisheries

Adapted from (Postel and Richter 2003: 14-15)

16   POLIS Project

 Box 13: Criteria for sustainable use of freshwater resources
“Sustainable use is defined as achieving four things simultaneously:
(1) providing all humans with access to safe, clean supplies
to meet their basic needs,
(2) sustaining healthy freshwater ecosystems that provide
socially valued ecosystem services and products,
(3) enabling the remaining water (after meeting 1 and 2)
to serve the broadest possible array of socially valued
purposes, and
(4) doing all of this in a way that does not compromise the
abilities of future generations to do the same.”
Brian Richter personal communication
in (Galloway and Pentland 2003: 9)

ties can take place around the essential green infrastructure. Then we look at the human needs, and think of
ways to meet them that are consistent with maintaining
ecosystem integrity. This is the context for ecological
governance.
2.4.1 From ecosystem management to
ecosystem-based management
The field of “ecosystem management” emerged in the
1980s to give presence in decision making to multiple
ecosystem values. Today, with greater emphasis on maintaining ecosystem integrity, a shift is occurring to
“ecosystem-based management” (ESBM) (Scientific
Panel for Sustainable Forest Practices in Clayquot Sound
1995; Song and M’Gonigle 2001) that takes the
ecosystem as the basic unit of analysis and is committed
to ecosystem integrity. With the ecosystem as a starting
point, ESBM emphasizes the need to adapt economic,
political and social processes to fit within that unit.
Instead of managing a watershed as an adjunct to the
water supply, maintaining healthy watersheds is considered a prerequisite to water management; water allocations are constrained by the larger need to ensure that
natural processes are maintained. Under ecosystembased management, human activity is situated within the
structure and functions of natural contexts—a shift that
requires humans to manage themselves to fit into nature,
not the reverse.
In the emerging field of “industrial ecology,”
economic production is designed to mimic natural
systems. Reuse and recycling are at its core—just as the
waste of a natural ecosystem (e.g. a fallen tree) becomes
nourishment for another system (e.g. course material for

new soil), so should waste from the industrial sector
become an input for another (Powers and Chertow
1997). More generally, industrial production should
build such linkages into the whole structure of industrial
design. Economic incentives and policy measures are
designed to ensure the system is cyclical by undertaking
“life-cycle assessment” of development proposals, for
example, or by encouraging new product designs that
create no waste or can be recycled into other products at
the end of their life.
These ideas are not new in Canada. And as Prime
Minister Paul Martin commented when he was Minister
of Finance, the time has come to apply them. (see Box 14)
2.4.2 Matching authority to jurisdiction
To undertake ESBM, formal jurisdictions of a
governing body should match both the geographical and
temporal scales of the problem being addressed. Many
existing political boundaries have no ecological foundations, while political processes are biased toward the
short term. Natural resources like water require institutionalized, long-term planning that can integrate
geographically through and across watersheds, and temporally into a dynamic and uncertain future.
Matching jurisdictional boundaries to the affected
geographic footprint naturally tends to re-orient decisions to facilitate consideration of environmental factors.
In some countries, a recognition of this tendency has led
to the creation of independent watershed management
bodies whose mandate is to determine ecosystem limits
to water use—source and sink services—and to create
mechanisms to live within these limits.
As will be discussed in later chapters, water basin
management (or Integrated Water Resource
Box 14: Abandoning waste
“If we are to move forward toward our goal of sustainable
communities … we will need to abandon the very concept
of waste. This will require a fundamental shift in our
thinking-away from linear models of production and closer
to the example that nature sets for us. The traditional
model takes in virgin materials at one end, creates waste
and emissions during production, and throws away potentially valuable materials after consumer use. But nature
long ago came up with a superior design. One where all
waste is reused as food or energy elsewhere. Nature’s reuse
and recycling of materials through a continuous or closed
loop system is not radical. But it is rational. And we would
do well to expand our powers of imitation.”
(Paul Martin, Minister of Finance for Canada, 2000)

At a Watershed   17

 Management—IWRM) can be accomplished by
creating a single new management body or by setting
rules for co-ordination between existing bodies.
Regardless of the specific approach, some institutional
mechanism must have authority over all hydrological
concerns in a given basin. This authority must be include
surface and ground water, water quality and quantity,
flood control, soil conservation, wetlands conservation,
fisheries, recreation, stream enhancement, dams and
reservoirs, pollution, and land uses with significant
watershed impacts, such as forestry, mining, agriculture
and urban development.
Watershed management has a local bias. Recognizing
that local people and institutions rely on and are usually
most aware of local conditions, local entities are best able
to respond to environmental feedback quickly, and tailor
solutions to these conditions. However, local bodies
must also be “nested” within higher level institutions
that hold such bodies accountable to their mandate,
while the broader agencies can co-ordinate with other
such institutions and participate in larger collective
actions where desirable. The result is a decentralized, but
co-ordinated, multi-tiered governance system that
applies the principle of subsidiarity by allocating management responsibilities to the lowest level of government or
social organization capable of effectively undertaking
that management (Hunter et al. 2002: 416).
This local management within the context of central
monitoring and accountability is, in fact, a growing
regulatory trend increasingly referred to as “democratic
experimentalism” which itself can be seen as a manifestation of a “new governance” movement.
Such an approach to governance is directed to overcoming the vertical fragmentation of higher from lower
levels of government, and the horizontal fragmentation
Box 15: Principle of Subsidiarity
“A famous formulation of [the Principle of Subsidiarity]
reads as follows: ‘It is an injustice and at the same time a
grave evil and disturbance of right order to assign to a
greater and higher association what lesser and subordinate
organisations can do. For every social activity ought of its
very nature to furnish help to the members of the body
social and never destroy and absorb them.’… [This principle] teaches that the entire will gain in authority and
effectiveness if the freedom and responsibility of the lower
formations are carefully preserved, with the result that the
organisation as a whole will be ‘happier and more prosperous.’”
(Schumacher 1999: 205-206)

18   POLIS Project

Box 16: Democratic experimentalism
Democratic Experimentalism is a new form of government
that entails decentralized power to enable citizens and
other actors to utilize their local knowledge to fit solutions
to their individual circumstances. Important in this concept
is that regional and national coordinating bodies require
actors to share their knowledge with others facing similar
problems. This information pooling increases the efficiency
of public administration by encouraging mutual learning
among its parts and heightens its accountability through
participation of citizens in the decisions that affect them. In
democratic experimentalism, sub-nation units of government are broadly free to set goals and to choose the
means to attain them. Regulatory agencies set and ensure
compliance with national objectives by means of best practice performance standards based on information that
regulated entities provide in return for the freedom to
experiment with solutions they prefer.
Source: (Dorf and Sabel 1998)

between different departments or municipalities in a
watershed. The goal is a management system that focuses
on promoting watershed health through integrated
management, and to achieve that integration by
devolving as much authority to the “lower” levels as is
consistent with achieving better results.
Given the complex constellation of existing entities—
federal, provincial/territorial, first nations, and local
governments, NGOs, associations and community
groups, business and industry—the experimentalist challenge of integration/devolution is significant. Many techniques have been developed to address this challenge,
from the use of “bridge” documents (e.g. inter-jurisdictional agreements, legally authorized coordination
managements agreements, MOUs, statements of principle) to setting “consistency requirements” across sectors.
While decentralization is the goal, senior government
leadership is critical to achieving these outcomes.
2.4.3 Adaptive management
Adaptive management is an important operational
consideration when dealing with natural resources and
ESBM. Given the complexity of a natural world that can
never be fully modelled or managed, and the inevitable
pressures generated by human uses, decision making is
always undertaken in the face of uncertainty and
dynamic change.
Adaptive management is a well-accepted management approach expressly developed to deal with
“surprises” by institutionalizing a process of continual

 experimentation and learning. Plans and policies are
always subject to modification in response to ecological
and non-ecological feedback. This informed process of
“trial and error” emphasizes provisional, reversible decision making, with careful monitoring of impacts to
refine decision making. Adaptive management differs
from conventional approaches because it addresses
uncertainty directly using the management process as a
tool to gain critical knowledge. The overall goal of adaptive management is to develop an optimal management
capacity. This is accomplished by maintaining ecological
resilience that allows the system to react to inevitable
stresses, and by generating flexibility in institutions and
stakeholders that allows managers to react when conditions change (Holling 1978; Gunderson 1999; Johnson
1999; Gunderson and Holling 2002).
Adaptive management can be viewed as an inherently
precautionary strategy insofar as it fosters dynamic
governance capable of responding to unpredictable
changes with institutional adaptability and resilience
(IUCN 2003: 3). At a monetary level, this approach is
more costly than traditional approaches because it
attempts to account for multiple variables. It is also data
intensive, and requires more co-operation across disciplines and jurisdictions, within agencies and among
stakeholders.16 Extensive monitoring of ecosystem conditions through carefully selected indicators is critical,
“[w]hat gets measured gets managed” (Hunter et al.
2002: 145). Despite potentially higher short-term financial costs, adaptive management is more economical
when all costs are taken into account, especially over the
medium and longer terms (Johnson 1999). “Flexible
social systems that proceed by learning-by-doing are
better adapted for long-term survival than are rigid social
systems that have set prescriptions for resource use”
(Holling et al. 1998: 358).
In the water management context, adaptive management has many manifestations including:
• provincial legislation and policies that require periodic reporting and planning by watershed bodies,
local governments and water utilities;
• flexible timing, quantities and allocations of water
withdrawals at the watershed level as understanding
of impacts on local biodiversity and aquatic
ecosystem health conditions change;
• implementation of certified environmental management systems (EMS), such as ISO 14001, to create

Box 17: Adaptive management
“Adaptive management as a resource technique began in
the 1970s … [it] tries to incorporate the views and knowledge of all interested parties. It accepts the fact that
management must proceed even if we do not have all the
information we would like, or we are not sure what all
the effects of management might be. It views management not only as a way to achieve objectives, but also as
a process for probing to learn more about the resource or
system being managed. Thus, learning is an inherent
objective of adaptive management. As we learn more, we
can adapt our policies to improve management success
and to be more responsive to future conditions.”
(Johnson 1999: 8)

opportunities for self-critical reflection and development of internal environmental policies; and
• disclosure requirements, and information clearinghouses supported at the federal level
2.4.4 Business and civil society roles
ESBM, the matching principle, subsidiarity, democratic experimentalism and adaptive management are
foundations of ecosystem governance. The implementation of these emerging principles, however, is primarily
of concern to governments as they attempt to arrive at
effective decisions and manage human interactions with
natural resources such as water. Leadership by all levels of
government is clearly critical for success.
Equally as important as developing sustainability and
creating an ecological governance regime is action by
business and industry, and the full engagement of
broader civil society. Participation is key to allowing a
productive system of ecological governance to emerge.
Ultimately, full engagement and a synthesis of the environment and the economy facilitates—and, in return, is
reinforced by—the development of a water “ethic.”
To support participation, many techniques have been
developed to foster a greater level of deliberative as
opposed to representative democracy. Resource decisions
inevitably involve trade-offs between economic, social
and ecological objectives, and inherently include value
judgements and competing interests. This situation
suggests the need for meaningful stakeholder participation to improve decision making and create more durable
results as stakeholders take greater ownership of deci-

Although adaptive management can be more expensive in the short term, it may prove less expensive in the long run if it leads to more effective
management.
16

At a Watershed   19

 sions. More participation also enhances implementation
and develops broader ecological awareness. The result is
often characterized as enhanced “social capital”—stronger
civic relationships of trust, goodwill and engagement
(Gunton and Day 2003; Lehtonene 2004).
A growing inventory of deliberative methodologies
indicates the need for individual citizens and groups to
have access to balanced and accurate information, time
to explore the intricacies of issues through discussion,
and power to affect decisions. Common ways to
enhance deliberation include citizen juries, study circles,
planning cells, national issues forums, town meetings,
consensus conferences, choicework dialogues, and
scenario workshops. The overarching objective of these
experimentalist strategies is to develop good governance
practices including greater transparency, accountability,
participation and representation in decision making.
Government can promote citizen participation by establishing public rights of access to information and to
judicial remedies (e.g. citizen suits/private prosecutions), or by expanding the public trust doctrine to
allow for public standing to challenge governmental
decisions that may result in substantial ecological degradation. Other institutional changes could include
support for independent watchdog organizations,
whistle blower protection, and greater resources to build
citizen capacity.
Significant participation is most effective where
citizen interest is strong. Collaborative efforts in watershed planning require ongoing opportunities to engage
“civil society.” Above all, the procedural commitment to
improve participation must be accompanied by a
commitment to substantive innovation. Otherwise, as
some have charged, participation could easily become a
“new tyranny” (Cooke and Kothari 2001).
Ultimately, better decision making results in the
harmonization of ecological, economic and social objectives. Ecological modernization promotes the idea that
these objectives can be harmonized through dramatic
efficiency improvements in production and consumption. By removing perverse subsidies, promoting
economic efficiency and conservation, re-orienting
markets and encouraging the development and adoption
of new technologies, movement towards a sustainable
scale for the economy is possible. The integration of
environmental concerns in production and consumption
is critical (Murphy 2001). Ecological modernization

Box 18: The need for public engagement
“The public, in my opinion, is miles ahead of both business
and government on water issues, at least in terms of its
alarm at the possible outcomes and its willingness to put
effort into solutions. The critical issue is to improve
communications between all three parties: civil society,
government bureaucracies, and corporations.”
Marq de Villiers in an interview in Corporate Knights 2004 Water Issue: 29

demands a broader approach to environmental policy—
one that promotes new kinds of economic growth and
competitiveness to create opportunities for profitable
and “green” innovation (Esty 1999, Murphy 2000).
Macro-economic restructuring is a central element of
ecological modernization. Gouldson and Murphy (1997:
75) describe this changing sectoral composition:
… ecological modernization seeks structural
change at the macro-economic level. It looks for industrial sectors which combine higher levels of economic
development with lower levels of environmental
impact. In particular, it seeks to shift the emphasis of
the macro-economy away from energy and resource
intensive industries towards service and knowledge
intensive industries.
Government must establish the imperative for
change and create incentives to achieve it. Many mechanisms are available to do this, from regulations that
mandate full-cost accounting, extended producer
responsibility and “polluter pays” provisions to new
processes for licensing such as the “prior justification
procedure” that ensures producers use the best emerging
technologies, and redistributive arrangements that shift
the tax burden from labour onto resource users
(M’Gonigle et al. 1994).
Developing a new ecological ethic is difficult
because it demands that we change behaviour.
Conventional education programs that focus on information dissemination fail to address the entrenched
barriers associated with changing behaviour. New techniques, such as “social marketing” are needed to address
barriers prior to program design and implementation
(Maas 2003: 15).17

The Region of Durham in Ontario has adopted this approach into its outdoor water efficiency program with notable success. The program
commencing 1997, with the region employing summer students in a community-based social marketing to work with homeowners to reduce residential lawn watering resulting in a 32% reduction in peak water demand over a three-year period (Maas 2003: 16).
17

20   POLIS Project

 Box 19: Community-based social marketing
Community-based social marketing draws heavily on
research in social psychology which indicates that initiatives to promote behaviour change are often most effective when they are carried out at the community level and
involve direct contact with people. The emergence of
community-based social marketing over the last several
years can be traced to a growing understanding that
programs which rely heavily or exclusively on media advertising can be effective in creating public awareness and
understanding of issues related to sustainability, but are
limited in their ability to foster behaviour change.
Community-based social marketing involves four steps:
1) identifying the barriers and benefits to an activity,
2) developing a strategy that uses tools proven effective
in changing behavior,
3) piloting the strategy, and
4) evaluating the strategy once it has been implemented.

Moving to a water ethic

Developing a water ethic requires reconnecting
modern society to water’s life-giving role. A water ethic
can serve as a guide in the face of complex decisions
about natural systems. Sandra Postel (1997: 185)
captures the significance of such a water ethic:
Adopting such an ethic would represent a historical
philosophical shift away from the strictly utilitarian,
divide-and-conquer approach to water management
and toward an integrated, holistic approach that views
people and water as related parts of a greater whole. It
would make us stop asking how we can further manipulate rivers, lakes, and streams to meet our insatiable
demand, and instead ask how we can best satisfy
human needs while accommodating the ecological
requirement of healthy water systems.
The river is, indeed, within us.

Source: (McKenzie-Mohr 2004)

At a Watershed   21

 22 POLIS Project

Chapter 3

Urban Water In Canada
Laws and institutions must go hand in hand
with the progress of the human mind.
Thomas Jefferson, 1786
Following the tragedies in Walkerton in 2000 and
North Battleford in 2001, the focus in Canada has been
on water quality—ensuring water is safe for human
consumption. Since 2001, water policy and management strategies have been rapidly evolving, and many
now include source protection as a priority. Other pollution-driven issues, such as the decline in aquatic species,
have also increased awareness of the need to protect
freshwater resources.
Although water quantity issues—supply and availability—receive less attention than water quality issues,
they too are of critical concern. In Perth, Ontario, for
example, area residents initiated a community-based
campaign to prevent OMYA Canada Inc. from withdrawing large amounts of water from the Tay River,
fearing it would damage the river’s ecology and potentially reduce the town’s water supply (Powell 2003: 20;
Campbell 2004: 3).
In addition to being a fundamental part of Canada’s
natural landscape, water is also critical to the economy—
representing a foundation for our high standard of
living. In 2000, Canadian business earned $1.4 billion
from water-related goods and services,18 and in 1992
Environment Canada estimated that water contributed
$7.5 to $23 billion annually to the economy. Although
this estimate is over 10 years old, it demonstrates the
significance of water to the Canadian economy. The full
value of fresh water is incalculable19 and its inherent

value is indisputable.
This chapter provides a snap shot of water quantity
and supply availability in Canada and an overview of the
institutions and legal framework that govern and manage
Canadian freshwater resources. After a brief discussion
about water availability, water use, and threats to water
resources, we explore the institutional, jurisdictional and
legal complexities associated with water management.
The extent of this complexity represents a significant
barrier. If sustainable water management is to become a
serious goal in Canada, the governance of freshwater
resources—specifically the institutions and management
approach—needs reform.

3.1 Water in Canada
This section focuses on the state of Canadian freshwater resources, with particular emphasis on the urban
context. To begin, key background information about
water availability and the limits of supply is presented in
an attempt to dispel the seemingly unshakable “myth of
abundance,” which is often cited as a root cause of the
resistance to change Canadian water use habits. Low
prices and poor pricing structures further entrench high
levels of use. The ramifications of profligate water use are
significant, and are exacerbated by the uncertain impacts
of climate change.

Water-related goods and services include a diversity of systems, equipment and services related to water supply and conservation, wastewater
management and sewage treatment. This includes manufacturing industries that produce water-disinfection systems, water clarification systems, filtration, wastewater treatment and industrial processes and storage systems. Other goods include the equipment and technologies for freshwater supply,
delivery and water handling. Services include water delivery and water handling systems, maintenance and repair, and related consulting engineering
and analytical services for freshwater, wastewater and stormwater (Statscan 2003: 31).
19
Accurately measuring and assigning economic values to environmental goods and services is a difficult (if not impossible) task. However, calculating
the value of certain services, such as providing clean drinking water, can be a useful indicator. For example, the 40,000 residents in Caledon, Ontario
rely on groundwater as a drinking water source. The replacement cost of Caledon's groundwater drinking water service (through enhanced treatment
of surface water) has been calculated at $33 million annually (Environment Canada 2004:128).
18

At a Watershed   23

 3.1.1 Myth of abundance
Compared with most other nations around the
world, Canada is well endowed with fresh water.
Encompassing approximately 7% of the world’s landmass, Canada has 9% of its renewable water and only
0.5% of the global population (Environment Canada
2003). The Great Lakes are one of the largest sources of
fresh water in the world. However, these figures are
misleading because much of Canada’s fresh water is
unavailable for human use.
Many of the country’s water sources and major river
systems are located far from where the majority of the
population lives. An estimated 12% of Canada, or 1.2
million square km, is covered by lakes and rivers, but
only 3% of that area is located in inhabited regions
(Statscan 2003). Approximately 60% of Canada’s fresh
water flows north, primarily to the Hudson Bay and
Arctic watersheds, while 85% of the Canadian population lives within 300 kilometres of the southern
Canada/U.S. border (Environment Canada 2003).
Despite the seeming abundance of fresh water associated
with The Great Lakes Basin, most of the water it

contains is unavailable for sustainable use.20
In the south where the majority of Canadians live,
water availability varies greatly from region to region.
Portions of Canada’s Atlantic and Pacific coastal areas
receive abundant rainfall (averaging between 1100 and
1400 millimetres of precipitation per year) while the
Prairies fluctuate between flood conditions in the spring
and near drought conditions in the summer, receiving
less than 500 millimetres of precipitation annually
(Environment Canada 2003).
3.1.2 Limited supply - An emerging reality in
Canada
Water scarcity is a real concern in many parts of
Canada, particularly in urban areas where the geographic
concentration of human activity creates significant
strains on existing, and limited, water resources.
Between 1994 and 1999 one in four Canadian
municipalities reported water shortages due to increased
consumption, drought or infrastructure constraints
(Environment Canada 2002). Environment Canada’s
Web site states that fresh water in southern Canada is

Box 20: Canadian precipitation 1971-2000

Since the majority of Great Lake water is not renewable (i.e. our water “capital”), only the much more limited renewable water (i.e. our water
“interest”) can sustainably be used without permanently reducing lake levels or groundwater supplies.
20

24   POLIS Project

 “heavily used and often overly stressed.” In 2001, the
Commissioner of the Environment and Sustainable
Development commented that “at the current rates of
use, the strain on the available supply of fresh water in
the Great Lakes basin may contribute to decreased water
levels, which could cause significant environmental
damage and substantial social costs” (CESD 2001:24).
Many other regions, such as the Prairie provinces and
the Okanagan Valley, face water demands that either
exceed or are approaching the limits of their natural
supply. In the Assiniboine-Red River Basin, home to
more than 1.25 million Canadians, annual stream flow is
only about 1,200 cubic meters per person, and is highly
variable from season to season and year to year (Statscan
2003). By way of comparison, the average Canadian
actually uses 1500 cubic metres of water per year.
In British Columbia, over 17% of surface water
sources have reached or are nearing their capacity to reliably supply water for extractive uses. Many groundwater
aquifers are also nearing water use capacity, with one
third of aquifers vulnerable to contamination due to low
water levels (MELP 1998: 9-12). The impacts of these
limitations are significant. In 2003 approximately 25%
of the province’s water supply systems were stressed, with
two-thirds of those systems imposing water restrictions
and 20% facing unusual or increased expenditures
resulting from drought conditions (LWBC 2004: 1).
3.1.3 Ground water - The hidden resource
Groundwater is a crucial but under-appreciated and
misunderstood resource in Canada. It is critical to satisfying drinking water needs and is a vital part of the
hydrological system and health of the environment.
Almost 10 million Canadians rely on groundwater for
daily use, and the number is growing (Natural Resources
Canada 2004a).
Groundwater use varies widely in Canada. Only
27.7% of Quebec residents depend on groundwater, while
almost 70% of those living in New Brunswick, and 100%
of the population in Prince Edward Island rely on it for
drinking water needs (Environment Canada 2004a).
In the Great Lakes Basin, about 11.5 million residents in both Canada and the United States use groundwater for domestic purposes, and it is used extensively
for agricultural and industrial purposes. Groundwater
contributes more than 50% of the flow to rivers and

streams that feed the Great Lakes, sustaining important
ecological resources, such as fisheries and wetlands
(Grannerman et al. 2000; Gordon Foundation 2004: 6).
In this region, groundwater pumping affects an entire
water basin. A recent scientific study showed that
pumping had reversed the direction of flow away from
Lake Michigan (US Geological Survey 2000).
The Great Lakes Basin is one example of groundwater resources under stress. Other areas, such as the
Fraser Valley in British Columbia, near Cache Creek and
along coastal areas in the Gulf Islands, have documented
evidence of groundwater withdrawal being greater than
replenishment (WLAP 2002). Recently, in Estevan
Saskatchewan, excessive water pumping significantly
dropped the local water table. With a recharge rate of
only 1mm to 3mm per year, the local water table is
expected to take thousands of years to fully recover
(Campbell 2004: 6).
Alphonso Rivera (2004: 6), Canada’s chief hydrologist, believes “the increase in groundwater use in the last
30 years and current trends strongly suggest that groundwater will become a more important component of
water supply in the future of Canada” (Rivera 2004: 6).
Yet the understanding and management of this resource
is insufficient in Canada.21
3.1.4 Canadians - High urban water users
A previous report examined Canadian water use in
detail.22 Canadians are intensive water users, especially in
the urban sector. In 1999, the average Canadian used
343 litres per capita per day for residential use alone.
When other municipal water use categories are
included—light industrial, commercial, institutional
and wastage-water use averages about 600 litres per
capita per day (Environment Canada 2002).
In terms of total water use,23 the Canadian average is
4,400 litres a day, or approximately 1,500 cubic metres
per Canadian each year. By comparison, these water use
levels are approximately 2.5 times the levels in European
cities with similar standards of living for residential use
and 4 times the levels for total water use (OECD 1999).
In a 2001 report, Canada ranked 28th out of 29 OECD
countries in a comparison of per capita water use (Boyd
2001). This poor showing relative to other OECD countries underscores how far Canada has to go before
becoming a leader in how water is used, as opposed to

For a detailed discussion of groundwater management across provinces see the forthcoming report from the Walter and Duncan Gordon Foundation
Buried Treasure—Groundwater Permitting and Pricing in Canada by Linda Nowlan.
22
See UWDM Project's Report 1—Flushing the Future?
23
In addition to municipal use, total water use includes other sectors such as agriculture, mining and power production.
21

At a Watershed   25

 world, with households paying
Box 21: OECD Comparison
how much.
from 20 to 60 cents per thousand
Within Canada the amount of
litres of water, or 0.02 to 0.06 cents
water used ranges enormously from
per litre (Environment Canada
city to city. A survey of major
1996). “On average they are less
Canadian cities found a four fold
than half those in most OECD
difference between high and low
countries and roughly cover half
water users. Winnipeg, Edmonton
the costs of supplying water and
and Waterloo use less than half the
treating waste water” (OECD
amount of water used in Montreal,
2004: 71).
Calgary, Hamilton or St. John’s
Pricing structure is an equally
(Brandes and Ferguson 2003).
important consideration influWhile Canada’s high water use
encing water use. In Canada,
is of significant concern, the fact
volume-based and flat-rate structhat it continues to rise is of even
tures are the two main types of
greater concern. Over the past 20
pricing structures. With a volumeyears, water use in Canada has
based pricing structure, cost is
increased by 25%—in contrast
based on volume used. It is imporwith many other developed
tant to note, however, that the rate
nations, including the United
Freshwater
Abstractions,
Boyd
2001
structure can be increasing,
States where overall water use has
decreased. The upward trend in Canada has continued decreasing or constant as water use increases, making the
throughout the 1990s, with total residential water use per unit cost of water higher, lower or constant as more
increasing 21%, and total municipal water use increasing volume is used. With a flat-rate structure, consumers are
6% (Environment Canada 2001a; Brandes and Ferguson charged a fixed amount regardless of the volume used.
Flat-rate is the most common pricing structure in
2003).
Canada, used by 56% of utilities (Environment Canada
2001a). Canadian municipalities often prefer this
3.1.5 Low prices, high demand
Canadians are extravagant water users for many method because it is perceived as simpler for both the
reasons—insufficient consumer awareness of water customers and administrators.
In 1999, Canadians charged with a volume-based
issues, lack of incentives (e.g. rebates for efficient
fixtures), consumer resistance to new technologies (e.g. pricing structure used an average of 269 litres per person
low-flow toilets), and out-dated regulations (e.g. per day. In contrast, those paying a flat rate used 457
plumbing and building codes). The North American litres per person per day—70% more water than
fondness for expansive lawns and historical habits of customers with volume-based pricing (Environment
excessive water consumption also contribute to over use. Canada 2001a). The OECD has repeatedly criticized
While the list of reasons is extensive, many observers Canada for failing to put economic instruments into
credit the myth of abundance as the primary culprit, practice to manage water. In its 2004 environmental
performance review of Canada the OECD noted that:
with low water prices simply reinforcing the myth.
Historically, water prices were low due to government “user fees still cover only part of the cost of delivering
grants and incentives for infrastructure development water services, while fee structures generally do not
encourage conservation” (OECD 2004).
aimed at ensuring public health and encouraging
The federal government’s Green Plan suggested “the
housing developments and industrial growth (Loudon
1994: 235; Loudon 1994a: 249). A growing number of key to conserving water is paying a fair price for the
authorities now recognize that low water prices are no water we use. If we pay more, we will use less and we will
longer in the best long-term interests of Canadian be able to raise the funds needed to build and maintain
society. In fact, low prices encourage wasteful and exces- our water supply and treatment systems.” In comparison
sive use, artificially increase demand, provide little incen- to voluntary methods such as education campaigns,
tive for efficiency improvements and make overcapital- “[p]ricing systems may have a more profound and longlasting effect on individual behaviour than moral
ization almost inevitable (Tate 1997: 47).
Canadian water is the cheapest in the industrialized suasion, and will eliminate the possibility of inequity
26   POLIS Project

 Box 22: Canadians use more water and pay less for it

water is returned to the river,
water quality can be affected due
to limited dilution. Summer
flows in the Grand River system
in southern Ontario, for
example, contain up to 40%
effluent from wastewater treatment facilities (Sproule-Jones
2003). Municipal wastewater
effluent is the largest source of
effluent
discharged
into
Canadian waters, and it will
continue to increase with
continued population growth
and urbanization (Environment
Canada 2001). Discharged
effluent contains residues of
Source: CESD 2001: Chapter 1, Section 3. human waste, debris, nutrients,
pathogens, endocrine disrupting
between those who voluntarily change their behaviour in substances, unmetabolized pharmaceuticals, ingredients
response to education and those who do not” (CRM from households and personal care products, and other
1996: 2,4).
potentially toxic chemical contaminants (Pollution
In European cities people pay more for water, and Probe 2004: 22).
utilities generally employ an increasing volume-based
High and increasing urban demand leads to more
water pricing structure, with prices getting progressively withdrawals from source waters and encourages largehigher as volume increases. This practice is guided by the scale supply infrastructure, such as dams and reservoirs,
principle that a certain level of water is required to meet with significant long-term effects. Municipalities are
basic human needs, and any additional water is consid- responsible for 12% of total water withdrawals in
ered a luxury (OECD 1999). In Canada, however,
Canada. Impacts are concentrated geographically and
current water prices and pricing structures do not gener- add to other cumulative factors, such as urbanization
ally reflect the relative importance of this resource. The and point and non-point source pollutants that heavily
Canadian Council of Ministers of the Environment has impact the aquatic and riparian environment.
even stated that “pricing policies in most municipalities Collectively, Canadians dump about 300 million litres of
actually discourage efficient use of water” (CCME used motor oil into Canada’s waterways each year
1994). Pearse (2002: 15-3) argues that, in Canada, through urban runoff—more than seven times the
“water is regarded as a free good, and is used liberally and amount of oil spilled during the Exxon Valdez disaster
often wastefully. There is no incentive to economize, or (de Villiers 2000).
even to fix leaks.”
Other direct impacts from high levels of source water
withdrawals include physical changes of watercourses and
3.1.6 Environmental impacts of high use
ecosystems. These impacts disrupt the hydrological cycle,
Urban development and high water use in urban damage stream habitat and impair ecological function due
areas alter the hydrological cycle and place increasing to changes in flow and temperature of water. High levels of
demands on related infrastructure and services. Changes withdrawal (including over-pumping) also introduce
in the hydrological cycle can lead to flow and sediment exotic parasites and organisms, and can cause irreversible
regime changes, geomorphological changes, impaired aquifer depletion and saltwater intrusion (Gleick 1998;
water quality, reduced biodiversity and overall degrada- Postel 2000: 943).
tion of water resources (Environment Canada 2004).
Aquatic habitats and freshwater species are among
Over 22 million Canadians live in river basins where the most endangered and threatened ecosystems in the
humans use 10% or more of the stream flow in some world (World Resources Institute 2000). The American
way (Campbell 2004). Even when most of the used Fisheries Society estimates that 354 species of fish in
At a Watershed   27

 North America are at risk, primarily due to habitat
destruction through the excessive use and mismanagement of water (Postel 1994: 13). Gleick (2003: 1524)
reports that 27% of all North American freshwater fauna
are threatened with extinction. High levels of human
water use amplify the stress on this already overburdened
and critical ecosystem.
3.1.7 Canada’s aging supply infrastructure
High urban water use also increases infrastructure
costs. As water demands increase, the cost of maintaining existing infrastructure goes up, as do the costs for
infrastructure expansion and future maintenance.
Modern water and wastewater systems are the most
capital intensive of all public works—with estimates of
unmet water and wastewater infrastructure ranging from
$23 to $49 billion (NRTEE 1996; Environment Canada
2003a). The National Round Table on Environment and
Economy (1996: 10) estimates that “under current
pricing regimes, new capital demands for water and
wastewater infrastructure will exceed $41 billion by the
year 2015.” Much of the water supply infrastructure in
Canadian cities is over 50 years old, and a growing population and high water use put further stress on this aging
infrastructure.
Currently, provincial and federal governments subsidize urban water and wastewater infrastructure in
Canada. Most water and sewage utilities, especially in
larger urban cites, do not adequately account for the full
costs of maintenance and operation, let alone capital or
environmental costs (Pearse et al. 1985; NRTEE 1996;
Renzetti 1999; O’Connor 2002). In the Niagara
Region—a typical water utility in Ontario—the estimated range of unaccounted costs for 1998 is $10
million to $35 million, or between 16 and 55% of the
operating budget (Renzetti 1999: 20).
Beyond the existing capital shortfall and maintenance
and operations deficit, other factors, such as higher water
treatment requirements, also increase costs
(Environment Canada 2004: 37). Costs are increasing as
a result of recommendations from the Walkerton inquiry
(O’Connor 2002). As municipalities use lower quality
sources of water due to depleted high quality sources, they
also face the costs of new technologies. Lower quality
water sources require more complex treatment systems
that consume more water, creating a self-reinforcing and
wasteful spiral (Environment Canada 2004: 37).
The combination of crumbling infrastructure, the
costs associated with increasing quality requirements and
the inaccessibility of new water sources, suggest that
28   POLIS Project

urban water management can no longer function as it
has in the past. Fundamental change is required in water
management and in how Canadian utilities deal with the
built and natural infrastructure. For many regions,
current overall water use levels cannot be increased,
implying that additional water needs associated with
population and economic growth must be met through
efficiency measures and alternative water sources, such as
rainwater or recycled water.
3.1.8 Climate Change: The certainty of
uncertainty
The full impacts of climate change are uncertain, but
it will stress water supplies in Canada, making existing
supply problems even worse (Campbell 2004). A recent
Environment Canada report indicates that climate
change will exacerbate water shortages throughout the
country. Although, historically, droughts were most
frequent in the southern Prairies, many climate experts
agree that “climate change may increase [drought]
frequency, duration and severity in all regions of the
country”(Environment Canada 2004: xii).
Regional impacts will vary widely (see Box 23).
Predicted impacts on the Great Lakes include further
drops in water levels of between 0.5 and 1 metre due to
increased evaporation and decreased runoff (Farid et al.
1997: 74). In the Prairies, the implications are potentially disastrous. Temperature increases during the last 75
years have led to a 40% reduction in flow in many
Alberta Rivers (Schindler 2001: 18). This reduction in
water availability will continue to have a direct impact
on many western cities such as Calgary, Edmonton and
Regina. Glacier recession and thinning due to climate
change will also reduce other western rivers, such as the
Fraser, Columbia and Saskatchewan-Nelson rivers
(Schindler 2001: 18). There is no end in sight.
Groundwater supplies will be affected across Canada,
especially shallow, unconfined aquifers that contain the
highest quality groundwater and provide important
sources of potable water and water for livestock (Natural
Resources Canada 2004: 6). Timing of precipitation and
drought conditions strongly affects the rate of groundwater recharge, therefore increasing their sensitivity and
vulnerability to climate change.
Regions already under stress are most vulnerable to
the effects of climate change. An obvious example is the
Pallister Triangle in the southern Prairies, where drought
and severe annual soil moisture deficits are recurring
concerns (Natural Resources Canada 2004: 4). Even
Ontario, generally viewed as a water-rich province, suffers

 frequent water shortages (Dolan et al. 2000). In British
Columbia, another water-rich province, more than 17%
of surface water resources are at or near their supply
capacity for extractive uses (MELP 1998). The increasing
range of these water stressed areas suggests the broad
effects that climate change will have throughout Canada.
Shrinking water supplies are a critical concern, but so
are extreme events such as flooding, which are associated
with changing weather patterns. Flooding can directly
affect freshwater supplies by damaging infrastructure
and contaminating water supplies, and indirectly by
changing patterns of groundwater recharge
(Environment Canada 2004).
Climate change also affects demand—human and
environmental. Warmer temperatures and drier conditions due to climate change will further increase water
demand in many regions (Natural Resources Canada
2004: 7). Agricultural and domestic demands will
increase for irrigation, gardening and lawn watering, and
drinking water (Natural Resources Canada 2004: 8).
In general, a high level of uncertainty exists, and will
likely always exist, regarding the impacts of projections
of climate and hydrological change at the local management level. Given the uncertainties and the potential
impacts of climate change, common recommendations
or suggested strategies include: improved planning and
preparedness for droughts and severe floods, improved
water quality protection, enhanced monitoring efforts
and water conservation measures (Dolan et al. 2000;
Cohen and Miller 2001; Schindler 2001; Environment
Canada 2004; Natural Resources Canada 2004).
These recommendations are considered “no-regret”
options that would benefit Canadians irrespective of
climate change impacts. The International Panel on
Climate Change (IPCC 1996) urges water managers to
begin “a systematic examination of engineering criteria,
operating rules, contingency plans and water allocation
policies” and states with “high confidence” that “water
demand management and institutional adaptation are
the primary components for increasing system flexibility
to meet uncertainties of climate change.”

3.2 Legal and institutional framework
for fresh water in Canada
With a multitude of agencies and departments
sharing authority, water management in Canada has
been described as “a bewilderingly complex administrative galaxy.” It is “a true patchwork of authorities and
responsibilities inherited from days when water was
taken for granted, and other resources, such as timber,

minerals and fish, were the main concern” (Campbell
2004: 7). Water management cuts across departments
such as environment, natural resources, agriculture,
health, public works and infrastructure and varying
jurisdictions at municipal, provincial, territorial and
federal levels of government.
Although water is not specifically mentioned in the
Canadian Constitution, as a natural resource it is a
primary responsibility of provincial and territorial
governments. Urban water management is typically delegated to local governments and water utilities, and the
federal government’s role is less direct. The federal
government does still have an important role promoting
national standards and guidelines, providing infrastructure funding and supporting research and data collection.
3.2.1 Federal government
Constitutionally, federal authority relating to fresh
water includes navigable waters, pollution prevention,
shared waters (both national and international boundary
waters), commercial fisheries and fish habitat, and water
on First Nations’ land and in the northern territories.
Within the federal government, responsibilities for freshwater are fragmented. For example, 19 departments and
agencies are represented on an interdepartmental assistant deputy ministers’ committee on fresh water (PRI
2004: 2).
The federal government has clear jurisdiction over
fresh water in a few broad areas. In particular, it regulates
the release of toxic substances, manages activities that
impact and potentially harm fish habitat, ensures rivers
remain navigable, and manages the water on federal lands.
The federal government also has some responsibility for
waters that cross international borders and provincial
boundaries. The Government of Canada has an agreement with the United States to collectively manage international waters, most notably through the International
Joint Commission. Federal authority over criminal law
and the “peace, order and good government of Canada”
(POGG) has been interpreted to give Parliament
authority over the environment (including water) where
federal laws regulate matters of national importance.
In the urban context, the federal government has
limited involvement. However, it can directly influence
water use and management through infrastructure
funding policies. Federal money is substantial for infrastructure, upgrades, or replacement and expansion.
Fiscal policies that link grants to conservation planning
and/or demand management requirements can be
powerful tools to promote efficient water use and reduce
At a Watershed   29

 Box 23: Potential impacts of climate change on water resources
Region

Potential Change

Associated Concerns

Yukon and coastal
British Columbia

• Increased spring flood risk, impacts on river • Reduced hydroelectric potential, ecological
flows caused by glacier retreat and disappear- impacts (including fisheries), damage to infrastructure, water apportionment
ance

Rocky Mountains

• Increased risks of flooding and avalanches
• Rise in winter snowline in winter-spring,
possible increase in snowfall, more frequent • Ecological impacts, impacts on tourism and
rain-on-snow events
recreation

Prairies

• Changes in annual streamflow, possible large • Implications for agriculture, hydroelectric
declines in summer streamflow
generation, ecosystem and water apportionment
• Increased likelihood of severe drought,
• Losses in agricultural production, changes in
increasing aridity in semiarid zones
land use
• Increases or decreases in irrigation demand
and water availability

Great Lakes Basin

• Possible precipitation increases, coupled with • Impacts on hydroelectric generation, shoreline
increased evaporation leading to reduced
infrastructure, shipping and recreation
runoff and declines in lake levels
• Ecological impacts, increased water loss
through evaporation and impacts on naviga• Decreased lake-ice extent, including some
tion
years without ice cover

Atlantic

• Decreased amount and duration of snow
cover

Arctic and Subarctic

• Thinner ice cover, 1 to 3 month increase in
ice-free season, increased extent of open
water

• Smaller spring floods, lower summer flows·
Implications for spring flooding and coastal
erosion
• Changes in the magnitude and timing of ice
• Ecological impacts, water apportionment
freeze-up and break-up
issues, hydroelectric potential
• Possible large reductions in streamflow
• Loss of potable water and increased water
conflicts
• Saline intrusion into coastal aquifers

• Increased variability in lake levels, complete
drying of some delta lakes

• Ecological impacts, impacts on traditional
ways of life, improved navigation, changes in
viable road networks
• Impacts on ecosystem and communities

Source: (Cohen and Miller 2001; Natural Resources Canada 2004)

water demands. Proposals for new infrastructure could
be contingent on preparing an effective demand
management plan that explores least-cost alternatives,
and on implementing education, metering, pricing and
regulations to promote conservation. More directly,
grants and funding could be used to promote conservation by funding specific demand management programs,
such as exists with the Federation of Canadian
Municipalities “Green Infrastructure Funds” program.
30   POLIS Project

Significant federal legislation and policies

The federal government possesses powerful legal
authority and tools to protect aquatic ecosystems.
Sufficient legislation exists to protect against damage
caused by infrastructure expansions, excessive withdrawals and pollution discharges. However, government
is often criticized for a lack of effective enforcement. The
Parliament’s Standing Committee on Environment and
Sustainable Development concluded in 1998,

 Box 24: Selected federal and provincial water related laws, strategies and plans
Legislation

Strategies, plans and programs

Federal government

2002 amendment to International Boundary
Waters Act
1999 Canadian Environmental Protection
Act (Part 7, Division 2, Section 120-121)
1997 Oceans Act
1987 Federal Water Policy
1970 Canada Water Act (R.S. 1985, c. C11)

2002 Oceans Strategy
2000 National Programme of Action for the
Protection of the Marine Environment from
Land-based Activities
Five strategies (water pricing, science leadership,
integrated planning, legislation, public awareness)
1994 National Action Plan to Encourage
Municipal Water Use Efficiency

Alberta

1996 Water Act

2003 Water for Life Strategy
2001 Municipal (Drinking Water) Policies and
Procedures Manual

British Columbia

Water Act
Drinking Water Protection Act

2002 Living Rivers Strategy
2002 Action Plan for Safe Drinking Water
1999 Freshwater Strategy
1997 Water Conservation Strategy

Manitoba

2002 Drinking Water Safety Act
2003 Manitoba Water Strategy
2000 Water Resources Conservation and
Protection and Consequential Amendments
Act

2003 Manitoba Water Strategy

Newfoundland and
Labrador

2002 Water Resources Act

Multi-barrier Strategic Action Plan

Nova Scotia

2000 Water Resources Protection Act
1995 Environment Act

2002 Drinking Water Strategy

Ontario 2002

Nutrient Management Act
2002 Safe Drinking Water Act
2002 Sustainable Water and
SewageSystems Act

Quebec

1999 Water Conservation Law
1972 Environment Quality Act
1964 Watercourses Act

2002 Quebec Water Policy
2002 Mining and metal manufacturing
1993 Pulp and paper mills

Saskatchewan

2002 Water Regulations under the 2002
Environmental Management and Protection
Act

1999 Water Management Framework

Northwest Territories

1992 Northwest Territories Waters Act

Framework for Management of Drinking Water
Quality

Yukon

1992 Yukon Waters Act
(OECD 2004: 55)

At a Watershed   31

 “Environment Canada and indeed some provinces are
not enforcing environmental laws when they could and
should. This failure to act is of deep concern” (SCESD
1998).
In particular, the Canada Water Act, the Fisheries Act
and the Canadian Environment Protection Act are useful
but underutilized federal tools for sustainable water
management in Canada.
Canada’s Federal Water Policy was adopted in 1987
(Environment Canada 1987). Its two principle objectives are:
1. to protect and enhance the quality of water, and
2. to encourage the efficient and equitable use of fresh
water in a way that can meet the social, economic, and
environmental needs of present and future generations.
The Policy established goals and strategies for water
management, and included a series of federal government commitments, including a central commitment to
promote realistic water pricing that charges the true
value of the resource and costs of its delivery. This policy
has yet to be acted on. The Federal Water Policy has the
potential to drive the federal position on freshwater
management; however, a substantial reduction in staff
and budgets of federal water departments and a general
lack of follow-through has led some observers to question the federal government’s capacity to administer even
a modest water policy (Pearse and Quinn 1996: 339;
Boyd 2003; Brandes and Ferguson 2004: 50).
Despite inaction on national water policy, recent
developments suggest that the federal government—
Environment Canada in particular—is becoming more
active in water management. At the 2002 World Summit
on Sustainable Development, the federal government
agreed to complete an integrated water resource management plan by 2005. Environment Canada also recently
created a new Sustainable Water Use Branch. Although
this new branch is currently in the process of developing
its mandate, it could serve as an authoritative clearinghouse for research and best practices in water management. It is also working with other departments and
agencies to build capacity for demand management, and
to link infrastructure grants to demand management
plans. Whether or not the Sustainable Water Use Branch
will certainly have a significant impact remains to be seen,
but the new branch will require sufficient resources, staff
and training, to support a broader federal commitment to
water sustainability as a national priority.

32   POLIS Project

Box 25: Significant federal legislation to
protect aquatic ecosystems
Under the Canada Water Act, the Minister of the
Environment can enter agreements with provincial governments to restore and protect bodies of water of national
interest. The Act also authorizes the Minister to undertake
research and collect data to develop comprehensive
management plans for nationally significant waters, in cooperation with provinces that have an interest in those
waters. If the provinces cannot agree on management
plans for federal, inter-jurisdictional, and international or
boundary waters, the Act requires the Minister of the
Environment to develop and carry out those plans without
the provinces.
Provisions of the Fisheries Act allow the federal government to ensure that sufficient flows are maintained in
rivers and streams to protect fish and fish habitat, particularly from the operation of dams and other obstructions.
Sections 20 through 26 of the Act give Fisheries and
Oceans Canada the power to require minimum water
flows, the construction of fishways or fish ladders and/or
the removal of obstructions. Water quality can also be
protected through Section 36 which prohibits the
discharge of harmful substances into waters used by fish.
The Canadian Environmental Protection Act, administered jointly by Environment Canada and Health Canada,
mandates the federal government to protect the environment and human health from the use and release of toxic
substances, pollutants, and wastes. Health Canada is
responsible for protecting Canadians against health risks
and the spread of disease carried by water, and plays a key
role in developing guidelines for drinking water quality.

Bulk water exports

International trade agreements and water exports are
increasingly of concern to Canadians. Water shortages
faced by some regions of the world, including the United
States, has brought considerable attention to Canadian
freshwater resources. Statements such as “the wars of the
twenty-first century will be fought over water” made by
the vice-president of the World Bank and Chairman of
the World Water Commission add tension to concerns
about water export (de Villiers 2000: 15). International
trade agreements such as NAFTA, and organizations
such as the WTO, amplify Canadian worries about loss
of sovereignty over water resources and the inability to

 “turn off the tap” once trade has begun.25
The 1987 Federal Water Policy stated that Ottawa
would “take all possible measures within the limits of its
constitutional authority to prohibit the export of
Canadian water by interbasin diversions” (Environment
Canada 1987: 2, 19). Despite this claim, proposals to
export bulk water from Canada by Sun Belt Water Inc in
British Columbia, the Nova Group in Ontario and the
McCurdy Group in Newfoundland have forced the
federal government to take action (Boyd 2003: 58). Due
to significant debate about the federal government’s
jurisdiction over decisions about water, 26 government
opted not to ban bulk water export directly. Instead, the
government acted indirectly (Thompson 1987; Saunders
1995; Boyd 2003:58), amending the International
Boundary Water Treaty Act to prohibit bulk water
removals from boundary watersheds (principally the
Great Lakes) and promoting an Accord for the Prohibition
of Bulk Water Removal from Drainage Basins (Campbell
and Nizami 2001: 8; Boyd 2003: 58). By voluntarily
signing the Accord, provinces and territories committed
themselves to enact legislation that bans the export of
bulk water from their respective jurisdictions. Currently,
only New Brunswick is without a law banning bulk
water exports. However, existing interbasin diversions—
a form of bulk water export—are considered to be
“grandfathered” and not subject to reversal
(Environment Canada 2004: 6).
The most significant challenge facing Canadian laws
and policies governing bulk water exports is NAFTA 27
and the considerable controversy over what extent
NAFTA applies to all “goods” (Saunders 1995: 1182;
Campbell and Nizami 2001: 7). The Government of
Canada suggests that water in its natural state is not a
“good” (DFAIT 1999). On the other hand, the Council
of Canadians and the U.S. government argue that once
water is traded between Canada and the United States,
NAFTA applies (Boyd 2003: 60).
Due to the complexity of this issue, and the unpredictable nature of international arbitration panels,

which are not bound by precedents, it is difficult to
ascertain whether or not NAFTA applies to water
exports. Nonetheless, NAFTA does influence water
policy and may even constrain Canada’s ability to
restrict water exports (Campbell and Nizami 2001:
16). “At a minimum, there is a substantial risk that
NAFTA applies to Canadian water” (Boyd 2003: 60).
Existing laws such as British Columbia’s Water
Protection Act could be deemed to violate investor
rights and the potential outcome could see the B.C.
government having to pay $15.75 billion in damages in
one case alone (Boyd 2003: 56). “Despite government
claims to the contrary, NAFTA unquestionably restricts
Canada’s ability to manage our fresh water, although
not to the dramatic extent suggested by some critics”
(Boyd 2003: 64).
The federal role and mandate - The Great
Lakes example

The international nature of the Great Lakes has
often provided a unique legislative challenge. Two
provinces and eight states border the lakes and, as a
result, addressing both water quantity and quality
issues has been heavily influenced by federal legislation
and a number of interjurisdictional agreements (Powell
2003: 22). At least nine pieces of federal legislation
establish responsibilities for the federal management of
fresh water in this area. A number of agreements, policies, and programs further articulate those responsibilities. Six federal departments play an active role in the
government’s commitment to a safe and secure water
supply in the basin. Environment Canada, as the lead,
is the most active. Other departments are Fisheries and
Oceans, Health Canada, Natural Resources Canada,
Agriculture and Agri-Food Canada, and Foreign Affairs
and International Trade (CESD 2001 Chapter 1
section 3).
International treaties and interjurisdictional agreements also play an important role and further complicate
the situation in the Great Lakes Region. Recent federal

Canada is already exporting water in bulk to the United States. For example, Greater Vancouver water district (by pipeline), Clearly Canadian Ltd.
(by tanker truck), and although it is not currently happening, a water export licence from B.C. to the U.S. exists for Alpine Glacier Water Inc (by tanker).
Water is also exported by pipeline from Manitoba to North Dakota, from New Brunswick to Maine and from Alberta to Montana to supply American
communities near the border (Boyd 2003: 55).
26
Then federal environment minister, David Anderson, told Newfoundland and Ontario that the federal government has no jurisdiction to make decisions about provincial resources, citing the long-standing position that the federal government does not have the constitutional ability to address
provincial resource issues. On the other hand, some legal experts suggest “Parliament can pass laws regulating export of water from Canada”
pursuant to its power over international trade, just as the federal government regulates energy exports (from provincial natural resources) under the
National Energy Board Act (Boyd 2003: 58; Thompson 1987).
27
For a useful review of NAFTA as it pertains to Canada’s fresh water see Campbell K. and Nizami Y. 2001 “Security or Scarcity? NAFTA, GATT and
Canada's Freshwater.” West Coast Environmental Law available at http://wcel.org/resources/publications/default.cfm
25

At a Watershed   33

 amendments28 to the International Boundary Water Treaty
Act (IBTWA) are particularly relevant to the Great Lakes
Basin (see 3.2.5 below). In December of 2001, the
IBTWA amendments by the Government of Canada
prohibited the bulk removal of boundary waters from
the basin in which they are located. The amendments
also require people to obtain licences from the Minister
of Foreign Affairs for water-related projects that affect
the natural level of flow of waters on the U.S. side of the
border (Powell 2003: 24). Other examples of national
and international agreements that affect the basin
include the Great Lakes Water Quality Agreement
between Canada and the United States, and the federal
government’s agreements with Quebec and Ontario and
its own Great Lakes and St. Lawrence River ecosystem
initiatives.
The Great Lakes example demonstrates that water
management in Canada involves a wide variety of
departments and institutions, even for one level of
government. Given this complexity, the need for a
comprehensive and coordinated approach is obvious.
3.2.2 Provincial and territorial governments
The provinces and territories have primary responsibility for water management in Canada. The provinces’
power to create laws regulating water comes from
specific clauses in the constitution assigning them jurisdiction over “property and civil rights” and “the management and sale of public lands.” Water is traditionally
regarded as a form of property, and the term “public
lands” includes water (Pearse et al. 1985). Within this
constitutional framework, provinces are the lead jurisdiction for setting policy, legislating prices, permitting all
uses and managing water sources. Provinces generally
devolve much of the management of urban water to
municipalities, especially in larger urban centres.
However, most municipalities, like any other major user,
are still required to obtain a permit from the province to
take water.
Provincial governments deal with water through a
variety of different ministries and departments,
including Environment, Municipal Affairs, Natural
Resources, Fisheries, Infrastructure, Sustainable
Resource Development and Health. Other departments
are often still involved, adding to the complexity. In

Manitoba, however, the province opted to concentrate
water-related issues in one department, a Water
Stewardship Department. This amalgamation of all
water-related issues represents a commitment to ensure
water resources are managed in a co-ordinated and
comprehensive way (Manitoba Government 2004).
Withdrawing and allocating water

All provinces require permits or licences to withdraw
surface water. The detailed process for assessing and allocating permits varies across the country by province. In
Ontario, for example, the Ontario Water Resources Act
(OWRA) regulates water takings; in British Columbia,
the Water Act and Water Protection Act provide the basic
regulatory framework for water management.29
Although statutory rules generally govern water allocation in Canada, many underlying legal doctrines still
influence water allocations (Percy 1988; Nowlan 2005):
• riparian rights, where a landowner retain rights
related to water quality/quantity for domestic use is
still applies in Ontario and the Atlantic provinces;
• prior allocation, where a licensee acquires rights to
water based on the date of application, is used in
the western provinces of British Columbia, Alberta,
Saskatchewan and Manitoba;
• rules based in the civil code are used in Quebec;
and,
• the authority management approach is used in the
northern territories of the Yukon, Nunavut and the
Northwest Territories.
The current surface water licensing approach in
Canada is oriented to regulating consumptive use of
water rather than ensuring instream needs are met.
Maintaining natural flows for the protection of ecosystems, wildlife habitat, fisheries, or traditional uses is, at
best, a secondary consideration. The limited environmental protection that does exist is not required, and
instead, relies on the discretionary power of decisionmakers. This approach is generally considered to provide
inadequate protection for maintaining instream flows
and groundwater supply. This regime does not allow for
individuals or NGOs to apply for a licence that “allocates
water for environmental purposes by specifying natural
or existing flows and quality as terms and conditions of
the licence” (Thompson 1991).

28
These amendments were the federal response to the 2001 signing of Great Lakes Charter Annex, A supplementary Agreement to the Great Lakes
Charter “Annex 2001”), an agreement signed by the Ontario and Quebec premiers and the eight Great Lakes governors (Powell 2003: 24).
29
For a detailed review of the legal frameworks governing water allocations across the various Canadian provinces and territories see Environment
Canada’s Freshwater Web site - Water Policy and Legislation (Provincial-Territorial) at http://www.ec.gc.ca/water/en/policy/prov/e_prov.htm, or the
CWWA legislation database available at http://www.cwwa.ca/legislation

34   POLIS Project

 Some regions, such as the Okanagan Basin in British
Columbia, or areas of southern Alberta, are facing an
“Era of Reallocation” due to water overallocation. To
limit further extractions, restrictions are now implemented on many water sources (Janmaat 2005: 209).
Continued urban growth coupled with water restrictions
suggests that the primary concern about water allocation
is not to extract more water (because no more is available), but to put the available water to its most valuable
use (Janmaat 2005: 209).
In most cases, provinces charge an administrative fee
for water permits, but do not charge for the actual
volume of water taken (Environment Canada 2003a).
The lack of effective withdrawal fees does not support
conservation-based pricing principles and is considered
by many as a form of perverse subsidy, leading to overconsumption by individuals and other end-users.
Ultimately, “the inefficient price of the resource becomes
embedded in the stock of industrial capital and in the
design of municipal water utility systems” (Renzetti and
Dupont 2002: 495).
In general, various water allocation systems in
Canada evoke similar concerns. They are not comprehensive and fail to integrate groundwater and surface
water, and rarely account for environmental needs and
proper ecological function. Furthermore, they do not
promote conservation and are too rigid to adapt to the
emerging social and environmental priorities.
Compensation for withdrawal rights

With some waters already over-allocated, any legally
recognized right to compensation could impede efforts
to reduce licensed withdrawals to sustainable levels. In
this regard Lucas (1990: 31, v) argues that water withdrawal licences “do not convey real property interest, but
are bare statutory licences conferring a personal right of
use only,” so that no “legal basis [exists] for asserting
rights to compensation in the event of confiscation or
modification of water rights by water authorities.”
Nevertheless, some case law suggests that compensation may be required in circumstances where a government take-back of a granted right destroys a business.30
Further, statutory requirements for compensation may
still exist, as under Alberta legislation when a new, higher
priority user requests cancellation of an existing, lower
priority licence (in which case compensation for “loss” or
“damage,” as opposed to the value of the interest taken,
is required) (Lucas 1990: 92).

In regions across Canada, some watersheds are
subject to existing permits for water withdrawals that
exceed the water available, a potentially a dire concern
for long-term environmental health. The uncertainty
regarding compensation is a significant barrier to
restoring water withdrawal licences to sustainable levels.
Reversing overallocations and ensuring that future water
allocations are sustainable is a pressing concern. And
these problems will only intensify as demands increase
and the impacts of climate change become more
apparent.
Mandating efficiency

Mandating efficiency requirements through
plumbing and building codes also falls under provincial
responsibility for water. In Ontario, efficiency requirements are included in the Ontario Plumbing Code that
applies to all permitted renovations and new construction. Amendments to the code include requirements for
efficient faucets, showerheads and, more recently, lowvolume toilets (Shrubsole 2001). However, most other
provinces lag behind with outdated plumbing and
building requirements (Maas 2003).
Instead of mandating specific efficiency requirements
province-wide, some provinces such as British Columbia
have opted to limit requirements to install low-flow
toilets to selected regions or municipalities that wish to
participate with this provincial program (MCAWS
2004). Although this type of change can promote
conservation in certain areas, a more effective approach
would be to change provincial Building and Plumbing
codes to apply to the whole province.
3.2.3 Municipal governments
Municipalities and local governments operating
under provincial legislation are generally responsible for
delivering treated water to residents and customers, and
for collecting and treating wastewater. Local governments also play a primary role in implementing conservation and water demand management programs, and
are often responsible for stormwater management.
In Canada, municipal water use accounts for 11% of
total water use, ranking third after thermal power generation and manufacturing. More than 80% of Canadians
live in urban areas, and are served by municipal water
supplies and some form of waste treatment system (Tate
1997). All the water that municipalities deliver to
customers should be treated to the level of drinking

Manitoba Fisheries Ltd. v. R. (1978), 88 D.L.R. (3d) 462 (S.C.C.).

30

At a Watershed   35

 quality standards. However, these standards can vary
extensively between, and even within, provinces.
Municipalities and the utilities also decide what to charge
their users, setting rates for homeowners, and deciding
what rates larger users such as companies, hospitals and
small industries will pay. In Ontario, under the Municipal
Act, municipalities have broad powers to enact bylaws to
impose fees and charges for services. This allows them to
decide how rates are set for water and sewer services.
Local governments are not explicitly assigned jurisdiction over specific subjects under Canada’s Constitution
Act, 1867. Municipalities can only take action when
explicitly authorized under provincial legislation.
Despite these constraints, local authorities are gaining
discretionary powers over local matters, as demonstrated
by recent changes in provincial legislation governing
local authorities, such as the Municipal Act in Ontario or
the Community Charter in British Columbia or Alberta.
The Supreme Court of Canada has reinforced this
trend in a recent decision dealing with pesticide regulation, the Spraytech31 case, gave local governments a direct
role in protecting the environment. The Court noted
that local governments are better equipped with local
knowledge, and are more accessible to citizens. Other
lower courts have since relied on the Spraytech case as a
precedent in upholding local environmental bylaws over
provincial or federal laws (Boyd 2003: 221).
Retail pricing

Currently in Canada, no uniform retail pricing structure exists. In some cases, charges increase as larger
volumes of water are taken (increasing block price), but
in other cases authorities charge a flat rate, or apply a
discount when larger volumes are used (declining block
rates).32 Cities that typically use significant amounts of
water per capita, such as Montreal, Vancouver and St.
John’s, employ flat rates for residential users. Even waterstressed cities like Calgary and Hamilton are only
partially metered, employing a mix of volume-based and

flat-rate pricing. Other cities, such as Edmonton,
Winnipeg and Saskatoon, employ a declining block rate
for residential users (Brandes and Ferguson 2003; Roach
et al. 2004: 7).
Utility ownership

In Canada, most water utilities are owned and operated by local (municipal) governments. However, a
variety of different models are now emerging, such as in
Edmonton where the city is served by a public corporation, or “corporatized” utility that is owned by the city,
but run as a corporation. Hamilton and Halifax provide
another model where private companies are involved in
management of specific services such as construction,
maintenance or customer services.
In Ontario, 70% of municipal water systems are operated directly by the municipality. About 23% are operated under contract with the provincial Crown agency
the Ontario Clean Water Agency. Roughly 6% are
contracted to private companies, and fewer than 1% to
another municipality33 (O’Connor 2002: 279; Powell
2003: 8).
Although most water supply systems remain publicly
owned, private companies have dramatically increased
their market share over the past two decades, especially
internationally. Opponents of private sector involvement
warn of decreased accountability, threats to public health,
and declining service levels and environmental quality.
The debate is polarized over whether water should be
treated as a public good (and “democratic right”) or as a
commodity for private property (Bakker 2004a).34
Regional authorities

In many regions of Canada, local governments are
structured with multiple levels. In certain jurisdictions,
such as the Capital Region District (CRD) in British
Columbia or the Region of Waterloo in Ontario, a tiered
relationship exists where the regional authority acts as a
wholesaler, treating and delivering water to member

114957 Canada Ltee (Spraytech, Societe de’arrosage) v Hudson (Town) (2001), 40 C.E.L.R. (N.S.) 1 (S.C.C.)
43% of Canadian households employ a flat rate; 12% of Canadian households employ a declining block rate; 36% employ a constant block rate
structure; 9% employ an increasing block rate (Roach, Huynh, et al. 2004: 7).
33
For a detailed discussion of the implications of utility ownership arrangements in general, see Bakker, K. (2003) Good Governance in Restructuring
Water Supply: A Handbook at http://powi.ca/goodgovernance.pdf; for a discussion of the implications of utility ownership on demand management
see Chapter 4, The Future in Every Drop, The POLIS Project on Ecological Governance at www.waterdsm.org
34
For a public sector union perspective, see CUPE’s WaterWatch campaign (www.cupe.ca). For an NGO perspective critical of private sector participation in water supply, see the Council of Canadians Blue Planet Project (www.canadians.org). For a business perspective supportive of private sector
participation, see the Canadian Council for Public Private Partnerships (www.pppcouncil.ca). See also: Elizabeth Brubaker’s (Pollution Probe) book,
Liquid Assets: Privatizing and Regulating Canada’s Water Utilities, University of Toronto Centre for Public Management, 2002; Maude Barlow (Council
of Canadians) and Tony Clarke’s (Polaris Institute) publication Blue Gold: The Battle Against Corporate Theft of the World’s Water, Earthscan 2002;
and reports commissioned by the Ontario government’s SuperBuild (www.superbuild.gov.on.ca) which seek to facilitate P3s in the water sector.
31
32

36   POLIS Project

 Box 26: Water supply business models in large Canadian municipalities
Municipality

Business Model

Agency

Calgary

Calgary Waterworks Municipal

Utility

Edmonton

EPCOR Water Services

Public corporation

Halifax (water)

Halifax Regional Water Commission

Public corporation

Halifax (wastewater)

Halifax Regional Environmental Partnership

P3

Hamilton

American Water Services

P3

Montreal

Public Works, City of Montreal

Municipal utility

Ottawa

Drinking Water Services Division, City of Ottawa

Municipal utility

Toronto

Toronto Works and Emergency Services

Municipal utility

Vancouver

Greater Vancouver Regional District

Municipal utility

Winnipeg

City of Winnipeg Water and Waste Department

Municipal utility
Bakker 2004a: 3

municipalities, which in turn act as retailers that sell to
end users (e.g. households, businesses and local industries). This tiered system may create fragmented responsibility for water supply between the various levels of local
government thereby requiring additional coordination
and planning by stakeholders. Such regional authorities,
however, can deliver some or all demand management
programs and initiatives, but may not have sufficient
authority to pass bylaws or mandate necessary changes,
such as amending plumbing and building codes.
Influencing demand

Municipalities have the most to gain by promoting
water conservation that reduces the costs of infrastructure, operations and maintenance, and protect source
waters. As discussed above, full-cost pricing and conservation-oriented price structures discourage excessive
water use. As Ontario’s Sustainable Water and Sewage
Systems Act comes into force later this year, municipalities in that province will be required to charge end users
the “true cost” of supplying water. The Act also requires
utilities to incorporate the costs of maintaining and
building new water and sewage infrastructure (including
source protection) into water rates.
Beyond increasing the cost of water, municipalities
can influence water use in a variety of ways. Delivering

comprehensive demand management programs, which
include an appropriate mix of pricing, regulations, leak
repair, incentives for conservation technologies, and
public education is the best way for municipalities to
influence water demand.
Installing meters is the first step and one of the most
effective ways for municipalities to manage water and
enable water conservation efforts. Once meters are
installed, utilities can measure the amount of water used,
identify excessive use and address the problems through
demand management. Meters are also a necessary
precondition for conservation-based pricing systems. In
systems where customers are charged by volume, they
generally use less water. Some authors report that
metering alone, without pricing changes, has resulted in
water use reductions of 10% to 40% (Shrubsole and Tate
1994: 7).
The initial costs of metering are high. In 1995, the
estimated cost to achieve “universal” metering
throughout Canada was $650 million (Tate 1997: 53).
In addition to installation and meter-reading costs, a
meter maintenance repair program is also required since
meters may “under-report” as they wear out. These costs
are relatively small, however, compared with the billions
needed for infrastructure repair and upgrading due to
excessive water use. When coupled with price re-strucAt a Watershed   37

 turing, metering can become cost/revenue neutral (Tate
1990: 17).
In addition to the critical need for universal
metering, a comprehensive integrated and long-term
approach to demand management is necessary. Previous
reports in this series have discussed the need for, and the
characteristics of, such programs. A comprehensive
approach35 requires sufficient capacity in the form of
staff, training and resources for implementation and
ongoing long-term demand management initiatives, and
an effective conservation plan, including a demand
management study, inventory of options and measurable
targets, developed with local expertise and effective
public participation (Brandes and Ferguson 2004).
Currently, the lack of effective planning is a significant stumbling block to effective demand management
programs. In British Columbia, for example, only 13%
of municipalities engaged in strategic planning, which
was likely limited to basic conservation planning (MELP
1998: 26,30). A study in Ontario found that, although
individual DSM measures are being implemented,
supply-side management continues to predominate, and
only one in five of the Ontario municipalities studied
had any kind of DSM plan or strategy in place (deLoe et
al. 2001: 57, 66). Other estimates suggest that fewer
than 20% of Canadian municipalities have established
demand-side management plans (Cantin et al. 2005: 3).
Effective planning and implementation of water conservation policies and programs is critical for all municipalities to ensure long-term water sustainability.
3.2.4 Intergovernmental coordinating
mechanisms
The division of powers between federal and provincial governments can often lead to uncertainty and jurisdictional problems in managing freshwater resources.
The issue of water pollution, for example, does not fall
within the exclusive jurisdiction of either level of government, making it difficult to determine which level has
the power and responsibility to deal with it. The general
rule is that where “overlapping jurisdictions exist, both
levels of government are free to deal with the matter”
(Estrin and Swaigen 1978). According to the doctrine of
paramountcy, when federal and provincial laws conflict,

federal law has priority. 36 In practice, federal-provincial
coordination is the usual governmental response to such
environmental problems.
Developing freshwater resources raises issues of
provincial jurisdiction, and has important economic
consequences for many sectors, such as industry, agriculture, manufacturing and tourism (Kennett 1991: 31).
Therefore, water management could be a source of major
intergovernmental conflicts, and the need for coordination is particularly acute.
A consensus is emerging among academics, freshwater resource managers and policy analysts that water
management should begin at the watershed level.
However, provincial and international boundaries are
not drawn with this in mind, and water management
must bridge the gap between political and physical realities (Pearse et al. 1985; Saunders 1988: v; Kennett
1991). Commenting on recommendations for watershed
management and the need for coordination, Thompson
(1991: 157) suggested that the “jurisdictional maze gives
more than platitudinous significance to Pearse’s principle
calling for integrated watershed planning and management because, without such integration among the
federal and provincial governments, water laws and policies tend to self-destruct in Canada.” To address this
need for coordination and co-operation, various intergovernmental institutional arrangements have evolved.
Over the past three decades, numerous joint
programs between the federal and provincial governments were implemented to address a wide variety of
environmental problems and issues in Canada. Between
1975 and 1980, the emphasis was on water management, but since then, the focus has shifted to an
emphasis on broader ecosystem approaches and
programs related to land-use management, wildlife, and
air pollution (Dwivedi et al. 2001). In this approach,
water is primarily considered in the context of the landscape. Not naming water specifically contributes to
recent concerns that water management is not enough of
a priority for government and the importance of freshwater resources is being undervalued.
The roles of senior government in federal-provincial
environmental initiatives have changed. Lately, the
federal government has played the role of financier and

For a detailed discussion see The Future in Every Drop, The POLIS Project on Ecological Governance at www.waterdsm.org (in particular, Chapter 5).
Over the years, different theories (and some confusion) have emerged as to when the "doctrine of paramountcy" arises. The Supreme Court of
Canada has resolved the matter by concluding that there must be an operational incompatibility or operational inconsistency between the federal and
provincial laws before paramountcy arises (see Smith v. The Queen, [1960] S.C.R. 776). That is, the courts now say that there must be an actual conflict
between federal and provincial laws before the "doctrine of paramountcy" is triggered, then the provincial law will be held to be inoperative only to
the extent of the conflict or operational incompatibility or operational inconsistency.
35
36

38   POLIS Project

 supplier of equipment, information, and technical
expertise. Provincial governments have operated as
program implementers (Dwivedi et al. 2001: 77), often
downloading responsibilities to regional or municipal
governments that lack sufficient resources to implement
programs effectively.
Conventions, task forces and agreements serve as
intergovernmental mechanisms for coordination. Several
examples include: the Canadian Framework for
Collaboration on Groundwater, the Accord for the
Prohibition of Bulk Water Removal from Drainage Basins,
and the 1988 Canada-Quebec Convention, designed to
address the major environmental problems of the St.
Lawrence Rivers Basin. Also, in the 1994 CanadaOntario Agreement on the Great Lakes Basin, both federal
and provincial governments agreed to a strategy to eliminate toxins, upgrade sewage treatment plants, improve
stormwater quality, rehabilitate several species, and
conserve and protect human and ecosystem health.
The most significant intergovernmental coordinating
institution is the Canadian Council of Ministers of the
Environment (CCME). Although The Prairie Provinces
Water Board is considered a model for dealing with interjurisdictional issues (Environment Canada 2004: 120).
The Canadian Council of Ministers of the
Environment

CCME’s mandate is to promote effective intergovernmental co-operation and co-ordination to address
interjurisdictional issues such as air pollution, toxic
chemical contamination, water quality and water conservation and economics (CCME 2004). CCME members,
the 14 environment ministers from federal, provincial
and territorial governments, collectively establish nationally consistent environmental standards, strategies and
objectives. The CCME proposes changes, but it has no
authority to implement or enforce legislation. Each jurisdiction decides individually whether to adopt CCME
proposals (CCME 2004).
Recent CCME activities have focused on water
quality, such as the development of the Water Quality
Index, a mechanism for Canadian jurisdictions to report
water quality information and make comparisons to
other jurisdictions (CCME 2004). The CCME has also
initiated a specific task force on water conservation and
economics.
3.2.5 International co-operation
Canada made international commitments on sustainable water management at the World Summit on

Box 27: Prairie Provinces Water Board
The Rocky Mountains are the primary source of water for
the large southern prairie rivers. To manage the complexities of river systems that flow through multiple jurisdictions,
Alberta, Saskatchewan, Manitoba and Canada established
the Prairie Provinces Water Board (PPWB) in 1948. The
PPWB recommends the best use of inter-provincial waters
and associated resources in the provinces, and recommends water allocations for streams flowing from one
province to another.
The Master Agreement on Apportionment, signed in 1969,
provides a formula to determine eastward flowing interprovincial water. Since the Agreement was signed, various
amendments have been to clarify apportionment arrangements, add water quality issues, and define inter-provincial
lakes as “water courses.” The federal government provides
50% of the funding for the PPWB, and the remainder is
funded by equal shares from each of the three member
provinces. The board reports on implementation of the
apportionment agreements and reviews and makes recommendations on water management issues. And three
permanent committees on water quantity, water quality
and groundwater assist with technical work and provide
advice.
The Master Agreement is considered a model for dealing
with inter-jurisdictional issues, and the consensus-based
model of the PPWB allows for an effective mechanism for
dispute resolution.
(Environment Canada 2004: 121)

Sustainable Development in 2002 and, in 2004, Canada
pledged with other United Nations member countries to
meet the UN Millennium Development Goals by 2015.
One of those goals is to work cooperatively with other
member countries to reduce by half the number of
people without access to reliable, safe fresh water. To
coordinate polices specifically between Canada and the
United States, the International Joint Commission (IJC) is
an example of a well-developed and valuable mechanism
for international coordination.
Watersheds and water management issues often cross
international boundaries. Over 20 million Canadians
live in watersheds that cross the Canada-U.S. border
(over 17 million of them in the Great Lakes-St Lawrence
watershed) and are affected by American policies, or
affect American water quantity and quality. To address
the lack of harmonization between Canadian and U.S.
water policies, an array of international treaties, agreeAt a Watershed   39

 ments and compacts has been developed to promote cooperation and to resolve disputes.
The St Lawrence Vision 2000 agreement, for
example, was launched in 1988 in order to protect the
health of St. Lawrence River ecosystems, safeguard
human health and involve riverside communities. The
Great Lakes 2001 to 2006 agreement involves the cooperation of eight federal government departments, the
province of Ontario and the U.S. government (Statscan
2003).
Other significant agreements and institutions
promoting international co-operation pertaining to
water quantity include The International Boundary
Waters Treaty Act, The International Joint Commission,
The Great Lakes Charter, and Annex 2001.
The International Boundary Waters Treaty
Act

This Act governs Canada’s obligation under the
Boundary Water Treaty of 1909, with respect to the
300 lakes and rivers shared by Canada and the
United States. Basic principles for the use, obstruction and diversion of boundary and transboundary
waters have been established by the Treaty and
administered by the International Joint Commission
(IJC), which was formed as part of this treaty (Powell
2003: 24).
The International Joint Commission (IJC)

The IJC assists both the Canadian and U.S.
governments to resolve problems in their shared
waters. Six commissioners, appointed by both the
Canadian and U.S. governments, administer the IJC,
and follow the principles established by the Treaty as
they try to prevent or resolve disputes. The organization has created more than 20 boards, comprised of
experts from Canada and the United States to assist
in carrying out its responsibilities (IJC 2004).
The Great Lakes Charter

The eight governors of the Great Lakes states and
the premiers of Ontario and Quebec signed The Great
Lakes Charter in 1985. The original voluntary agreement outlined a series of principles for the collective
management of the lakes. The governments agreed
that no state or province could proceed with a new or
increased diversion or consumptive water use over 5
million gallons per day without seeking the consent of
the other affected governments (CELA 2004b).

40   POLIS Project

Annex 2001

Annex 2001 is a recent amendment to the original Great Lakes Charter. It commits to preparing
binding standards within three years to “ govern large
scale withdrawals of Great Lakes water, protect the
water resources of the Great Lakes ecosystem, and
resolve disputes with respect to withdrawal and
protection” (Powell 2003: 24). The amendment
builds on the structures of the Charter but is more
far-reaching. For example, although it does not reference water diversions or exports, it does apply to
withdrawals of water from the basin, regardless of
size. Even small or routine withdrawals for use within
the basin are evaluated under a common standard
and those over a certain threshold quantity are
subject to regional review (Valiante 2003: 56).
Annex 2001 came about following the approval
by the Ontario government for the Nova Group to
withdraw 60 million gallons of water per year from
the Lake Superior. The approval underscored the
vulnerability of the lakes to private withdrawal
proposals and, consequently, the governments of
Canada and the United States asked the IJC for a
detailed report studying the impacts of major water
withdrawals on the Great Lakes Basin. The IJC found
that there is never a surplus of water in the Great
Lakes system and that withdrawals reduce the
system’s resilience. In its final report, the IJC recommended that the Canadian and U.S. federal, provincial and state governments should not permit the
removal of water from the Great Lakes Basin unless
the proponent can demonstrate that it will not
endanger the integrity of the Great Lakes ecosystem
(IJC 2000).

3.3 Conclusion
The apparent wealth of water in Canada is deceiving.
The bulk of renewable water is found far from where the
majority of Canadians live or is only available in abundance during the “wet season.” Additional stresses, such
as population growth, increasing urbanization, aging
infrastructure, pollution, poor pricing signals, and the
wild card of climate change combine to challenge water
management in Canada. A new reality of freshwater
scarcity is emerging as a serious threat to Canadian cities.
Attention to the importance of regional variability and
consideration of water resources as part of a complex and
integrated ecosystem is paramount.
The complexity associated with jurisdictional responsibilities exacerbates Canadian water management prob-

 lems, limiting sustainable solutions and further
entrenching excessive water use.
The institutional overview of this chapter suggests
that management of freshwater resources is in need of
sober reform if Canada is going to take water sustainability seriously. Despite the constraints inherent in the
federal system of government, considerable potential for
innovation to improve water management exists. Solving

Canada’s water resource problems will require accommodating various competing interests, understanding
historical forces that have created the existing framework, innovation and leadership to address emerging
and complex problems, and policy coordination at all
political and administrative levels.
While solutions are local in nature, a national
approach to water management is vital.

At a Watershed   41

 42 POLIS Project

PART II:

Developing water sustainability -
Lessons from elsewhere

At a Watershed 43

44 POLIS Project

Chapter 4

A national strategy for sustainable
water use
The water crisis is essentially a crisis of governance.
UNDP World Water Report 2003
Historically, water conservation in Canada has been
composed of individual responses by local authorities to
specific local water crises. This approach addresses proximate and short-term concerns, but does not take advantage of strategic opportunities to reduce environmental
impacts and enhance long-term human well-being. A
national strategy is necessary to achieve the environmental, social, and economic benefits of sustainable
water use.
Managing water effectively requires an integrated,
long-term and comprehensive approach. This demands a
commitment by all levels of society and government
leadership. Senior governments are uniquely situated to
promote and encourage the tools and institutional structures that allow all stakeholders to take effective action.

4.1 Avoiding the water crisis
In Australia, a Senate Committee (ECITA 2002)
outlines the benefits of a proactive national strategy that:
• establishes a National Partnership to coordinate
management actions of governments, water management authorities, stakeholders, civil society and the
general public;
• overcomes jurisdictional barriers;
• rationalizes and simplifies institutional arrangements;
• coordinates research, and distributes conservation
information to managers;
• ensures conservation measures are known and implemented;
• raises awareness and encourages efficient use of
water; and,
• drives change by encouraging water conservation
targets.

4.2 Comprehensive national strategies in Australia and Europe
Innovations to resolve water problems are emerging

across the globe. Australia and Europe are leading the
way in developing comprehensive continental strategies.
Canada has a federal water policy that has, however, not
been fully or effectively implemented because it has not
specifically addressed provincial and local action. The
leadership demonstrated by Australia and Europe could
guide all Canadian jurisdictions in overcoming these
jurisdictional barriers.
4.2.1 Australia
Over the past decade, the federal, state and territorial
governments of Australia have worked together to create
and implement a comprehensive national strategy for
water reform. Most recently, a 2004 Intergovernmental
Agreement (IGA) triggered a National Water Initiative
(NWI). In the area of urban water reform, the NWI
aims to:
• increase water use efficiency;
• promote the reuse and recycling of wastewater;
• encourage innovation; and,
• improve pricing.
As a first step, the States and Territories agreed to
undertake the following specific actions in regard to
demand management by 2006:
• review the institutional and regulatory models for
achieving integrated urban water cycle planning and
management, followed by preparation of best practice guidelines;
• take immediate action to develop national guidelines for water sensitive urban designs (including
recycled water and stormwater);
• enact legislation to implement the Water Efficiency
Labelling Scheme (WELS), a mandatory product
labelling scheme for appliances, and a Smart Water
Mark labelling scheme for household gardens,
including garden irrigation equipment, garden

At a Watershed   45

 designs and plants;
• review the effectiveness of temporary water restrictions and associated public education programs, and
assess the feasibility of making low-level restrictions
standard practice;
• implement cost-effective measures to address system
losses, and related maintenance issues; and,
• review incentives to stimulate innovation.
4.2.2 Europe
Another good example of a multi-party strategy is the
European Water Framework Directive, or WFD. This
Directive is based in binding legislation among
European states to:
• Implement watershed management - The territory
of each member state will be divided into river basin

districts with a management authority assigned to
each. A river basin that covers the territory of more
than one member state will be assigned to an international river basin district. Member states must
collect and maintain information on the characteristics of surface and ground waters for each district by
2004; put in place a monitoring system by 2006;
and establish a program to control withdrawals from
surface and ground waters, and develop a River
Basin Management Plan (RBMP) through a public
consultation process by 2009.
• Improve the quality of all water bodies - Member
states must aim to achieve good ecological and
chemical status for all surface waters and good chemical status for all groundwater by the year 2015.
• Avoid groundwater overdraft - Member states must

Box 28: Council of Australian Governments (COAG) leading water reforms
Similar to Canada, Australia’s federal system assigns primary
responsibility for natural resource management, including
water, to the states and territories. Recognizing the need for
coordinated action to halt the widespread deterioration of
Australia’s natural resources, the Council of Australian
Governments (COAG) was established in 1992. It comprises
the Prime Minister, State Premiers, Territory Chief Ministers
and the President of the Australian Local Government
Association.
In 1994, COAG made water resource management a top
priority and developed the Water Reform Framework (WRF).
The WRF attempts to create a consistent approach to water
reform throughout Australia, leaving each state and territory
the flexibility to adopt its own approach to implementation.
Some key components of the WRF include: water pricing
based on the principle of full-cost recovery; a comprehensive
water allocation requirement that considers environmental
flows; improved water trading; integrated catchment
management (the Australian term for watershed management); greater public education about water use; and
research into water conservation technologies.
In 1995, COAG endorsed the National Competition Policy
(NCP) that offers to pay states and territories for the
successful implementation of reforms such as the WRF. The
National Competition Council assesses the progress of implementation, and determines which states or territories will
receive the full share of payments under the NCP. Between
1999 and 2001, over $1 billion was awarded in competition
payments to states and territories. During the following twoyear period, the payments totaled $740 million. Non-compli-

ance with WRF requirements results in reduced payments. For
example, Queensland’s annual payment was reduced by
$270,000 in 2001-2003 due to Townsville City Council’s lack
of progress on water pricing reform.
At the June 2004 COAG meeting, the federal and most
state/territorial governments entered into an InterGovernmental Agreement (IGA) on the National Water
Initiative (NWI). The purpose of the IGA was to address
outstanding issues from the WRF, such as the commitments
to protect water sources and their dependent ecosystems; to
increase urban water conservation; to deal with over-allocation and to create a nationally compatible system for water
allocation.
A National Water Commission (NWC) was created as an independent statutory body to advise COAG on national water
issues, and to assist with implementation of the NWI. The
Commission will be responsible for the accreditation of
state/territorial implementation plans for the NWI and biennial assessments of their progress.
The COAG water reforms have led to a significant conceptual
shift in Australia’s water management. Together with the
Murray-Darling Basin Initiative, the reforms have resulted in:
• an integrated approach to catchment management across
Australia;
• a national scheme to adjust water allocations to sustainable levels;
• more efficient water use through water trading; and,
• an increase in urban DSM.
Source: (COAG 2004; NRMMC 2004)

46   POLIS Project

 aim to achieve good quantitative status for all
groundwater by 2015.
• Adopt efficient pricing - Member states must implement full-cost recovery, with pricing policies aimed
at encouraging efficient water use by 2010.

advisory bodies to develop guidance documents, and the
testing of such documents across a network of 15 pilot
river basins involving 18 countries.

As with the Australian national strategy, the WFD
has led to the study and development of many practical
initiatives to guide jurisdictions as they implement these
reforms. For example, A Common Implementation
Strategy (CIS), initiated in 2001, focuses on information
sharing tools, the creation of working groups and expert

An effective national water strategy must address a
range issues, from the control of water withdrawals and
source protection at the watershed level to the creation of
institutions for DSM implementation at the urban level.
Each of these issues is addressed in detail in the following
chapters and summarized here.

4.3 Key elements of a national water
strategy

At a Watershed   47

 Key elements of a national water strategy for Canada
Practice (BMP)

Purpose(s)

Key enabling requirement(s)

Water allocations that
ensure watershed health

Allocate water to sustain ecosystem integrity

Provincial action on fundamental reform of
water licensing and allocation systems

Adaptive withdrawal
permitting

Avoid future over-allocation of water sources by
allowing permitted withdrawals to be adjusted
over time in response to water availability

Change water licenses and entitlements;
and demand detailed hydrological and
human water use monitoring

Market-based instruments Provide incentives (financial rewards) for desired
behaviour or impose fees on undesirable behavfor water sustainability
iour to reduce water use and provide potential
revenue to subsidize conservation and restoration

Pricing - attention to distributive effects
(i.e. political economy of water)
Trading - property rights with clear ecological water allocations and significant
government regulation
Liability - public access to legal system

Long-term conservation
planning

Overcome short-term decision making that
increases long-term impacts/costs

Water conservation planning guidelines
and incentives that require their use
(conditional funding, legislation)

Environmental management systems

Embed planning in an adaptive management
framework, ensuring regular assessment of business practices and consequential environmental
impacts

Overcome upfront costs for management
process (e.g. plan, do, check, act) and
ensure availability of detailed information

Utility Full-Cost
Accounting

May eliminate perverse subsidies by promoting a
truer value of water to end users, ensuring longterm financial stability for the utility

Local political will or provincial legislation
as in Ontario. Citizen/end-user education

Developing conservation
capacity

Develop professionals that create and run effective long-term DSM programs

Sufficient financial resources and recognition that DSM professionals are critical to
any water supply team

Best practices clearinghouse

Disseminate information and opportunities to
improve water management and promote innovation

Create one central and credible resource in
collaboration with key stakeholders

Promote market in DSM
planning/implementation

Ensure ongoing innovation and continual integration of conservation technologies

Commitment by local government to link
development with conservation incentives

Labelling

Allow purchasers to identify and select the most
water-efficient products to meet their needs, facilitating a market for conservation technologies

Credible oversight and enforcement of
standards

Social Marketing

Promote behavioural change at community level

Specific training and direct public contact
and involvement

Conservation-based
pricing

Provide incentives to reduce water use and signal
the value of water

Universal metering and public and political
buy-in

Reuse and recycling

Cascade water use to reduce wastewater and
water use

Dual plumbing, enabling regulation, pilot
projects, national guidelines for reused
water and health regulations

Water parliaments

Ensure holistic planning and decision making at
the watershed scale by bodies aware of local
needs and circumstances

Collaboration by key stakeholders and
senior governments; sufficient resources
and delegated decision-making authority

48   POLIS Project

 Leading example(s)

Impact/implications

Governance principle

Water allocated for ecosystems and basic human
needs first; the remainder allocated to maximize
social and economic benefits

Ecosystem-based management

• South Africa National Water Act (Sec 5.3)
• Australia, COAG reforms (Sec 5.3)

May challenge expected long-term specific volume
requirements for fresh water

Adaptive management

• Time-limited withdrawal permits in the UK,
South Africa and Florida (Sec 5.4.1)
• A consumptive pool - Australia (Sec 5.4.2)

Tax shifting and green taxes may impact costs and
individual company/industry competitiveness

Ecological modernization;
full-cost accounting and user
pay

• Europe (Sec 5.6.1)
• South Africa (Sec 5.6.1)

Commodification of water resources and potential
corporate influence requires careful government
oversight

• Australia (Sec 5.6.2)
• Alberta (Sec 5.6.2)
• California (Sec 5.6.2)
• Sweden (Sec 5.6.3)
• Columbia (Sec 5.6.3)

Cost recovery facilitated by environmental bond
requirements
Senior government must provide support (finances
and information) to assist in preparation of plans,
and must enforce penalties if plans are not implemented

Matching principle and deliberative democracy

• EPA guidelines (Box 39)
• California's Urban Water Management
Planning Act (Box 40)

Requires industry or government action to develop
specific EMS frameworks for water utilities and
providers, and requires establishment of indicators

Adaptive management

• ISO 14001 (Box 41)
• North East Water in the State of Victoria
Australia (Sec 6.3.1)
• Sydney Water Corp., Australia (Box 42)

Concern that privatization may result; requires
strong public oversight

Subsidiarity and ecological
modernization

• CRD Victoria (Box 45)
• Ontario's Sustainable Water and Sewers
Systems Act (Box 44)

Changing utility focus from water supplier to service
provider

Ecological modernization

• California - dedicated government division
for water efficiency (Box 40)
• Some Canadian cities have hired full-time
DSM staff (Sec 6.6)

Compliance with practices can be part of criteria for
linking funds for infrastructure expansion or DSM
programs

Ecological modernization and • WaterWiser Clearinghouse Web (Sec 7.2.2)
subsidiarity
• California MOU Regarding Urban Water
Conservation (Sec 7.2.1, Box 47)

May increase developer costs leading to focused
resistance

Ecological modernization

• WASCOs (private entities contracted to plan
and implement DSM program (Sec 6.2.3)
• Arizona Active Management Areas requires
developers to reduce water use before new
building permits are given (Sec 6.4.1)

Can help local water providers select models/brands
for rebate and giveaway programs

Deliberative democracy and
ecological modernization

• WaterStar (Sec 7.3)
• EcoLabel (Sec 7.3)
• WELS (Australia) (Box 49)

Requires detailed planning, pilot projects and evaluation

Ecological modernization

• The Region of Durham, Ontario (Sec 7.1.5,
Box 19)

May effect municipal water revenue predictability

Ecological modernization; full • Irvine Ranch Water District (Box 50)
cost and user pay
• EU Water Framework Agreement (Sec 7.4)

Requires additional technologies and technical
expertise

Ecological Modernization

• California Water Code (Sec 7.5.2)
• Florida Reuse Coordinating C'ttee (Sec 7.5.2)
• Vernon, BC (Sec 7.5)

Changing role of government from central control
to facilitator of local decisions

Matching authority and
subsidiary

• France's Water Parliaments (Box 56)
• COAG and the Murray-Darling Basin
Initiative, Australia (Box 58)
• Washington State, US (Sec 8.2, Box 57)

At a Watershed   49

 50 POLIS Project

Chapter 5

Water allocations for the 21st Century
We’re all downstream.
Ecologists’ motto
Throughout the 20th Century, to accommodate a
growing population, Canadian laws and policies encouraged rapid economic growth. This resulted in substantial
freshwater withdrawals and large-scale modifications of
aquatic systems, through dams, reservoirs and diversions.
As Canadian cities grew and their water use
increased, surrounding water resources were developed.
Where local water resources were insufficient, distant
water sources were diverted. This pattern of incremental
development has had significant negative impacts on
these water bodies and, if followed in the future, will
ultimately limit the ability of the ecosystems to continue
to provide clean and sufficient water.
Water quality, geomorphology, riparian vegetation,
the composition of aquatic species, and the connectivity
between a stream, its floodplain and underlying groundwater have all been altered. Significant ecological
impacts can occur even at low levels of withdrawals
depending on the particular characteristics of a river
(Schofield, Burt and Connell 2003: 16). Pollution,
climate change and increasing water use associated with
population growth impose additional threats to these
aquatic and riparian systems. To address the ecological
limits on the amount of water that can be safely removed
from watersheds, a shift to ecosystem-based management (ESBM) is beginning. ESBM suggests that a “cap”
or “sustainability boundary” on such withdrawals be
established to protect the key physical, biological and
chemical processes in the aquatic ecosystem.
Natural variability of flows must be substantially
maintained or restored to retain aquatic ecosystem function and services (IFC 2002; Gillilan and Brown 1997;
Postel and Richter 2003).37 Caps must be adjustable and
flexible enough to respond to changing conditions or
new information (e.g. from climate change). The goal is
to withdraw water for human use in patterns that

emulate, as closely as possible, natural fluctuations in
levels and flows (Naimen et al. 1995; Brooks 2005).
Reserving water for environmental needs should be
established even in areas where water is considered abundant since the opportunity to do so may not exist in the
medium to long term. (IFC 2002: 307). Gillian and
Brown (1997: 100) emphasize this urgency noting that
“[o]ne of the lessons we’ve learned with instream flow
filings and possible water development is never to
assume a stream is protected by its location alone. Water
flows uphill to money. Where there’s enough money,
there’s a feasible project.”
By setting a limit on available water, the cap also
becomes a driver for DSM in the watershed. If current
water withdrawals already exceed ecological limits, or
trends indicate that they will be exceeded in the future,
the need for conservation becomes obvious. The existence of a cap acts as an early warning system to signal
that increasing water consumption will lead to an
ecological threat, thus allowing communities to act early.
Indeed, DSM makes reductions in water withdrawals
more palatable because it helps to maintain lifestyle with
less water.

5.1 Water needs for ecosystems
Withdrawals from surface waters, together with the
associated infrastructure have so altered the timing and
quantity of water flow that managing withdrawals to
provide for minimum, constant flows is no longer sufficient. Critically important is the nature of the flow,
including variables such as the magnitude, frequency,
duration, timing and the rate of change (as discussed in
Box 30).
The science of watershed management is now sufficiently advanced to prescribe targets and management
options that offer new ways to achieve an optimal

37
Extracting groundwater faster than it is recharged can also disturb the water cleaning ability of groundwater ecosystems and lead to pollution, saltwater intrusion, exhaustion of supply, and even the permanent destruction of an aquifer through land subsidence. Such groundwater overdraft will
also impact connected surface waters by reducing the base flows that streams rely on during dry periods.

At a Watershed   51

 balance between human needs and long-term river and
riparian health.38 This science draws on the interdisciplinary skills of hydrologists, geomorphologists, water
quality specialists, aquatic biologists, and riparian ecologists to improve integration between environment agencies and water-licensing agencies which are often separate entities with different mandates and biases (Gillilan
and Brown 1997: 127).
Computational tools to support decision making
have been developed to determine the variable instream
flows necessary to meet ecological water needs (IFC
2002; Gillilan and Brown 1997: 79-94; Schofield, Burt
and Connell 2003). South Africa is a leader in the development of such tools (Brown and King 2000; Hughes
and Hannart 2003; Postel and Richter 2003). The
DRIFT (Downstream Response to Imposed Flow
Transformations) methodology uses teams of biophysical
and socio-economic specialists to determine the expected
environmental, social and economic consequences of a
number of flow scenarios, providing decision makers
with a range of options. Another tool known as WEAP
(Water Evaluation and Planning) analyzes water allocation scenarios on a watershed basis to determine the level
of DSM required to meet ecological water needs (Lévite
et al. 2003).
Expert guidance is central to setting instream flows
and maintaining groundwater balance, and to developing
tools for doing so. The U.S. Fish and Wildlife Service
(USFWS) funded a National Instream Flow Program
Assessment (NIFPA) project in 1995 that brought
together coordinators from across the country to evaluate
instream flow programs and methods (IFC 2002: xiv).
This led to the formation of the Instream Flow Council
(IFC) in 1998, a non-profit organization dedicated to
improving the effectiveness of instream flow programs for
conserving aquatic resources. Because of differences in
data, technical capacity, funding, and available time to
complete ecological flow assessments depending on location, a suite of tools should be customized to suit each
location (Postel and Richter 2003: 55).
Identifying instream flow requirements is a complex
task; the scientific uncertainty is significant especially
given the unpredictable interaction between human and
natural activities. With the effective integration of social
science knowledge about human values, perceptions,

behaviours and institutional culture, the science can
better inform decision making processes (Poff et al.
2003). Involving broad range of stakeholders improves
the assessment of socio-ecological systems.39

5.2 Water allocation in Canada
In Canada, the provinces have primary responsibility
for the regulation of surface and ground water. Federal
interests are generally limited to trans-boundary waters,
waters on federal lands, and navigation and fisheries. As
introduced in Chapter 3, the main system for allocating
surface waters in Canada is through statutory permitting
rules. These permitting systems are underpinned by
various water law doctrines: from British Columbia to
Manitoba based on prior allocation; in Quebec the civil
code; in Ontario and the provinces east of Quebec a
riparian rights approach; and, in the North an authority
management approach (Percy 1988).
Although the details vary from province to province,
the general permitting process is similar. Sometimes a
posted notice and a public hearing are required before an
application is allowed. In most cases, however, public
hearings are waived if there are no objections. Unless all
the available water has been allocated, an interim conditional licence is usually approved, subject to the interests
of downstream licence holders. When the project has
been completed and inspected, a final licence is issued
that sets out the authorized use or nature of the work and
the authorized flows. A licence is sometimes issued for an
indefinite period although it can be revoked or altered,
often with repercussions (i.e. compensation) if specific
rights are expropriated. In some cases, licences are
cancelled if they are not exercised (Pearse et al. 1985: 92;
Percy 1988; Lucas 1990).
Water licences issued under the common law rules
still operate in parts of Canada. Large irrigation licences
in Alberta, for example, and older municipalities and
industries in Ontario received licences before 1961 when
the Water Resource Act was passed. These large volume
licences have challenged water management efforts, their
priority over other uses contributing to water shortages
and exacerbating conflicts over water allocation in scarce
water regions, such as the Okanagan in British Columbia
and in southern Alberta.
In most cases, provinces charge an administrative fee

Significant research and practical experience in South Africa, Australia and some areas in the United States have led to the development of holistic
methods for assessing the water needs of aquatic ecosystems. In South Africa, the federal Water Research Commission receives all its revenue from
a tariff on national water consumption the funds from which are then distributed to the research community.
39
”Indeed, science alone cannot ‘solve’ environmental problems, because there are a multitude of legitimate perspectives and desired outcomes that
defy objective, technical resolution” (Poff et al. 2003).
38

52   POLIS Project

 Box 30: Freshwater and ecosystem integrity
Five interconnected environmental drivers regulate the structure and function of aquatic ecosystems. Each varies according
to changes in climate and length of day. Focusing on any one
driver will not provide a true representation of ecosystem
structure and function. Effectively assessing and managing
human impacts on aquatic ecosystem integrity-from land use
changes, to flow modifications, to pollution inputs-requires
consideration of all of these factors in an integrated and
ongoing basis (Baron et al. 2003: 4).
Environmental drivers in freshwater ecosystems include the
following:
1. the flow regime defines the rates and pathways by
which rainfall and snowmelt enter and circulate within
river channels, lakes, wetlands, and connecting groundwater. It also determines how long water is stored in these
ecosystems.
2. sediment and organic matter inputs provide raw materials that create physical habitat structure, refugia,
substrates, and spawning grounds, and supply and store
nutrients that sustain aquatic plants and animals.
3. temperature and light characteristics regulate the
metabolic processes, activity levels, and productivity of
aquatic organisms.
4. chemical and nutrient conditions regulate pH, plant
and animal productivity, and water quality.
5. the biotic assemblage (plants and animals) influences
ecosystem process rates and community structure.
The natural flow regime
Under natural conditions, the flow regime is regarded as the
“master variable” that changes over space and time according
to local climatic conditions and the surrounding landscape

structure (Richter et al, 2003: 207; Poff et al. 1997: 769).
Temporally, flow may vary on hourly, daily, and intra/interannual bases. Spatially, the fluctuations in flow influence the
degree of river and stream channel inundation, lake levels and
groundwater and wetland recharge. The ecological structure
and function of streams and rivers are regulated by five critical
components of the flow regime (Poff et al. 1997: 770):
• magnitude - the amount of water moving past a fixed
location at any given time;
• frequency - how often a flow of a given magnitude is
observed over a given time interval;
• duration - the period of time associated with specific flow
conditions;
• timing - the regularity with which a given flow condition
occurs (e.g. annual peak flows); and,
• rate of change - how quickly a flow changes from one
condition to the next.
Together, these components describe the variable flow conditions for aquatic ecosystems. Each of these flow conditions has
a unique influence on the integrity of river and stream ecosystems and related lake, wetland and groundwater systems.
The cumulative impacts of flow modification and the myriad
other human disturbances on freshwater systems result in
marked changes in ecosystem processes. If flow regimes are
altered beyond critical limits, the ecological integrity and selfsustaining productivity of aquatic ecosystems become severely
compromised (Poff et al. 1997: 770). This in turn compromises
the ability of ecosystems to provide goods and services vital to
human health and economies such as storage and purification
of water for drinking water supply, as well as fisheries production and flood mitigation.
Source: (Brandes and Maas 2004: 36)

for water permits but not for the water taken
(Environment Canada 2003a). This licensing system does
not support conservation pricing but creates a “perverse
subsidy” that leads to overconsumption: “the inefficient
price of the resource becomes embedded in the stock of
industrial capital and in the design of municipal water
utility systems” (Renzetti and Dupont 2002: 495).
Current surface water licensing schemes in Canada are
primarily designed to license the consumptive use of
water rather than to meet instream needs that maintain
natural flows for ecosystems, wildlife habitat, fisheries, or
navigation (Percy 1988: 48, 65; Thompson 1991: 160).
Groundwater licensing schemes are also deficient, and
little effort has gone into identifying the interconnections
between surface and ground waters. Too rigid to adapt to

emerging ecological considerations or the changing priorities of society, these systems leave environmental protection to the discretion of decision makers, rather than
enshrining mandatory legal protection. In some cases,
more water has been allocated than even exists. Similarly,
groundwater allocation systems fail to protect aquifers
and the surface ecosystems that rely on them.

5.3 Water allocation that ensures
watershed health
Once ecological water needs have been identified,
they require legal protection. Instead, the current system
of water allocation in Canada produces a constant
decline in the residual amount of water available to
sustain ecosystem health and productivity.
At a Watershed   53

 Box 31 presents an alternative that “nests” the human
water economy within the finite “natural water
economy.” Placing a “sustainability boundary” on
human water use acknowledges the hydrologic limits of
watersheds and aquifers, and sets an explicit goal of allocating water to sustain healthy aquatic ecosystems (Postel
and Richter, 2003: 37).
Australia, Europe, Israel and South Africa build the
ecological sector directly into their water-planning
framework. Ontario has indicated in its White Paper on
source protection that it intends to do the same. The
European Union issued a directive establishing a new
framework for water policy that includes a focus on river
flows. A key feature of the directive is the establishment
of criteria for classifying the ecological health status of
rivers (and other water bodies) as high, good, moderate,
poor, or bad, depending upon how much the river’s
ecological characteristics deviate from a natural or undisturbed condition (Postel and Richter 2003: 83).

Box 31: Water allocation models

Time
Twentieth-Century Approach to Water Allocation. The conventional
approach to allocating water is to permit human uses (H) for agriculture,
cities, and industries to keep expanding, leaving for natural ecosystems (E
whatever slice of the "water pie" happens to remain. Over time, this
residual slice becomes too small to support ecosystem functions
adequately, causing the disappearance of species and the loss of valuable
ecosystem services.

Australia

In Australia, rivers and wetlands are recognized as
legitimate “users” of water, and jurisdictions implement
water allocations to sustain and restore ecological
processes and biodiversity of water dependant ecosystems (Schoefield et al. 2003). For example, New South
Wales responded to the COAG water reforms in
Australia with significant legislative reforms. These
reflect “the fundamental principle that the needs of the
environment, as defined by the rules of WSPs [Water
Sharing Plans], are met before the needs of other entitlement holders-water utilities, stock and domestic users,
and licensed users” (NSW Ministerial Statement 2004;
NSW WMA). “Planned environmental water,” as
committed by the rules of a WSP, cannot be used for any
other purpose while “adaptive environmental water” is
primarily dedicated for the environment but may be
withdrawn for other uses when available.
South Africa

Similarly, South Africa has undertaken significant
water reforms over the past decade (Abrams 1996; Allan
2003). The national government has authority over
water and, in 1998, passed the National Water Act
(South Africa NWA) which mandates that the water
needs for the effective functioning of all ecosystems be
protected. A classification system of water resources is to
be adopted based on factors such as quantity and environmental flow characteristics.
Once a particular water resource is classified, a
54   POLIS Project

Time
....Sustainability boundary
Proposed Twenty-First-Century Approach to Water Allocation. In this new
approach to allocating water, scientist and policymakers define the quantity
and timing of flows needed to support freshwater ecosystem health, and
then establish a "sustainability boundary" that protects these flows from
human use and modification. Human uses of water (H) can increase over
time, but only up to the sustainability boundary. At that point, new water
demands must be met through conservation, improvements in water productivity, and reallocation o water among users. By limiting human impacts on
natural river flows and allocating enough water for ecosystem support (E),
society derives optimal benefits from river systems in a sustainable manner.

Postel and Richter, 2003:39

“reserve” must then be determined. Even prior to classification, a preliminary reserve must be set before certain
uses of water are authorized. The reserve consists of two
parts: the “basic human needs reserve” to provide for the
essential needs of individuals, and the “ecological reserve”
required to protect the aquatic ecosystems of the water
resource (see Box 32). The Act states: “the quantity,
quality and reliability of water required to maintain the
ecological functions on which humans depend shall be
reserved so that the human use of water does not individually or cumulatively compromise the long-term sustainability of aquatic and associated ecosystems.” Public
consultation is required before setting these reserves. A
similar “reservation” scheme is in place in Florida.
In some cases, land use activities are included in
water withdrawal permitting schemes. Deforestation,
afforestation, agriculture, and urbanization all significantly alter the quantity and timing of water flows, as
does watershed “hardening” due to increasing areas of

 Box 32: Water allocations under South Africa's National Water Act
Water
Allocation

Purpose of Water

Objective

Mode of
Allocation

Water for Basic
Human Needs

To support basic human needs (i.e. drinking, cooking and
sanitation)

Meet human
survival needs

Nonnegotiable

Social and
economic growth
and well-being

Negotiated through
ongoing stakeholder dialogue
and consensus
around trade-offs

Water for the
Ecological Reserve

To sustain a certain
state of the
ecosystem (e.g.
substance fishing
and recreation)

State of the ecoUse of goods and
system associated
services to support
with a specific
a range of benefits
range of goods and
services

Postel and Richter 2003-87

impermeable surfaces. South Africa’s National Water Act
allows a land use practice in dry-land areas to be declared
a “stream flow reduction activity” (SFRA) if it reduces
the yield of downstream water from natural conditions.
Once declared, such land use activities are potentially
subject to the water allocation licensing system.
Afforestation was declared a SFRA in South Africa
because it permanently changes land use from its naturally low water use status, and because it occurs in areas
that produce the majority of the country’s water. Existing
and new forestry plantations will require water use allo-

cation permits. Other non-dryland farming activities
may also be declared SFRAs in the near future.
5.3.1 Withdrawal permitting
Instream flows must be determined and protected on
a watershed-by-watershed basis and potentially for each
river on a reach-by-reach basis to ensure that no part of
a river’s flow is significantly affected. Similarly, groundwater balance must be considered on a catchment-bycatchment basis.
Such a system is in place in Florida and in Arizona.

Box 33: Watershed protection in Florida, U.S.
Florida’s water management system has been the envy of
many U.S. states for over 25 years. Florida’s Water Resources
Act of 1972 was based on the Model Water Code developed
by the University of Florida Water Resources Research Center.
The Act delegates significant water management authority to
five regional Water Management Districts (WMDs) based on
hydrologic basin boundaries. Each WMD has a governing body
consisting of citizen volunteers appointed by the Governor.
The Act requires WMDs to establish minimum instream flows
and levels for surface and ground waters within their jurisdictions. Minimum flow is defined as the “limit at which further
withdrawals would be significantly harmful to the water
resources or ecology of the area.” “Water resources” include
environmental, fish and wildlife components. WMDs are
required to set water aside for the protection of fish and
wildlife or public health and safety. These “water reservations” vary depending on seasonal water needs. If water
sources are inadequate to provide for existing and projected
uses and natural systems, the WMDs will mitigate this though
water supply planning.
In addition to state statutory requirements, each WMD sets its

own rules concerning permits for consumptive uses. The
Southwest Florida Water Management District (SWFWMD),
for example, requires all applicants for major withdrawals to
provide reasonable assurances, on an individual and cumulative basis, that the water use:
• will not cause quantity or quality changes that adversely
affect surface and ground water resources;
• will not cause adverse environmental impacts to wetlands,
lakes, stream, estuaries, fish, wildlife or other natural
resources. Each “wetland hydroperiod shall not deviate
from their normal range and duration to the extent that
wetlands plant species composition and community zonation are adversely impacted;”
• will use the lowest quality of water possible, and will not
pollute an aquifer; and,
• will incorporate water conservation measures, apply practicable reuse measures, and reduce water losses.
Withdrawal permits typically contain requirements to monitor
water quality, maintain minimum aquifer levels, and provide
water use interim reports that describe adverse environmental
impacts and the mitigation of such impacts.
Source: (Regan 2003, Sumero 2003)

At a Watershed   55

 South Africa is also moving to a watershed-based withdrawal permitting scheme under its National Water Act.
The country is divided into 19 Water Management Areas
(WMAs), each containing one or more watersheds.
Although the Department of Water Affairs and Forestry
(DWAF) manages each WMA initially, a Catchment
Management Agency (CMA) will eventually be created
for each. At such time, the bulk of management responsibilities will be delegated to the CMA, including
licensing water withdrawals. This will leave DWAF to
serve as a policymaking and standard setting authority.
The NWA requires that catchment management strategies are developed for each WMA, including water allocation plans. An independent Water Tribunal was created
to hear appeals against the decisions of CMAs.
Watersheds or catchments that cross provincial or

international boundaries require national regulation or
coordination to overcome the disincentive for one
province to protect instream flows or groundwater
balance that cross the border into an adjacent province.
5.3.2 Integrated management of surface
and ground waters
As surface and ground waters often form a single,
connected resource, extracting water from one will affect
the other. Ground and surface water policies should
therefore be integrated through conjunctive water
management. In Connecticut, the Water Diversion Policy
Act requires a permit for any withdrawal exceeding
50,000 gallons per day (gpd) from either ground or
surface water sources (IFC 2002: 149). The same
criteria, including impacts on fisheries, wildlife, and

Box 34: Groundwater balance through DSM and land use planning in Arizona, U.S.
In the past, groundwater overdraft led to significant problems in Arizona. Costs for drilling and pumping increased as
water tables fell, water quality decreased, roads and
building foundations subsided, always with the threat of
eventual loss of supply. This prompted the creation of the
Groundwater Management Act (GMA) in 1980 and, to
administer the Act, the Arizona Department of Water
Resources (ADWR). A faculty associate position at Arizona
State University was also created to address the overdraft.
In 1986, the Ford Foundation selected the GMA as one of
the 10 most innovative programs in state and local government-due in part to its explicit recognition that control of
land use is essential to control water demands.
Under the GMA, five Active Management Areas (AMAs) are
designated where groundwater overdraft is most severe,
areas that include the majority of Arizona’s population.
AMA boundaries are usually defined by groundwater catchment areas. The primary management goal in four of the
AMAs is to attain “safe-yield” by 2025. This requires a longterm balance between annual extraction and annual
recharge (although it does not take into account potentially
diminished surface water flows). To prevent local water
tables from experiencing long-term declines in the Santa
Cruz AMA, a program of groundwater rights and permits
was created and a number of demand and supply-side
requirements imposed to resolve significant international,
riparian and ground/surface water issues.
On the demand side, no new agricultural irrigation is
allowed within AMAs, and ADWR is required to prepare a
Water Management Plan for each AMA every 10 years.

These plans must contain rigorous and enforceable water
conservation requirements for all major water users, a plan
for increasing groundwater supplies, and a conservation
assistance program. In the first management plan, municipal water utilities, for example, were required to reduce per
capita consumption by a fixed percentage (0-11%, based
on their 1980 per capita use) and to reduce system leakage
below 10%. To achieve these goals, utilities have implemented an appropriate set of DSM measures. For example,
working with local governments to establish more waterefficient landscaping bylaws.
On the supply side, developers within AMAs must demonstrate an assured water supply (AWS) before new urban
subdivisions are approved. The utility must do this if the
development is within their service area. The developer
must demonstrate a 100-year assured water supply,
predominantly from renewable water sources that are physically and legally available and of adequate quality. Supply
uses must be financially feasible and consistent with the
management and conservation goals of the AMA.
Finally, the GMA requires water users within AMAs to
meter and report their annual water use. Audits are
conducted frequently. ADWR maintains a groundwater use
database for enforcement and for long-range planning.
Groundwater users pay an annual groundwater withdrawal fee, directed to offset the costs of administration,
supply augmentation (such as aquifer recharge and
effluent re-use), and grants and technical assistance in
conservation. After 2006, such fees may also be used for
retirement of irrigated land.

Source: (Vance 1995-96; Jacobs and Holway 2004; ADWR 2004; Arizona GWMC 2001)

56   POLIS Project

 instream flows, are applied to all applications. Reversing
the burden of proof, the applicant must submit
convincing evidence to the contrary, or else the state will
presume that groundwater withdrawal will create an
equivalent (1:1) reduction in surface flow.
Under the European Water Framework Directive
(WFD), member states must aim to achieve “good quantitative status” for all groundwaters by 2015. This means
that groundwater withdrawals must not exceed the
average rate of recharge less the rate of flow required to
achieve the ecological quality objectives for associated
surface waters and terrestrial ecosystems such as
wetlands. The WFD thus provides, for the first time, a
partial framework for integrated management of ground
and surface waters throughout Europe.
5.3.3 Dealing with urbanization and drought
Urban development “hardens” a watershed, and then
creates addition demand for water. Ensuring water
supplies are available before such developments proceed is
essential to long-term planning. In Arizona, new urban
developments must demonstrate a 100-year assured water
supply to meet the new demand. Similarly in Florida, the
local withdrawal permitting bodies (WMDs) are required
to undertake long-term water supply planning if water
sources are not adequate to meet all existing and
projected reasonable-beneficial uses. This relationship
between land use and water allocation planning is one
reason why many jurisdictions are moving to integrated
watershed management.
In the past, environmental water needs have been
given low priority in relation to human withdrawals even
in times of drought. To correct this, drought response
plans are required, which prioritize water uses and implement water use reductions in times of drought to protect
instream flows and groundwater balance. South
Carolina’s Drought Response Act of 1985 declares water
used for instream flows to be an “essential water use”
with out-of-stream uses designated as nonessential, and
curtailed first during periods of drought (IFC 2002: 89).

5.4 Dealing with overallocations
Overuse of water resources occurs when too many
withdrawal permits are granted or when actual withdrawals exceed permitted amounts, possibly a result of
poor metering and/or monitoring. While improved
enforcement could address metering and monitoring
problems, undoing past over-allocations is difficult and
expensive. The Murray-Darling Initiative in Australia,
for example, recently devoted $500 million to reversing

past over-allocations. Despite the expense, failure to
address over-allocation increases ecological damage and
costs in the future.
Reducing all volumetric allocations pro rata appears
to be a simple solution. Yet, such an approach is politically unpalatable, may take water away from the most
efficient water users, and fail to target areas where environmental concerns are most pressing (Schofield, Burt
and Connell 2003: 9). Targeted DSM measures can help
rectify past overallocations. By requiring all water withdrawers and users in an over-allocated watershed to
redress imbalances in a systematic fashion, and then
adjust water allocation to better reflect ecological realities, viable solutions can be achieved.
In 1997, a Government Water Summit in the U.K.
made a commitment to reverse environmental damage
caused by past over-allocations (U.K. Environment
Agency 2004a; U.K. Environment Agency 2004c). The
Restoring Sustainable Abstraction (RSA) program was
first created to identify sites affected by over-use and determine priority actions to reduce environmental damage
and achieve sustainable withdrawal levels. In 2001, the
U.K. Environment Agency launched the Catchment
Abstraction Management Strategy (CAMS), a six-year
program to develop a CAMS for every watershed in
England and Wales. To reduce over-allocation, many
permanent withdrawal licences would have to be changed
or revoked, with statutorily required compensation
costing hundreds of millions of pounds. One method
being considered to minimize compensation costs is
“reverse auctions,” where licence-holders compete with
one another to sell their water back to the government.
To avoid overallocations in the future, adaptive water
withdrawal permitting would allow permitted withdrawal volumes to be changed over time in response to
water availability, varying as a result of the variable
instream flow needs of a river, seasonal variations in
precipitation, droughts, and long-term changes due to
climate change. Permitted withdrawal volumes might
also be reduced in response to new understanding of the
ecological impacts of withdrawals.
Permanent vested water rights in a particular volume
are a “serious legal barrier to wise water development”
Regan (2003: 173). Although adaptable allocations
systems are required to deal with changing and emerging
realities, they challenge the certainty required by water
users, whose plans and investments reflect expected
water availability. Two approaches to address this tension
are: time-limited withdrawal permitting, and the granting
of shares in the “consumptive pool.” A third, more gradual
At a Watershed   57

 approach to handle over-allocation and create adaptability is through water trading schemes, with an
instream flow reservation being applied with each water
transfer. In Alberta, under the new Water Act such a
system is possible. The Act authorizes the Government
to withhold up to 10% of the water being transferred,
although this hold back is discretionary and may come
under political pressure.
5.4.1 Time-limited withdrawal permitting
Time-limited withdrawal permits provide security
during the lifetime of the permit, subject to water use
restrictions during drought or emergency conditions,
thus providing some certainty that signals the appropriate level of capital investment (Beck 2000-2001:
154). Once the time period expires, the allowable extraction volume on the permit may be reduced, the permit
renewed or cancelled. What route is taken will depend
on changes in water availability, new water conservation
technology, unforeseen impacts from past withdrawals,
or increased knowledge of ecosystem needs.
The U.K. announced a time-limiting policy in 2001,
which became a statutory requirement in 2003. All new
licences and variations are now subject to time limits
(U.K. Environment Agency 2004a; U.K. Environment
Agency 2004c). To encourage holders of existing permanent licences to convert to time-limited status, the
Environment Agency is considering a reduction in withdrawal charges for time-limited licensees. And after July
2012, existing withdrawal licences that are not timelimited and that have the potential to cause serious
damage to the environment, may be revoked or adjusted
without compensation. In contrast, holders of timelimited licences will retain the right to compensation if
licences are revoked or varied prior to their expiration
date.
Under South Africa’s National Water Act licenses are
time limited to a maximum of 40 years and must be
reviewed at least every 5 years to allow for changes in
response to water availability. And in Florida, Water
Management Districts can award consumptive use permits
for up to 20 years. Upon application for renewal, permitted
volumes may be reduced and new permit conditions.
5.4.2 Awarding shares in the consumptive pool
An alternative approach to dealing with the tension
between adaptability and security is being implemented
across Australia following the 2004 National Water
Initiative (NWI). The government has committed to
returning previously over-allocated and/or overused
58   POLIS Project

surface and groundwater systems to “environmentally
sustainable levels of extractions.” In particular, an agreement commits governments to a nationally compatible
system for water allocation, planning, accounting, and
risk sharing (COAG 2004; CEOGW 2003):
• Water allocation. The consumptive use of water
requires a “water access entitlement,” which is a
perpetual or open-ended share of the “consumptive
pool” of a specific water resource. For each water
resource, the water available for consumptive withdrawals will first be calculated to determine the
pool, then allocated among water withdrawers
according to the number of shares each one holds.
While the shares are secure (and registered, allowing
them to be traded, leased, subdivided, or mortgaged), the total consumptive pool will change
according to the actual volume of water available
from season to season and over the years.
• Water plans. States/territories will develop statutory
water plans for ground and surface water management units in which access entitlements are to be
issued. Such plans will describe the rules to determine the consumptive pool and to allocate water, as
well as the ecological outcomes to be attained.
Periodic independent audits, reviews and public
reporting will be undertaken to assess the achievement of those outcomes. “Environmental” water
will be given at least the same degree of security as
the consumptive water access entitlements.
• Water accounting. A nationally compatible water
accounting system will be put in place in each jurisdiction to measure, monitor and report on the
amount of water being traded, extracted for
consumptive use, and managed for environmental
purposes. Each jurisdiction will identify areas that
have close interaction between surface and ground
water. By 2008, the system will include an
accounting of such interactions.
• Risk assignment. In addition to reductions required
for dealing with over-allocation and overuse, entitlement holders bear the risk of reduced volume
assignments due to drops in the consumptive pool
from seasonal or long-term climate changes, or periodic natural events such as drought. Entitlement
holders also bear the risk of reductions in response
to a better understanding of water systems’ capacities to sustain extraction levels until 2014. After
2014, this risk will only apply to the first 3% reduction, with the remainder to be shared between the
state/territory and federal governments.

 5.5 Linking water conservation to
permits
Legislation and/or withdrawal permit conditions
often require efficient water use. In Florida, for example,
the Southwest Florida Water Management District
(SWFWMD) requires all applicants for major withdrawals to provide assurances that they will incorporate
water conservation measures, apply all practicable reuse
measures, and ensure that water is not wasted. Arizona
has also imposed conservation requirements on water
utilities that withdraw groundwater.
In some cases, withdrawal permits were denied where
applicants had not demonstrated sufficient efforts to
implement DSM measures (Fleming and Hall 2000:
82). The City of Roswell’s (New Mexico, United States)
request for additional water was denied because of a high
per capita rate of water use coupled with the lack of a
conservation plan with specific efficiency measures to
reduce consumption. The City of El Paso (Texas) was
also denied its request for additional water in part
because the state officials determined that the city could
meet its 40-year needs through conservation and more
efficient use.
Similar requirements and permitting conditions have

prompted DSM efforts in Canada. For example, the
Government of Ontario recently refused to issue another
water taking permit to the City of Guelph until the municipality demonstrated that its existing water supply was
being used as efficiently as possible. In response, and in an
effort to meet the provincial requirement, the City of
Guelph implemented an Outside Water Use Program to
improve outdoor water conservation (Brooks 2005: 90).

5.6 Market-based instruments for
water sustainability
A range of market-based and economic instruments
exist that can promote more efficient use of water
resources. As illustrated in Box 35 these instruments can
be applied to withdrawals at the source, and to end users
(discussed in later chapters).
Market-based instruments are usually part of a larger
policy package and, to be effective, must be combined
with other tools into a comprehensive management
strategy. Cantin et al. (2005: 3) cautions “location and
context are everything,” emphasizing that market-based
instruments alone are not a silver bullet for water
sustainability, but must be applied with a clear understanding of the policy objectives they are to achieve.40

Box 35: The full range of market-based instruments to promote water sustainability
Surface water

Ground water
Volume- and quality-based withdrawal pricing, tradable withdrawal permits, legal liability for environmental damage resulting from withdrawals

Municipal water collection, treatment and distribution
Volume-based retail pricing and/or taxes on water use
by end users
End user

Subsidies for water-efficient technology
Volume- and quality-based sewage charges and/or
taxes on sewage production by end users

Municipal sewage collection and treatment

Reuse or discharge

Reuse subsidies and pricing of reused water, volumeand quality-based discharge pricing, tradable
discharge permits (such as for specific pollutants),
legal liability for environmental damage resulting
from discharges

The authors go on to suggest that market-based instruments “maybe be most useful if applied in an Adaptive Management framework, such as
the soft path analysis…” (Cantin et al. 2005: 9).
40

At a Watershed   59

 5.6.1 Withdrawal pricing
Volume-based withdrawal pricing charges for each
unit of water withdrawn or licensed to be withdrawn,
creating a constant incentive to reduce water use
(Renzetti and Dupont 2002). Charges vary according to
what incentives they create, how the unit price is set, and
how generated revenues will be used. In Hamburg,
Germany, withdrawal prices are volume- and qualitybased (Kraemer et al. 2003: 10-13). “Good groundwater”
from deep and relatively well-protected aquifers carries a
higher unit price than poorer groundwater, creating an
incentive to use lower quality water where feasible.
In Denmark, a “tap water tax” is charged for water
utility withdrawals, the cost of the tax then passed on to
consumers (Kraemer et al. 2003: 13-15; ECOTEC
2001: 71-74). This is part of a “green tax-shifting”
scheme where taxes on economically-beneficial activities
(such as income from employment) are partially replaced
by taxes on damaging activities (such as resource
consumption). To this end, water utilities must pay the
tax on 90% of the water they withdraw, but can only
pass on to end-users the tax of their actual metered water
consumption. The utility must pay the tax on any water
losses due to system leakage over 10% (leakage below
10% is generally considered reasonable). In addition to
helping reduce end-user water consumption, this general
revenue tax has helped decrease leakage from water
works by 23% since the program was instituted.
Earmarking revenues for purposes related to the tax
can improve its political acceptability (Kraemer et al.
2003: 5,45; daMotta et al. 2003: 76). In Brazil, which is
gradually shifting to watershed management, River
Basin Committees suggest the water charges for the
basin, and the resulting revenues be used to pay for the
programs necessary to achieve the environmental targets
identified in the Water Resources Plan for the basin
(Brazil ANA 2004, Kraemer et al. 2003: 44,45; daMotta
et al. 2003). Under the Brazilian Federal Water Resources
Law, only up to 7.5% of such revenues can be transferred out of the basin.
In South Africa, withdrawal pricing includes a
volume-based consumptive charge, a levy to fund the
Water Research Commission, and a charge to pay for
water management within the Water Management Area
(WMA). This WMA charge funds, among other things,
for planning and implementation of watershed management strategies, monitoring and assessment of water
resource, water quality and uses, and conservation and
demand management. Ultimately, as Catchment
Management Agencies (CMAs) are established, these
60   POLIS Project

more local bodies will take over price setting from the
central government department, with revenues shared
between the CMA and DWAF according to the relative
responsibilities within the management area.
These examples illustrate ways withdrawal revenues are
directly used to subsidize DSM measures or restoration of
damaged ecosystems from past water projects. Other
options include compensation payments to farmers for
restrictions in land use (e.g fertilizer reduction) as is done
in Baden-Württemberg (one of Germany’s Länders, or
provinces) (Kraemer et al. 2003: 10-13).
A recent report by the Independent Competition and
Regulatory Commission (ICRC) in the Australian
Capital Territory (ACT) recommended that withdrawal
charges include a broad range of values (ICRC 2003). In
addition to covering government costs for watershed
management and related environmental protection, the
ICRC recommended including two new charges. A
“scarcity charge” offsets the lost-opportunity costs
resulting from consumptive water use, as measured by
the market-trading price for temporary water entitlements, while an “environmental charge” offsets the costs
of ecological impacts caused by reduced downstream
flows, as measured by the cost of permanently buying
back such flows.
An effective approach to abstraction pricing consists
of a flat rate licensing fee, to cover administrative costs, in
combination with an availability charge, that reflects the
capital and environmental cost of providing the supply,
and an actual charge based on the volume of water withdrawn. A similar pricing approach could apply to
discharge of treated wastewater into receiving waters
(Brandes and Ferguson 2004: 44).
In many cases where volume-based withdrawal
pricing has been implemented, exceptions or price
reductions have been provided for specific types of endusers (Kraemer et al. 2003: 9-14; ECOTEC 2001: 69).
Some of these, such as for emergency fire-fighting and to
ensure poorer people can meet their basic water needs,
can be justified for equitable social objectives. Others,
however, are more politically driven “perverse subsidies”
that may impede the ability of the economic instrument
to allocate water to its most beneficial end use, and
instead facilitate continuing ecological degradation.
Water and water services should not be provided free
except in the most severe cases. Whether a subsidy is
appropriate should be publicly evaluated and debated.
Fundamentally water rates and withdrawal charges
should be designed to encourage efficient and effective
use of water (Gleick et al. 2002).

 5.6.2 Tradable withdrawal permits
An ecological analysis of instream needs and groundwater balance helps to determine how much water can
be withdrawn for consumptive uses, but does not help
determine who should get the water to maximize the
social benefits. One market-based approach to this allocation problem is to use public auctions (such as bidding
and tendering processes) to sell new withdrawal permits.
Going further, water withdrawal rights can be made
freely tradable. This would help ensure that allocations
are directed to the most economically beneficial uses,
and create positive incentives for rights holders to invest
in conservation technology, since the water saved can
then be sold. The ability to transfer water rights can
provide flexibility for overallocated systems.
Tradable water rights have existed in Chile for a
couple of decades. Hearne and Easter (1996) found
substantial efficiency gains, with both sellers and buyers
benefiting (although results generally indicated buyers
captured the larger share of gains). Other studies found
similar results, but examined the nature of the gains and
found they accrue disproportionately to large farmers
(Romano and Leporati 2002; Janmaat 2005). This
disproportionate benefit is of concern if left unchecked
because water rights may become concentrated in the
hands of a few wealthy farmers or corporate interests.
Australia has been trading water for decades, and their
trading schemes have generally provided for an instream
flow reservation when transfers occur (IFC 2002:
153,154). Under the rules of a pilot interstate trading
project in the Murray-Darling Basin, an exchange rate of
0.9 was set for transfers so that 10% of the original allocation would be returned to the river. 41 A similar system
is allowed under the Alberta Water Act, with water trading
possible in the South Saskatchewan Basin.
Water markets can promote conservation. Being able
to sell unused portions of water rights may provide an
incentive to reduce use or substitute conservation technologies. However water markets and transfer of water
rights are controversial. There are, as above, serious
equity concerns that must be protected. As well, they are
often associated with the idea of “water for sale” and the
commodification of water, sparking fears about the
potential privatization of what is generally considered
the most precious and fundamental resource (Nowlan
2005: 80).

The legal framework directly influences how a
market operates and functions. The laws that define
property rights are crucial to the functioning of markets,
as are the laws that structure and regulate that market.
How entitlement rights are defined influences the values
that market participants assign to them, especially, the
definition of who will incur the related regulatory and
financial risks (Horbulyk 2004). However, a clear definition of water rights can be a challenging and politically
charged task. Furthermore, water’s mobility, volatility,
and variable (and changeable) quality make it difficult to
define and regulate as property (Cantin et al. 2005).
Any trading schemes, such as the one outlined, must
situate water withdrawals in a watershed or catchment
context. Any trading system must account for ecological
needs first. A basic volume of ecological water is not a
luxury but a necessity. Only when a sustainable limit is
established that is sensitive to instream flows and
groundwater balance, can a market system, when functioning properly, facilitate the movement of water to its
highest value.
Markets work best when accompanied by other
instruments (regulations, oversight, education, etc.) to
ensure equity and environmental goals are met: “The
water market can be a very good servant to move water
around between competing uses and drive the process
towards sustainable rural communities, but if left to its
own forces, it could prove a very unforgiving master”
(Bjornlund 2004).
Box 36: Limits of water markets
“Markets, trades, and transfers, however, can accomplish
only a small part of the large challenge of rebalancing water
allocation between human uses and ecosystem support.
They are not a substitute for a broader legal or regulatory
mandate to designate flows for the health and functioning
of freshwater ecosystems.”
(Postel and Richter 2003)

5.6.3 Legal liability for environmental damage
The third type of market-based instrument for water
withdrawals outlined in Box 35 is legal liability of water
withdrawers for environmental damage (Regan 2003:
160; Hunter et al. 2002: 411,415; Fiorino 1999:
449,450). Such environmental liability schemes can

Under the COAG reforms, Australia is now moving to the trading of perpetual shares in the consumptive pool. New South Wales is implementing
a number of initiatives to facilitate such trading. The state publishes data on the long-term average volume of water likely to be available per share,
it established a water entitlement registry that will eventually provide for indefeasibility of water entitlements, and it provides an absolute guarantee
that a registered entitlement is accurate.
41

At a Watershed   61

 create incentives for users to investigate and avoid potential environmental harm that might result from their
activities. If harm does occur, they are legally responsible
for the costs of restoration.
Liability schemes have been used successfully in
Sweden in relation to water pollution (Kraemer et al.
2003: 35). More broadly, the recent Europe-wide
“Directive on Environmental Liability with Regard to
the Prevention and Remedying of Environmental
Damage” requires liability schemes to be put in place by
all member states (E.U. Directive 2004). It explicitly
includes liability for significant adverse effects on the
ecological, chemical or quantitative status of waters,
whether caused by discharges or withdrawals.
To enhance the legitimacy and efficacy of legal liability
regimes (or indeed any environmental law), some jurisdictions allow the public to enforce them, and some even
provide monetary incentives to do so. For example, in
Colombia, anyone pursuing environmental liability judicial action is entitled to receive 10 to 15% of the total
compensation. This has significantly increased the number
of violations taken to court (Kraemer et al. 2003: 43).
The United States similarly allows the public to
enforce most environmental legislation through the
statutory mechanism of citizen suits, which is considered
an important civil liberty and a key component of
ecological democracy (Delogu 1992; Thompson 2000).
The Public Trust Doctrine in the United States also
provides citizens with an effective mechanism to oversee
withdrawal and pollution permitting. The recent
European Union directive on environmental liability
also facilitates citizen access to the courts. In contrast,
few Canadian environmental laws include citizen suit
provisions, and a number of Canadian jurisdictions,
such as British Columbia, routinely intervene to stay
private prosecutions by citizens attempting to enforce
environmental laws (Proctor 1991; Webb 1991; Tingle
1994; Ferguson 2004).
5.7 Conclusion
A starting point for water use reform is to protect
ecological function at the source, providing water for
other human activities only after ecosystem preservation

62   POLIS Project

Box 37: The Public Trust Doctrine in the
United States
The U.S. Public Trust Doctrine is based on the fundamental
recognition that certain resources are of too high a public
value to be given over to private control, but should be
held in trust by the state for the benefit of all citizens. In
the case of water, the doctrine has required that waterways
remain usable for navigation, commerce and fishing. In
some U.S. states, such as California, the courts have
expanded this list of trust responsibilities to include recreation, open space, scenery, and habitat for birds, fish and
wildlife.
U.S. courts have held that consumptive water rights are
subject to the Public Trust Doctrine, and that water rights
or regulatory approvals of withdrawals must also adhere to
the doctrine where feasible. One of the most famous cases
and a leading precedent is National Audubon Society v.
Superior Court of Alpine County. In this 1983 Californian
case, the court ordered the State Water Resources Control
Board (SWRCB) to review the 42-year old grant of Mono
Lake waters to the City of Los Angeles. The review was to
determine whether diversions that were causing significant
environmental damage should be cut back to maintain
public trust values in Mono Lake. As a result of the review,
water diversions were reduced by two-thirds.
Source: (IFC 2002: 11-20,136; Gillilan and Brown 1997:
151-157)

is assured. Once human water extraction and flow modification have reached the limit in a river basin or watershed, new demand for water must not be met by further
river manipulation. Instead, water productivity must be
increased. This entails unleashing the full potential of
demand management for water.
The scientific knowledge of ecological flows for rivers
is already sufficiently advanced to prescribe targets and
management options that will ensure long-term river
and riparian health. Policy tools for these approaches
exist. As the examples in Australia, South Africa, Europe
and the United Status have shown, the policy toolbox
can be adapted to different legal and cultural settings.
This toolbox also holds significant potential in Canada.

 Chapter 6

Enabling Local Water Sustainability

Efforts now need to focus on the institutions that can creatively manage and
accelerate the adoption of demand-side management practices and policies
— on governance of demand management.
(Brooks 2003: 33)
In Canadian cities water use is profligate and the
impacts are geographically concentrated. As a result, the
urban sector faces escalating environmental degradation,
threatened future supplies, and ballooning infrastructure
costs (Brandes and Ferguson 2004: 5-10; Maas 2003: 58). Demand management (DSM) for urban water use is
critical to any national water strategy.
Although DSM has many benefits, local authorities
(such as local and regional governments, and water
wholesalers and utilities) often fail to fully implement it.
This failure is a result of many obstacles—institutional
inertia, the lack of long-term planning and legal powers
to implement or mandate DSM, insufficient data, technical knowledge, staff and financial resources, and a
general lack of public awareness and support (Brandes
and Ferguson 2004: 11-17; Maas 2003: 25-27). Senior
governments can play a key role in addressing this situation, catalyzing a collaboration of professional and
industry associations, NGOs and local authorities to
implement comprehensive demand management.
This chapter focuses on how the management and
operational structure of local authorities can be adapted to
promote sustainability. Restructuring the management of
local authorities so that long-term water conservation planning is embedded within an adaptive management framework, and integrated with land use planning, helps create a
cultural shift within local authorities. While a few local
authorities might undertake such initiatives on their own,
such restructuring is unlikely to occur in any widespread or
systematic way without senior government involvement.

6.1 Promoting demand management
Many water efficiency improvements are available,
and under-utilized, such as:
• system improvements to repair leakage in system
distribution pipes;
• indoor improvements to retrofit existing fixtures,

install new efficient fixtures (e.g. low-flow toilets),
reuse water on-site (e.g. bathwater for toilet
flushing), change behaviours (e.g. turning off taps);
• outdoor improvements to install efficient technologies
(e.g. drip irrigation), re-landscape (e.g. replace lawns
with native plants that require little water), reuse
water on-site (such as bathwater for irrigation),
change behaviours (to avoid over-watering for
example);
• large scale reuse to reclaim water through neighbourhood- or municipality-wide collection and treatment for reuse in irrigating park or farmland, or for
return to residences and businesses through dual
plumbing systems (Vickers 2001).
Many individual DSM measures have been developed
to require or encourage such efficiency improvements.
Some can be undertaken by water utilities directly, such as
through monitoring and maintenance programs to identify
and fix system leaks. Others target homeowners and businesses, such as legislative requirements that mandate the
use of efficient technologies, educational programs, conservation pricing, rebates and giveaways. A comprehensive
DSM program implements a carefully chosen suite of such
measures to maximize their collective impact.
Senior governments and NGOs can undertake a
broad array of such actions to promote urban DSM.
They include “sticks” such as mandatory requirements,
“carrots” such as conditional funding, and general
support such as guidelines and technical assistance. Some
lead directly to water savings (such as provincial building
and plumbing code provisions that require water-efficient
fixtures in new construction), while others are necessary
to make local initiatives possible (such as provincial regulations and technical guidelines to help ensure that water
reuse is conducted safely). As the examples in this and the
next chapter demonstrate, such actions can be used in a
variety of innovative combinations.
At a Watershed   63

 Box 38: A range of actions to promote urban DSM
Legislative actions
• Authorization - Provincial governments can
authorize local authorities to undertake and/or
impose conservation measures (such as
outdoor watering restrictions or banning the
sale of inefficient fixtures).
• Mandatory requirements - Senior governments can impose requirements, ranging
from DSM measures themselves (e.g. building
and plumbing codes) to mandating local
authorities to undertake DSM planning and
basic DSM measures.
• Mandatory-enabling legislation - Senior
governments can use hybrid legislation that
mandates a higher-level body, such as a
federal or provincial government department,
to produce tools (e.g. planning or bestmanagement guidelines) that enable local
governments to undertake DSM.
Policy actions
• Model bylaws - Senior governments, associations and other NGOs can develop model
bylaws for voluntary adoption by local authorities, who might adapt them to local conditions.
• Guidelines & technical assistance - Senior
governments, industry and professional associations, and other non-governmental organizations can provide a broad range of guidelines
and technical assistance to help in the design
and implementation of DSM programs. This
range includes development of computational
tools, provision of information on best
management practices, and on-site training.
Economic actions
• Conditional funding - Since water system
infrastructure is costly, senior governments can
place conditions on infrastructure support to
require conservation planning so that all DSM
opportunities are explored and implemented
where feasible, or require implementation of
specific DSM measures such as conservation
pricing.42
• Dedicated funding - Senior governments
and others can provide financial assistance
through grants or loans to local authorities to
help them undertake DSM planning and
implement DSM programs (some of which,
such as universal metering, can have significant up-front costs).

• Green taxes - Senior governments can
impose green taxes to help internalize environmental costs and provide economic incentives for DSM and development of water-efficient technologies. As described in Chapter 5,
such taxes include volume-based water withdrawal and wastewater discharge pricing.
• Government procurement - by purchasing
water-efficient technologies themselves, all
levels of government can decrease water use,
demonstrate their use to the public, and
promote the development of such products.
Collaborative actions
• Public-private partnerships - Local authorities
can enter into a PPP with a private company
that is able to plan and/or implement a DSM
program. This can help develop a competitive
market in water conservation provision, utilize
the expertise of the private partner, and help
the local authority avoid up-front costs
through "savings financing" (where the
private partner pays the up-front costs in
return for a share of the resulting cost savings).
• Public participation - Urban DSM relies on
changes in public and business behaviour, so it
is critical to include them in DSM planning and
implementation. Such participation might
involve including members of the public and
businesses on local water planning bodies,
creating a citizen/business advisory committee
on water issues, establishing of a "citizen jury"
to evaluate and make recommendations on
proposed projects or turning to civil society
implementation of specific DSM measures.
• Collaboration - Comprehensive DSM
programs can involve many different parties,
such as the federal government providing
guidelines and education, provincial governments legislating conservation requirements
and providing funds, local authorities and the
public undertaking local conservation planning, and professional associations providing
technical assistance. Such multi-tiered collaborative efforts to coordinate these activities,
perhaps under the guidance of a national
water sustainability strategy, are often critical.
A collaborative multi-agency task-force,
working group or water commission could be
established by senior governments to provide
advice to government, promote dialogue and
research, and coordinate DSM efforts.

DSM program and staffing actions
• Dedicated programs & staff - All levels of
government can create dedicated departments, programs and/or staff positions to
further water conservation. The U.S.
Environmental Protection Agency (EPA), for
example, has a comprehensive Water
Efficiency Program that provides information
and assistance on water efficiency, including
case studies on successful DSM programs.
Similarly, the Office of Water Use Efficiency in
the California Department of Water Resources
is responsible for water use efficiency planning
and coordination, and provides expertise to
local agencies and individuals on water
conservation and reuse. Local authorities
usually require dedicated DSM staff to make a
comprehensive DSM program work. One
option is for senior government to create dedicated staff to be shared between various
smaller municipalities.
Educational and research actions
• Pilot and demonstration projects - Pilot projects can range from a single house fitted with
water conservation fixtures to a large-scale
development with closed-loop water reclamation. Such pilot projects can help spread, test,
and familiarize people with efficient technologies and processes in a public setting. Senior
governments, local authorities, industry and
professional associations, other NGOs and the
public can all play a role in such projects.
• Education - Broad education can instil a
public "water ethic," and inform politicians,
planners and managers of the need for and
potential of DSM.
• Award and recognition programs Highlighting utilities and/or private entities
that undertake innovative and successful
DSM efforts can provide encouragement and
help educate others.
• Research - A great deal is already known
about water conservation that we are not
using, so the major focus should be on implementation. Nevertheless, important roles exist
for research, on how to improve the effectiveness of DSM programs, or how to ensure that
on-site water reuse and recycling is conducted
safely.

For conditional funding to be effective, there must be some mechanism for monitoring and withdrawing the funds if conditions are not fulfilled.

42

64   POLIS Project

 6.2 Long-term planning for water
supply and conservation
As mentioned in Chapter 3, the lack of effective planning is a significant stumbling block to effective demand
management programs. Some Canadian municipalities
are implementing DSM measures;43 the majority typically do so in a limited, ad hoc and reactive manner. This
approach is unlikely to produce the substantial and longterm water savings that comprehensive demand management has to offer. Indeed, the relatively short-term decision processes in many local authorities represent one of
the key institutional barriers to water sustainability. In
many cases where supply-side infrastructure expansion
appears necessary, it could have been avoided if DSM
had been fully considered with sufficient lead time.
What is required then is a comprehensive, long-term (at
least 20-50 years) and integrated planning approach that
considers the full-range of DSM measures and determines
the least-cost combination of demand- and supply-side
options (Brandes and Ferguson 2004: 2,3,35-42). Such
planning should take into account future water availability
(including climate change scenarios), operating costs
(including chemical and energy use), future infrastructure
expansion costs, and ecological impacts. Collectively, these
considerations will usually mean that supply-side options
should only be undertaken as a last resort. Indeed, a soft
path approach “backcasts” from a preferred scenario of
future water sustainability that embeds demand management throughout the water systems. Such a planning
process would indicate, for example, how the “service” of
attractive landscapes could be more cost-effectively undertaken through rebates for re-landscaping with low-wateruse plants than through the provision of additional water. In
this soft path future, senior governments would ensure that
local planning efforts are consistent with broader-scale
(watershed or provincial) water-related planning processes.44
6.2.1 Guidelines, tools and financial assistance
for conservation planning
Providing local authorities assistance in water conservation planning is critical, given its importance and
complexity. In 1998, the U.S. EPA published the Water
Conservation Plan Guidelines, one of the first compre-

hensive and generic sets of guidelines available to water
utility managers in the United States. The guidelines
provide water utilities with a step-by-step planning
process, including detailed worksheets and descriptions
of the types of information required at each step. They
also describe how to implement water efficiency measures, and what strategies and assumptions to consider
when calculating costs and savings. Straightforward and
easy to understand, the guidelines contain regionspecific information and an extensive reference/resource
section, including online resources.
Box 39: EPA Water Conservation Plan
Guidelines
The EPA Water Conservation Plan Guidelines, created under
the Safe Drinking Water Act, set out a simple
“Comprehensive Water Conservation Plan” template that
directs a water utility to:
• specify conservation goals on the basis of community
involvement;
• develop a water system profile;
• prepare a demand forecast;
• describe planned facilities;
• identify water conservation measures and barriers to
implementation;
• analyze benefits and costs;
• select conservation measures;
• integrate resources and modify forecasts; and,
• prepare an implementation and evaluation strategy.
The guidelines direct local authorities to collect and analyze
data to evaluate the effectiveness of a wide range of potential DSM measures, such as universal metering and conservation pricing, public education, retrofits and rebates,
promotion of landscape efficiency and recycling. Different
sets of guidelines have been developed for water systems of
different sizes.
States are given the option of making the guidelines mandatory for water utilities or of requiring local authorities to
prepare plans consistent with the guidelines as a condition
for funding.
Source: (EPA Water Conservation Plan Guidelines)

With estimates of approximately 20% of Canadian municipalities having established demand-side management plans (Cantin et al. 2005: 3).
See Chapter 8 for a discussion of watershed management. As for provincial-scale planning, in the United States, 21 states have adopted state-wide
water conservation plans or strategies (Miri 1998: 5). The California Water Code, for example, requires the Department of Water Resources (DWR) to
develop a California Water Plan to provide for the coordinated utilization and conservation of the water resources of the State, and must include a
discussion of water conservation, recycling, water pricing policies, etc. (§10004). Once such a state-wide plan has been developed, local-level plans
are then usually required to be consistent with the plan.
43
44

At a Watershed   65

 To effectively use such guidelines, local planners need
to be able to predict water (and energy) use reductions
that might result from different combinations of DSM
measures, and be able to compare their costs and benefits to supply-side options. A number of tools have been
developed to aid planners in this task, such as:
• Environment Canada’s Water Use Analysis Model
(WUAM) and the U.S. Army Corps of Engineer’s
IWR-MAIN.
• WATERGY, a spreadsheet model funded by the
U.S. Federal Energy Management Program
(FEMP), to estimate water and energy savings, as
well as total cost and payback times, for a number
of conservation measures such as installation of
water-efficient fixtures and appliances.
• CALVIN, a decision support tool that evaluates the
most economically efficient package of supply and
demand management actions given the current
infrastructure, precipitation levels, withdrawal
patterns, etc. (Lund 2004).
Ongoing development of such tools is an important
area for future funding and research by senior governments and NGOs.
Local authorities, and especially smaller utilities that
tend not to have undertaken DSM planning before, will
also often require financial and more personalized assis-

tance. With this in mind, in 1997 the U.S. Bureau of
Reclamation created the Water Conservation Field
Services Program (WCFSP). The WCFSP helps water
utilities develop and implement effective water management and conservation plans through technical assistance, field visits and financial aid. It also encourages
water conservation generally and coordination of utilities
with state and local conservation efforts.
6.2.2 Mandatory conservation planning and
conditional funding
Providing assistance through guidelines, tools, funds
and other means can help local authorities undertake
planning if they so choose, but sometimes more forceful
“carrots” or “sticks” are required. In the United States,
27 states stipulate conservation objective requirements
or mandatory water conservation plans. A number of
states require such planning as a prerequisite for state
funding (Miri 1998: 4). Similarly in British Columbia,
to qualify for provincial water and wastewater infrastructure funding, municipalities are required to submit
water conservation plans with grant applications (Maas
2003: 17).
California’s water legislation is one of the most
progressive and conservation-oriented in the United
States, and demonstrates the use of both mandatory

Box 40: Water supply and conservation planning in California
California’s Urban Water Management Planning Act (CA
Water Code §10610-10657) requires all urban water
suppliers over a certain size to prepare, and update every
five years, an Urban Water Management Plan. The Act
includes extensive requirements related to DSM. For
example, the Plan must include supply and demand projections, including an evaluation of the reliability of such
supplies and their vulnerability to seasonal or climatic
shortage. For any water source that may not be available at
a consistent level of use, the Plan must include provisions
to supplement or replace that source with alternative
sources or with DSM measures.
In addition, plans must include a description of all ongoing or
planned DSM measures and how their effectiveness will be
evaluated, and an evaluation of 14 specified DSM measures
(such as metering, retrofits, rebates, education, and pricing
reforms) if they are not being implemented. The potential use
of recycled water must also be addressed, including ongoing
or planned actions to encourage it. Further, the Plan must
include provisions to deal with droughts.
45

The Act uses conditional funding to promote DSM planning. If
a water supplier fails to submit or update its Plan as required, it
becomes ineligible for various state funding and drought assistance. In addition, in evaluating applications for grants and
loans for urban water conservation projects, the Department
will take into account the extent to which a water supplier
actually implemented DSM efforts identified in its Plan.
Finally, the Act promotes broad participation in developing
such plans. Water suppliers must encourage the active involvement of “diverse social, cultural, and economic elements” in
the local area prior to and during preparation of the plan, and
they must hold a public hearing.
The Office of Water Use Efficiency in California’s Department
of Water Resources (DWR) assists utilities to prepare their plans
by providing guidebooks, worksheets and workshops.45 In
addition, California voters passed Proposition 50 in 2002,
making $30 million of funding available for water use efficiency grants in the urban and agricultural sectors, and $42
million for recycling planning and implementation.

Available at the Office of Water Use Efficiency Web site at http://www.owue.water.ca.gov/urbanplan/index.cfm

66   POLIS Project

 requirements and conditional funding to motivate DSM
planning and implementation.
6.2.3 Promoting a market in DSM
Rather than plan and implement a DSM program
itself, a local authority might use a competitive bidding
process to involve the private sector. Just such a process
was undertaken by the City of Kelowna in British
Columbia. The City invited the private sector to submit
creative proposals for a 15-year DSM program to meet
the city’s water reduction targets, and encouraged
bidders to submit plans with the most innovative and
least expensive ways to meet those targets. The result was
a public-private partnership (PPP) in which a private
company undertook a metering and education program.
This is one example of a new market in water conservation, where private companies develop conservation
expertise and compete with one another to provide services to utilities and/or end users (Burrill 1996; Louw and
Kassier 2002: 60). One such water service company—or
“WASCO”—in Virginia charges a contingency fee based
on a fraction of the measured water savings achieved.
Known as “savings financing,” this allows a private
company to pay the up-front costs for planning and/or
implementation of water conservation efforts in return
for an ongoing part of the resulting cost savings (Foerstel
1994: 66). Such financing schemes can provide a means
for cash-strapped local authorities to undertake DSM
programs. They can also help overcome the “payback
gap,” whereby end-users are often unwilling to invest in
water-efficient technology if it will take more than a year
or so to pay for itself through reduced water fees. This
“gap” results in a collective under-investment in conservation, and over-investment in supply-side options.
WASCOs are not yet widespread but are expected to take
off in the United States in the same way that energy
management services developed in the 1980s following
concerns over energy supplies.

6.3 Embedding planning
Water supply and conservation planning should not
be a one-off exercise but should be embedded in an
adaptive management framework. It is essential to
monitor the effectiveness of a DSM program and adjust
it as necessary to maximize its effectiveness over time and
account for unforeseen circumstances. Program monitoring can also be used to inform society about progress
on water conservation goals and as a means to maintain
interest and raise awareness.

6.3.1 Environmental Management Systems
(EMSs)
One well-developed method for embedding planning
in an adaptive management framework is through a
“continual improvement management system,” such as
an Environmental Management System (EMS). An
EMS, such as ISO 14001, is based on a cyclical “plan,
do, check, act” process in which an organization
develops procedures to identify and manage its environmental impacts, then regularly monitors and adapts
those procedures over time.
At their best, environmental management systems
can help create a cultural shift within an organization by
embedding a routine assessment of business practices,
Box 41: The ‘plan, do, check, act’ cycle in
Environmental Management Systems (EMS)
An EMS, such as ISO 14001, includes five basic components:
• Policy: Establish and commit to a written environmental policy that sets overall direction and vision.
• Plan: Identify current environmental impacts and applicable legal requirements. Establish objectives, goals and
targets for reducing impacts. Develop plans and timelines for achieving those objectives and targets,
including metrics for measuring progress towards them.
• Do: Start implementation of the plan. This may require
adjusting organizational structures and procedures, as
well as staff roles and responsibilities, to align them with
the policy and objectives. Training of managers and
employees on the EMS and plan implementation is likely
required, as is setting up appropriate document control
procedures and communications.
• Check: Establish techniques for auditing the management system, for measuring progress towards the objectives and targets, and for reporting on progress.
• Act: Establish procedures for making regular, ongoing
improvements. Use these to make adjustments to the
objectives, plans and operations, as well as the management system itself, to remedy any problems and to
promote continual improvement.
ISO 14001 also provides for external auditing, in which an
organization’s EMS is analyzed by an independent auditor
and certified if it conforms to the required procedures.
Source: (Ross & Associates 2002; Wood 2002-2003)

At a Watershed   67

 and developing an improved sense of accountability for
the organization’s environmental impacts. An EMS can
be implemented on a variety of scales, ranging from an
entire local government to a particular facility or department within a single utility.
Australia is a leader in the use of EMSs by water utilities.
North East Water in the State of Victoria, for example, has
achieved ISO 14001 certification for its EMS (NERWA
2005). The utility’s EMS environmental impacts registry
includes several environmental aspects related to water
consumption, and it is incorporating its water conservation
strategy into its annual review processes (Maconachie
2004). The Sydney Water Corporation has an ISO 14001
certified EMS for their wastewater sewer system, and also an
organization-wide EMS (SWC 2003). The latter has incorporated the water conservation and demand management
targets specified in their State operating licence) (Newall
2004). The Australian Institute of Engineers actively
supports the use of EMSs by water utilities, and in 2000
released a position paper to that effect (IEAust 2000).
In the United States, since 1997, the EPA has partnered
with the Global Environment & Technology Foundation
(GETF) and 23 local governments in three ISO-14001
based “EMS for Local Government Initiatives” (GETF
2005; EPA 2005). The EPA and GETF provide EMS
training and technical assistance to selected municipalities
in order to pilot EMS in local government operations,
develop experience, and share it with others.
Participating local governments report significant water
savings. One used stored rainwater for dust control and so
conserved about 800,000 gallons of potable water per year,
while another eliminated the use of potable water in its
“Greens, Dirt and Trash” operations saving approximately
31 million gallons of potable water. The EPA and GETF
have also created an online national Public Entity EMS
Resource (PEER) Center, and eight Local Resource
Centers, to help local governments understand and adopt
EMSs for their operations.46
While ISO 14001 is a generic EMS, industry-specific
environmental management systems can be developed for
particular sectors. For example, a National Biosolids
Partnership (NBP) was created in the United States to
develop an EMS specifically tailored for biosolids operations in wastewater utilities.47 In addition to the standard

components of a continual improvement management
system, the NBP EMS includes requirements for public
participation and communication, and commitment to the
principles of a Code of Good Practice. Such tangible
requirements can be critical because, as critics point out,
generic EMSs require little or no public involvement and
do not require any specific environmental outcomes to be
met (Wood 2002-2003: 192-210).
As a first step in creating an integrated management
system tailored for water and wastewater utilities, the EPA
partnered with the Association of Metropolitan Sewerage
Agencies (AMSA), the Water Environment Federation
(WEF), and a number of utilities to create an EMS
Integration Project Workgroup. This workgroup
concluded that the large number of potential management
systems, combined with numerous specific management
tools,48 is creating confusion and “initiative overload” for
many utilities (Ross & Associates 2002). As a result, “even
the most successful initiatives are reaching only a small
portion of utilities nation-wide.” The workgroup
concluded that “an EMS is a natural fit for water and
wastewater utilities” with many benefits. Nevertheless, it
highlighted the need for guidance, such as:
• further “proof-of-concept” efforts, including utilitybased pilot and demonstration projects;
• ongoing education of utility management about the
long-term benefits of EMSs;
• provision of guidance materials, financial subsidies
and technical assistance (such as that provided by
the National Biosolids Partnership); and,
• development of award and recognition programs for
utilities that successfully implement an EMS.
The EPA has followed up on this study by funding a
three-year project through the AWWA Research
Foundation to develop an EMS for Water Utilities, in
partnership with a private environmental consulting
firm and about a dozen water utilities (AWWARF
Project #2930).
Putting an EMS in place in a public utility can
involve significant up-front costs, and numerous jurisdictions have offered grants, tax credits, preferential
access to government loans and other financial incentives
to promote EMSs (Wood 2002-2003: 178; EPA 2001).
Some jurisdictions have made EMSs mandatory in

Available at the PEER Center Web site at http://www.peercenter.net/
More information available at the NBP Web site at http://www.biosolids.org/
48
Such tools have been developed for water and wastewater utilities, such as the EPA's CMOM (which provides a range of best practices for the
management and maintenance of sewer systems) and the AWWA proposed Accreditation Program (which provides a series of standards on operational-level best-practices). These are not management frameworks themselves, as is an EMS. Rather, they provide concrete guidance on specific issues
and can be nested within an EMS to provide for a complete management package (see Ross & Associates 2002).
46
47

68   POLIS Project

 certain sectors. Nova Scotia and New Brunswick, for
example, made ISO-based EMSs mandatory in the gas
pipeline industry (Wood 2002-2003: 181), and Victoria,
Australia, made EMSs mandatory for all non-metropolitan water authorities in the state (IEAust 2000).
6.3.2 Indicators
An important part of adaptive management frameworks is monitoring the outcome of activities and
adjusting them accordingly. As Benjamin Franklin once
said, “what counts is what gets counted.” “Indicators” are
measurements of key outcomes. For urban water provision, they range from simple measures such as per capita
water use and number of DSM measures undertaken, to
full environmental footprint analysis of a water utility.
Such indicators can be used to set priorities for reducing
environmental impacts, to determine progress of a DSM
program, and to provide the basis for awarding and
monitoring conditional permits or funding (Long Peak
Working Group on National Water Policy 1994: 134).
Under South Africa’s 1998 National Water Act
(NWA), the Regulations Relating to Compulsory Standards
and Measures to Conserve Water require water service
institutions to conduct, and report on, an annual water
service audit (Allan 2003). This audit must include:
• total volume of water supplied, and volume
supplied to each sector;
• volume of wastewater accepted into the sewerage
system;
• volume of wastewater approved for reuse;
• the number of meters installed, and the percentage
tested and replaced;
• the pricing rate structure and the percentage of total
costs recovered through revenues; and,
• water conservation and demand management steps
undertaken, including a determination of the
amount of unaccounted-for water (i.e. system
leakage and metering errors) and steps taken to
reduce it, and the progress made in the installation
of water efficient devices.
The South African regulations also mandate certain
DSM measures. These include repairing any “major,
visible or reported” system leaks within 48 hours, fitting
all connections with water volume measuring or controlling devices within two years, and ensuring water pressure for domestic customers remains below a defined
maximum (900kPa). Water services institutions must
also employ a consumer service person to receive reports
of non-compliance with the regulation.
To gain a more general overview of the environ-

mental impact of a water utility, a broader set of indicators can be used, such as the amounts of water, chemical
and energy consumed, pollution produced, and water
and nutrients recycled (Lundin and Morrison 2002).
One of the most sophisticated indicators is the environmental footprint, which attempts to give an indication
of the total land and sea area an organization or population
relies upon to provide for their material and energy
consumption. Such indicators can help understand and
raise awareness of the full extent of an operation’s environmental impacts, some of which are often far from obvious.
Requiring that indicators be publicly reported can be a
powerful incentive, encouraging local authorities to reflect
and change behaviour—due to both competitive desires to
Box 42: The ‘environmental footprint’ as an
indicator
The Sydney Water Corporation (SWC) in Australia has undertaken a pilot environmental footprint (EF) calculation as part
of a national initiative to develop sustainability indicators.
The SWC calculated its EF by measuring all “upstream” land
requirements for its activities. This included, for example,
the land used for mining the iron ore for steel to build
machinery for SWC’s infrastructure works, and the
projected land impacts of climate change caused by SWC’s
use of energy from fossil fuels. Land impacts were ranked
according to the degree of alteration of the land from its
natural state. SWC’s EF was estimated at 73,100 hectares:
54,000 due to climate change, 16,700 due to SWC’s
suppliers (such as machinery), and 2,400 due to the footprint of SWC’s buildings and other physical works.
The SWC reports that the footprint exercise has helped them
better understand and communicate their environmental
performance and progress towards sustainability. It revealed
some of SWC’s less obvious environmental impacts, and in
particular has highlighted the need for SWC to reduce their
energy use. The SWC also uses its EF to calculate individual
environmental footprints for each customer. This provides
educational tool for individual customers helps them see
how conservation efforts (such as installing a low-flow toilet)
can reduce their personal impact.
In its pilot calculation, the SWC EF calculations included only
“upstream” impacts. “Downstream” impacts that result
from their water withdrawals and wastewater discharges
(such as negative effects on aquatic ecosystems from
disrupted and polluted stream flows) were not included.
This is a rich area for further research.
Source: (Lenzen et al. 2003)

At a Watershed   69

 be an environmental leader, and to avoid negative publicity.
In the case of pollution, for example, the Indonesian
Program for Pollution Control, Evaluation and Rating
(PROPER) rated dischargers of water pollution from gold
(“world class”) to black (no effort at all) (Fiorino 1999:
448,449). This simple requirement increased compliance
with pollution control legislation by over 50% in two years.
A set of consistent, nationwide measures is needed to
realize the full benefits of indicators. Senior governments
can bring stakeholders together to work collaboratively to
define the desired indicators. A national, independent environmental monitoring and reporting body could coordinate the development of indicators for urban water utilities.
For example, the National Round Table on Environment
and the Economy could expand its work on national indicators to deal specifically with water quantity issues.

6.4 Integrating water planning with
land use management
Water supply and conservation planning is not an
isolated process although it is often treated that way.
Land use developments, for example, can create significant new water demands. If such developments are not
undertaken in coordination with conservation efforts,
they can lead to further supply-side water and wastewater infrastructure expansions. Such developments can
also impact local water sources through impervious
surfaces and stormwater sewers, resulting in increased
pollution run-off and altered groundwater recharge
patterns. In short, some form of integrated planning is
required that considers water supply and conservation,
land use, wastewater and stormwater collectively.
6.4.1 Conditional development permits
Senior governments can take steps to ensure that new
development has adequate water supplies, and that DSM
is implemented. For example, Arizona stipulates that in
specific areas (that include most of the state’s population)
development projects can proceed only if adequate future
water supplies are assured. In Active Management Areas
(AMAs) in Arizona, water suppliers are required to
undertake supply and conservation planning to achieve
progressively more efficient water use. This occurs in five
implementation stages covering a period of 45 years, with
increasingly stringent reductions in water use per-capita
per-day required from one stage to the next (Arizona
DWR). In addition, developers intending to offer land
within AMAs for sale or lease to the public must get an

“assured water supply certificate” from the Arizona
Department of Water Resources, by demonstrating that
“water of sufficient quantity and quality is available to
sustain the proposed development for 100 years.”
New developments can be designed to minimize
water use. Toronto and Barrie in Ontario, for example,
require all draft subdivision plans and development
proposals to include a water efficiency and conservation
plan (Waller and Scott 1998: 387). North Miami Beach,
Florida, requires development plans to incorporate water
efficiency principles before a building permit can be
issued (Vickers 2001: 159,169,179).
Some local communities are also using innovative DSM
measures targeted at developers. For example, in Morro Bay,
California, builders can either pay a standard hook-up fee
for new developments, or they can retrofit existing houses
to the point that the reduction in existing water use matches
the water requirements of the new development. Such an
approach again has the potential to enhance a competitive
market of WASCOs in water conservation. Indeed, “[o]ne
can image a homebuilder coming to the door and offering
free fixture retrofits, and the householder replying, ‘What’s
it worth to you?’” (RMI 1991: 69).
6.4.2 Integrated water cycle management
Integrated Water Cycle Management (IWCM) looks
in an integrated way at managing water as it cycles
through the water supply system, sanitary (wastewater)
sewer system, and stormwater sewer system. This can
promote numerous ways to use water more efficiently.
For example, some Canadian cities use stormwater to
irrigate golf courses and parkland, as well as for wetland
preservation, which has the added benefit of reducing
wastewater treatment where stormwater was previously
directed to sanitary sewers (Marsalek et al. 2002: 28).
Institutionally, these three components of the urban
water cycle are often separated in different departments,
which can make integration difficult. Thus one approach
is to create a single local institution for managing water,
wastewater and stormwater, such as EcoWater in
Waitakere, New Zealand.49
The State of New South Wales (NSW) in Australia
uses conditional funding to promote IWCM (NSW
DEUS 2004). A local water utility must demonstrate
substantial compliance with six criteria before it can
make a dividend payment or seek financial assistance
under the Country Towns Water Supply and Sewerage
Program. One such criterion is IWCM planning,

More information available at the EcoWater Web site at http://www.waitakere.govt.nz/AbtCnl/to/ecowtr.asp

49

70   POLIS Project

 intended to motivate water utilities to adopt long-term,
comprehensive strategies for the integrated delivery of
water, wastewater and stormwater services. The State
provides guidelines to help local authorities develop such
plans, and the NSW Department of Energy Utilities and
Sustainability is conducting a pilot program to test
IWCM strategies in partnership with ten local water
utilities. The NSW Water Directorate, established in
1999 to provide independent advice to local governments on water and sewerage operations, is also active in
promoting IWCM (NSW Water Directorate 2004).
Another form of integration is that between various
utilities (gas, electric, water and wastewater).
Coordinating efficiency programs between such utilities
can help spread the cost of DSM programs, and the
combined water, sewer and energy cost savings can make
efficiency improvements cost-effective, when they would
not be for a single utility.
6.4.3 Water sensitive urban design
Water sensitive urban design (WSUD) is a broad
concept that considers all impacts of urban design on water
sources. This approach integrates water supply, wastewater
and stormwater management, but also land use planning
and management to optimize water conservation.
Impervious surfaces—paving, roofing, and

compacted soil—can increase stormwater runoff and
decrease groundwater recharge. To help reduce such
impacts, numerous communities in the United States
have linked stormwater fees to the size of such impervious surfaces (Kornfeld 2001-02: 372-376). In
Washington State, the town of Lacey has pioneered a
performance-based approach that promotes “zero effective impervious surface projects,” under which a developer may be released from the usual stormwater requirements by using pervious materials for driveways, smaller
rooftop exposures and/or rooftop gardens, for example.
Water sensitive urban design has suggested decentralized, “clustered” infrastructure, including onsite rainwater
harvesting and stormwater draining technologies. A
number of pilot projects demonstrate such ideas. At
Simon Fraser University in Vancouver, for example, a
design approach developed in British Columbia called the
“Water Balance” model is being applied to a new residence
development.50 The approach uses the natural hydrology
of the area to guide the design of landscaping and infiltration systems, so as to maintain absorption of rainfall into
the ground and keep runoff close to pre-development
levels. The Hammarby Pilot Project in Sweden is a fine
example of an urban redevelopment project that comprehensively addresses water concerns (see Box 43).51
Concepts of industrial ecology can also be incorpo-

Box 43: Water sensitive urban design in the Hammarby Pilot Project, Sweden
The Hammarby Sjostad Project (developed jointly by Birka
Energi, the Stockholm Water Company, and the City of
Stockholm Waste Management Administration) is an urban
redevelopment project that is transforming a run-down port
area into a large energy- and water-efficient commercial/residential development. Dubbed the “Hammarby Model,” the
project’s primary aim is to develop and apply a new model of
urban water and energy cycle management.
By 2010, the project will include 8,000 residences and 25,000
people living or working there. The redevelopment aims to make
efficient use of water, and to be as self-contained as possible in
energy use and waste production/recycling. With its own state-ofthe art sewage treatment plant, the development goal is to cut
current water use by 50%.

Full life cycle analysis is applied to all activities, and monitoring and verification systems will be used to assess the
success of the project. A unique “Environmental Load Profile”
system has been created to evaluate different scenarios
regarding the design of technical infrastructure (water,
heating, cooling, sewerage, and waste), as well as the
lifestyles of the residents. A monitoring station is being built
to measure the composition of wastewater at the local
sewage treatment plant, and residents’ consumption patterns
for energy and water will be measured by individual measuring systems for each apartment. In addition, new information systems developed by Swedish researchers through the
Sustainable Urban Water Management Programme will be
tested as part of the Hammarby development.
Source: (Hammarby Sjostad 2004)

The Water Balance Model (WBM), developed as an extension of Stormwater Planning: A Guidebook for British Columbia, is a decision support and
scenario modeling tool that was formally launched at the Urban Forum of the Annual Conference of the Union of BC Municipalities in September
2003. The WBM enables users to compare scenarios for reducing volumes of rainwater runoff to achieve a light “hydrologic footprint”. The intention is that it will become standard practice for land development decisions in British Columbia. WBM is Web-based and can be found at
http://www.waterbalance.ca
51
The proposed Dockside project in Victoria, British Columbia is an example of a “triple bottom line” development that will integrate a closed loop,
water system featuring cutting-edge conservation technologies, alternative sources, water reuse and recycling to minimize municipal water demands.
The proposed development plan is available at http://www.city.victoria.bc.ca/cityhall/pdfs/currentprojects_dockside_prpsl2.pdf

50

At a Watershed   71

 rated into urban designs so that the output wastes from
one activity can become the inputs for another. A new
golf course, for example, might be designed to reuse
treated wastewater from an existing nearby residential
area for irrigation purposes. Similarly, a sewage treatment plant might be located next to a power generation
facility for reuse of sewage biosolids.
Assistance is required to help make WSUD more widespread. In Australia, the Lower Hunter and Central Coast
Regional Environmental Management Strategy has developed a National Design Guide for Water Sensitive Urban
Design (LHCCREMS 2003). This provides local governments with a set of model planning provisions that can be
used to promote “water smart development.” Melbourne
Water in Australia is another leader in developing integrated urban water-cycle management and promoting best
practice guidelines for WSUD (WSUD 2004).
For WSUD to truly take hold, however, senior
government leadership is required, through legislated
requirements, guidelines, technical assistance, funding
and green taxes. In Australia, the NWI initiated by
COAG in 2003 includes a commitment to develop
national guidelines on water sensitive urban designs
(COAG NWI: para. 92).
In Canada, the Canadian Water Network (CWN)
within the Networks of Centres of Excellence presents an
opportunity to develop WSUD concepts and develop pilot
projects in collaboration with progressive communities.
The Stormwater Planning Guidebook for British Columbia,
mentioned above, is a good Canadian example of applying
the watershed/landscape-based approach to assist local
government to set performance targets for land development and rainwater management at the site, neighbour-

hood and watershed scales (Stephens et al. 2005).

6.5 Full-cost accounting
Another institutional arrangement addresses how
local authorities fund water and wastewater infrastructure and operations. Given the aging water infrastructure
in Canada, reduced funding from senior governments,
and a lack of sufficient economic incentives to promote
sustainability, consensus is emerging on the need for
“full-cost accounting” in water and wastewater utilities.
The Canadian National Round Table on the
Environment and Economy (NRTEE 1996) has noted
how the lack of user pay systems in many regions and
municipalities discourages water conservation, and
predicted that a trend toward full cost, user pay principles to meet basic infrastructure requirements, thus
increasing the demand for eco-efficient environmental
technologies while redirecting patterns of economic
development.
At a minimum, “full cost” should include infrastructure operation, maintenance, and eventual replacement
or expansion. However, true full cost should include
sewage and wastewater costs, as well as social and environmental costs (which are currently external to most
economic accounting methods). Including these externalities is difficult, since they can rarely be calculated
directly and estimates vary widely. For example, estimates of annual unaccounted-for costs in the Niagara
Region utility ranged from $10 to $35 million (Renzetti
and Kushner 2004). Nevertheless, this indicates that the
costs of water and wastewater services are substantially
understated by 16% to 55%.
Municipalities and utilities have little incentive to

Box 44: Full-cost accounting under Ontario’s Sustainable Water and Sewage Systems Act
The goal of The Sustainable Water and Sewage Systems Act,
passed in December 2002, is to ensure that municipalities can
finance essential water and sewer services and ensure clean,
safe drinking water. The Act provides a framework for implementing full-cost accounting and recovery, making it mandatory for municipalities to assess the costs of providing water
and sewage services, and to recover the amount of money
needed to operate and maintain them.
All designated municipalities that provide water and sewage
services must first prepare a report, called a Full Cost Report,
containing:
• an inventory and management plan for their infrastructure;

• an assessment of the full costs of providing water services,
including costs for source protection, operations, financing,
renewal and replacement, and improvements; and,
• revenue received to provide water and sewage services.
After the Full Cost Report is approved, the municipality must,
within six months, prepare a Cost Recovery Plan that shows
how it will pay for the full cost of water services. If a municipality refuses to prepare a report or a plan, the minister may
prepare a report or plan and recover the costs from the municipality. The Act also requires municipalities to set up dedicated
reserve accounts to pay the full costs of water and sewage
services.
Sources: (Renzetti and Kushner 2004: 14; CELA 2004a).

72   POLIS Project

 account for their costs where provincial and federal
governments supply unconditional capital grants and
subsidies for water infrastructure. This funding subsidizes
the consumption of water by keeping prices artificially
low and promotes the extension of inefficient infrastructure into new developments (Environment Canada
2001a). In response, Ontario recently passed the
Sustainable Water and Sewage System Act to promote
conservation, and to help ensure capital costs are better
accounted for and there are sufficient funds for infrastructure maintenance.
Some concerns exist with a move to full-cost
accounting. The accounting challenge of ensuring all
costs—especially those related to the environment—are
adequately valued, may not in practice be technically
possible (Pearse and Bocking 2002: 15-6). Some view
full-cost accounting as a prelude to privatization of water
utilities, although numerous examples exist of full-cost
accounting within public utilities (Gleick et al. 2002;
Pearse and Bocking 2002: 15-12). The Capital Regional
District (CRD) in Victoria, British Columbia, for
example, employs full-cost accounting without privatization (see Box 45).
Yet another concern is the impact of full-cost
accounting on low-income households. For this reason,
the Pacific Institute (a leading water conservation think
tank), supports the use of sound economics in water
management but does not necessarily advocate full-cost
recovery pricing. Although water and water services
should be provided at fair and reasonable rates, and be
designed to encourage efficient use of water, the Institute
maintains that subsides must be transparent and evaluated and discussed by the public (Gleick et al. 2002: vi).

6.6 Water conservation capacity
A significant barrier to DSM in Canada is the
ongoing supply-side engineering bias entrenched in many
local authorities and private consulting firms contracted
by them (Maas 2003: 25). Educating municipal politicians, planners, managers, and utility staff about the
impacts of urban water use and training them in the
implementation of DSM are priority requirements.
Establishing staff positions and/or departments

Box 45: Full-cost accounting in the Capital
Regional District (CRD), B.C.
The CRD supplies wholesale water through various municipalities to a population of approximately 310,000. The
Water Department is responsible for the wholesale treatment and delivery of bulk drinking water to its municipal
customers, and for the operation of the retail water distribution system in some outlying communities in addition to
management of the watershed.
The Water District (now the CRD Water Board) moved to a
“full cost” accounting system in 1997 as consequence of
rate hearings ordered by the provincial Comptroller of
water under provincial legislation. The new funding mechanism does incorporate lifecycle costs of infrastructuredepreciation, operating and maintenance costs into cost
accounting to ensure funds are available to replace worn
out infrastructure. These “full costs” include some components of environmental costs since the CRD owns and
manages the long-term health of the water source.
This approach is a model of sustainable asset management.
Source: (Dore and Hull 2003, CRD 2005)

within local authorities that are focused on conservation
efforts can bring many advantages. They can institute
and run DSM efforts over the long-term, keep abreast of
the latest developments in DSM around the world,
develop an understanding of local needs and barriers,
and adapt a DSM program to such local circumstances
(Brandes and Ferguson 2004: 25,26). Some local authorities in Canada have hired such staff. For example, the
Region of Ottawa-Carleton hired a Water Efficiency
Coordinator, and Edmonton has a full-time Water
Conservation Engineer to administer their city’s conservation programs. The CRD in Victoria, British
Columbia has two full-time demand management coordinators, one focusing exclusively on the ICI sector.
Senior governments can financially support such new
staff positions, make them pre-requisites to further
funding, or direct hire DSM staff at the provincial and
federal levels to work with local and regional entities.

At a Watershed   73

 74 POLIS Project

Chapter 7

Facilitating urban water demand
management
“We have so much knowledge about water that we are not using;
we know what we should be doing, it’s just a matter of getting on with it.”
Bocking, quoted in (Maas 2003: 25)
Clearly the potential exists for senior governments
and NGOs to embed water-sustainability into local
institutions. This chapter focuses on the role of senior
governments in encouraging the application of specific
DSM measures and programs. For example, they can
impose legislative requirements for water efficiency,
provide funding, undertake pilot projects and educational programs, or develop green building certification
programs. Such actions can motivate and support local
communities to undertake innovative programs of their
own.
Given the broad range of potential DSM measures, it
may be difficult for local authorities to determine what
to implement and in what combinations. Many jurisdictions have undertaken collaborative efforts to develop
best management practices to guide integrated DSM
program design and implementation. In addition to
discussing such collaborations, this chapter considers
how to promote the use of national and provincial coordination for more sophisticated DSM measures. Water
reuse-recycling and conservation-based pricing incentives stand out as promising measures to reduce water
use and promote water sustainability that provide immediate opportunities in regions of acute scarcity and
limited supply.

7.1 Actions to promote and implement urban DSM
Immediate actions can be undertaken to ensure urban
DSM. Together these actions are a critical component of
any long-term urban water management strategy.
7.1.1 Mandatory building and plumbing codes
In 1992, the U.S. federal government passed the
Energy Policy Act, imposing water-efficiency require-

ments for faucets, showerheads, toilets and urinals in all
new construction and renovations. As a result, water use
is estimated to be reduced by 8% by 2020, saving water
utilities an estimated $7.5 billion in water infrastructure
costs across the country, and $35 billion if energy savings
are included (Dickinson et al. 2001). In addition, the
International Association of Plumbing and Mechanical
Officials International Association of Plumbing and
Mechanical Officials (IAMPO) recently released its 2003
edition of the Uniform Plumbing Code (UPC), a model
code that can be adopted by states or cities (IAMPO
2004). Scottsdale, Arizona, for example, has adopted the
UPC water conservation provisions (§402) unaltered.
7.1.2 Model bylaws
The State of Florida has employed “mandatoryenabling” legislation to encourage local authorities to
adopt outdoor water conservation bylaws. Water
Management Districts (WMDs) were required to
develop model xeriscaping ordinances and incentive
programs for use by local governments, as well as an
incentive program to encourage local governments to
adopt these ordinances and programs (§373.185, Florida
Statutes). Local governments were then required to undertake feasibility studies and to adopt a xeriscaping ordinance if the benefits of a xeriscape program were found
to outweigh the costs. In addition, local governments
must have an adequate xeriscaping ordinance in place to
qualify for district financial incentive programs
(§166.048). WMDs are also empowered to make adoption of xeriscaping mandatory as a condition of any
consumptive use permit.
Rather than develop model ordinances individually,
the five Florida WMDs developed a single model ordinance in collaboration with several other organizations,
At a Watershed   75

 including various gardening and landscaping associations, a number of state departments, and the University
of Florida. The result was a comprehensive model ordinance that includes a range of best management practices for outdoor water conservation.
7.1.3 Pilot and demonstration projects
The Canadian Mortgage and Housing Corporation
(CMHC) designed the Toronto Healthy House as a pilot
project to demonstrate water self-sufficiency through onsite recycling of wastewater, and rain and snow collection
(CMHC 2001).
7.1.4 Funding
In Australia, Melbourne’s four water authorities, with
the support of the State government, have established
the Smart Water Fund (Melbourne SWF). Open to any
individual, community group or commercial enterprise,
the Fund’s purpose is to encourage and support development of innovative biosolids recycling and water-saving
projects. Funded projects have included:
• a partnership of 11 schools that attempted to save
water and change the water use habits of children,
such as through conducting water audits and
installing rainwater tanks for toilet flushing; and,
• evaluation of the water efficiency of car washes and
development of an accreditation system by the

Australian Car Wash Association.
In the United States, the federal EPA has produced a
guidebook, Tools for Raising Revenue, to help local
authorities and NGOs raise revenue to pay for water
conservation efforts such as through differential pricing
for water consumers and permitting fees. The guidebook
also assists them to use financial tools to encourage environmental self-auditing.
7.1.5 Education
Educational efforts usually involve simply disseminating information to end users, and can often make use
of materials developed by Environment Canada, the
CWWA, and others. Educational materials have also
been developed collaboratively. The Water Conservation
Coalition, a partnership of water utilities and agencies in
the Puget Sound area of Washington State, developed a
single “brand” for water conservation materials-the
“water, use it wisely” campaign.52
Community-based social marketing, emphasizes
direct contact between end-users and those delivering
the program, to increase the effectiveness of educational
efforts (Maas 2003: 15,16). The Region of Durham,
Ontario adopted this approach by employing summer
students to visit and work repeatedly with homeowners
to reduce residential lawn watering. The results were an
impressive 32% reduction in peak water demand.

Box 46: Community building while saving water: The San Antonio experience
San Antonio, Texas, found standard rebate programs to be
unsuccessful in getting people to replace wasteful, but still
functional, toilets. San Antonio Water Services then tried
providing toilets free of charge, but still only half those who
received a toilet voucher actually picked one up. This
prompted an innovative and collaborative program called
“The Season to Save Community Challenge,” paid for
through a conservation charge on top-tier residential and
commercial customers.
Water Services distributes vouchers and provides training
to participating non-profit organizations, such as youth and
church groups, homeowner associations, and sports clubs.
Members of these groups distribute the vouchers in the
community, and for each new toilet collected the community group receives $25. The group receives an additional
$15 for each toilet actually installed within a month, and
some community groups set up their own installation
service to earn this bonus. People were less likely to let

down their favourite community group, and redemption of
vouchers soared to 90%.
In their last campaign, 50 non-profit groups participated
and over 4,000 toilets were distributed, saving approximately 1,000 acre/feet of water and raising $100,000 for
participating community groups. One Girl Scout group used
its money to build a new playground and landscape a
school. Other community groups have also been reinvigorated by the activity, through both the funds it brings and
the resulting renewed contacts with the community.
Water Services estimates that the program costs them
$275 per acre-foot of water saved (in contrast with an estimated $1,000/acre-foot to seek out and develop new
water sources). The program thus represents not only an
innovative means to reduce water use, but also a progressive redirection of public funds from costly physical infrastructure works to social reinvestment.
Source: (SAWS 2004; Guz 2004)

More information at The Water Conservation Coalition Web site at http://www.bewatersmart.net/

52

76   POLIS Project

 Educational programs have also been directed at
plumbers, builders and landscape gardeners. In Arizona,
a Master Gardeners training and certification program
includes an eight-week program on the design, installation and maintenance of efficient irrigation systems
(Phoenix 1998).
7.1.6 Voluntary green building certification
programs
Voluntary certification programs can reward those
who exceed mandatory standards. The Leadership in
Energy and Environmental Design (LEED) program, for
example, is designed to encourage energy and water efficient building practices. Building projects are rated as
platinum, gold, or silver according to five criteria sets,
including water safety and efficiency. Building professionals can also be accredited by the Canadian Green
Building Council (CAGBC) or the U.S. Green Building
Council (USGBC).53
Similarly, the City of Austin, Texas, has developed a
local Green Building certification program that provides
a “green building basics” training course, sustainable
building guidelines for municipalities, a Green Building
logo, and a rating system for buildings according to six

criteria (including water efficiency).54

7.2 Developing and disseminating
Best Management Practices
Many innovative DSM measures are being used
around the world to promote water sustainability but
local authorities do not have the resources to tap into this
wealth of ideas and experience. Authorities need access
to those who can investigate, document and disseminate
these “best management practices” (BMPs).
BMPs can be developed for just about every aspect of
water sustainability, including supply and conservation
planning, water sensitive urban design, and water-use
reduction in existing buildings. Professional and
industry associations have an obvious role to play in the
development of such BMPs due to their experience,
direct communication channels, ongoing role in professional development and training, knowledge of utility
interests, and established credibility with industry. By
encouraging collaborative efforts with such associations
and other NGOs, local authorities, and citizens, senior
governments can ensure that BMPs have broad acceptance and are likely to be successfully implemented.

Box 47: California MOU on best management practices (BMPs)
The California MOU commits signatory water suppliers to implement 14
BMPs:
• BMP 1: Residential surveys - For each
reporting period, audit 20% of
customers for leaks, use of efficient
devices, water-efficient landscaping,
etc;
• BMP 2: Retrofits - Develop a strategy
to distribute low-flow showerheads,
toilet retrofits and faucet aerators, and
meet ambitious targets for showerhead replacement (e.g. retrofitting
75% of older homes);
• BMP 3: Audits - Audit the distribution
system for leaks;
• BMP 4: Metering - Require meters for
all new connections, billing by volume
of use, and establish a retrofit program

for existing unmetered connections;
• BMP 5: Landscape - Provide support
and incentives to improve landscape
water use efficiency;
• BMP 6: Clothes washers - Offer a
financial incentive, if cost effective, to
purchase high-efficiency washing
machines;
• BMP 7: Public information - Implement
a public information program to
promote water conservation;
• BMP 8: School education program Implement an education program to
promote water conservation in school
curriculum;
• BMP 9: Conservation programs for
commercial, industrial and institutional
(CII) accounts - Implement audits and
specific measures to deal with indi-

vidual users;
• BMP 10: Wholesaler incentives Wholesale water suppliers to provide
financial incentives for conservation
efforts to their retail water agency
customers;
• BMP 11: Rates - Implement rates that
are consistent with conservation
pricing;
• BMP 12: Conservation coordinator Designate staff to coordinate conservation programs and act as “In-House
Best Practices Keepers;”
• BMP 13: Waste prohibitions - Enact
measures to prohibit wasteful uses of
water; and
• BMP 14: ULFTs - Implement programs
to replace high-water-using toilets
with ultra-low-flush toilets.

Source: California Urban Water Conservation Council (CUWCC)
See the Canadian Green Building Council Web site at http://www.cagbc.org/ and the LEED Web site at
http://www.usgbc.org/DisplayPage.aspx?CategoryID=19 and the U.S. Green Building Council Web site at
http://www.usgbc.org/DisplayPage.aspx?CategoryID=1
54
See the Austin Green Building Web site at http://www.ci.austin.tx.us/greenbuilder/
53

At a Watershed   77

 7.2.1 The Council on Urban Water
Conservation
California provides an example of an effective collaboration. A diminishing water supply, rising production
costs, and worrisome environmental impacts motivated
nearly 100 water suppliers, state agencies, environmental
groups and others to collaborate to improve conservation
practices across the state. In 1991, they entered into a
joint “Memorandum of Understanding (MOU)
Regarding Urban Water Conservation” (CUWCC
2005). Under this MOU, a package of 14 best management practices (BMPs) were developed, and signatory
water suppliers pledged to use good faith efforts to
implement them within ten years.
One of the keys to the MOU was establishing a
collaborative central body, the California Urban Water
Conservation Council (CUWCC). Made up of representatives from each signatory, the CUWCC coordinates
studies on the effectiveness of water conservation measures and oversees implementation of the MOU. It also
provides practical and technical resources, such as guidelines, cost-benefit calculators, a consultant database, and
model water-efficient landscape ordinances. Together
with the EPA, the CUWCC created the “H2OUSE”
Web site which promotes and provides resources for residential water conservation.55
Under the MOU, the Council will continue to study
emerging BMPs, that relate to such innovations and
economic incentives for water conservation, greywater
reuses, distribution system pressure regulation, and novel
efficiency standards for industrial and commercial
processes. The Council currently has over 300 members,
including almost half of the urban water utilities in the
state, as well as public advocacy groups, state agencies
and other interested groups.
The State of Texas emulated the California approach
in 2003 by setting up a Water Conservation
Implementation Task Force to develop a set of BMPs for
water conservation in various sectors, and to provide
recommendations on water conservation policy (Texas
WCITF 2004). Membership of the Task Force is diverse,
representing federal and state agencies, professional water
organizations, municipalities, environmental groups, and

agricultural and industrial water users. Its recommendations to the State legislature have included development
and funding of a statewide public-awareness program on
water conservation, authorization of a conservation coordinator position in each of Texas’ regional water planning
areas, and creation of a standing Water Conservation
Advisory Council (Texas WCITF 2004).
7.2.2 Clearinghouses
Web-based clearinghouses disseminate BMPs very
well. In the United States, collaborative efforts created
the on online WaterWiser Clearinghouse Web site initiated in 1992. Following a feasibility study contracted by
the EPA, in 1993 the EPA provided $250,000 for the
creation of the Web site by the American Water and
Waste Association
WaterWiser contains conservation and efficiency
materials, an events calendar, a company directory for
water-efficient services, a Web-based forum, and a
detailed bibliographical database. The AWWA Water
Conservation Division maintains the WaterWiser Web
site.56 In Canada, a comprehensive national clearinghouse could be created, modelled on Environment
Canada’s “Canadian Pollution Prevention Information
Clearinghouse” (CPPIC).57 The key would be to create a
single resource linking all stakeholders (CWWA,
Environment Canada, FCM, CHMC, CCME, and the
CWRA) and ensuring that it is effectively monitored and
regularly updated with Canadian examples.
7.2.3 Civil society’s ideas for conservation
Australia has undertaken a fascinating experiment in
the collection and dissemination of conservation ideas
from the public. Under the “Water Savings Project,” a
public call was made netting 555 responses with suggestions, for water conservation in all water use sectors-residential, garden, business, agricultural and public places
(AFFA 2004). This has led to feasibility studies, infrastructure renewal, recycling and re-use options, institutional changes, and new management systems and practices. To disseminate these ideas, the Australian
Government has partnered with “savewater.com.au” (the
state of Victoria’s water conservation Web site) to

More information at the H2OUSE Web site at http://www.h2ouse.org/
The B.C. Water and Waste Association (B.C. chapter of the AWWA) has also recently begun its own BMP Guidelines program, and, led by the water
sustainability committee, is providing a Web-based clearinghouse of best practices and successful water conservation examples in British Columbia
available at www.waterbucket.ca.
57
Lessons can also be learned from the National Guide to Sustainable Municipal Infrastructure—the InfraGuide—an excellent example of how senior
governments can collaborate with local governments and experts to produce useful information. The InfraGuide documents proven and cost-effective approaches to sustainable infrastructure, and currently provides 31 BMPs.
55

56

78   POLIS Project

 Box 48: Research institutions for water sustainability
Australia’s Commonwealth Scientific and
Industrial Research Organization (CSIRO)
CSIRO is a national laboratory and research institution that
provides research data for governments and other decisionmakers developing policies and management strategies.
CSIRO’s National Research Flagships program has been an
invaluable driving force for water reforms in Australia. For
example, its Policy and Economic Research Unit (PERU) recently
published a report for the Australian Water Conservation and
Reuse Research Program entitled, “Exploring the Institutional
Impediments to Conservation and Water Reuse: National
Issues” (MacDonald and Dyack 2004).
In 1998, CSIRO (with support from the Australian water
industry and COAG) embarked on an ambitious research
program directed at improving the sustainability of
Australia’s urban water systems.60 “CSIRO Urban Water”
has recently concluded its feasibility stage by identifying the
most promising technological opportunities to improve
system performance. Now proceeding to the second phase,
CSIRO Urban Water researchers are analyzing existing urban
water, wastewater and stormwater systems. The researchers
have identified significant opportunities to increase system
sustainability and reduce costs by integrating water and

provide its own online conservation clearinghouse.
7.2.4 Data collection and research
A lack of information on such things as the expected
water savings from specific DSM programs creates wariness about initiating comprehensive DSM programs, and
limits the effectiveness of such programs when they are
attempted. Up-to-date, detailed and consistent data on
urban water use is required to help understand urban
water use levels and trends, and to evaluate DSM
programs across the country. Environment Canada’s
Municipal Water Use Database (MUD) is a useful
resource, but requires more detailed and consistent data
collection and evaluation (Brandes 2003: 33). Another
resource for Canadian data collection is found in the
private sector. The National Water and Wastewater
Benchmarking Initiative, coordinated by the consulting
company EarthTech Canada, began as a pilot project in
1998 in partnership with the National Research Council

wastewater systems, and a large scale demonstration site of
these concepts is planned.
U.S. National Institutes for Water Resources (NIWR)
The NIWR is a network of Water Resources Research Institutes
(WRRIs), one in each state, established by the Water Resources
Research Act.61 Each Institute conducts basic and applied
research to solve water problems unique to its area. For
example, the Texas WRRI is looking into increased irrigation
efficiency and water conservation for the Rio Grande Basin
Initiative, while a proposal from Wisconsin seeks to identify the
causes of exponential growth in groundwater pumping and its
relationship to population and land-use changes.
Arizona’s Water Sustainability Program (WSP)
In 2000, Arizona enacted a 0.6% increase in its sales tax
specifically earmarked for education funding. This funding
enabled the University of Arizona to establish the Water
Sustainability Program.62 It provides education for grades K-12
through graduate school, and supports collaborative research
and technology transfer initiatives. It has fostered partnerships
with over 70 businesses, governments, NGOs, water management districts, schools and industry associations.

and several Canadian municipalities. The initiative
continues to develop as a source of standardized data on
water use for its 38 member municipalities across the
country.58
Given the number of potential DSM measures and
diverse combinations that can be created, research into
the optimal design is important to the development of
effective planning strategies. Some jurisdictions have
created specialized water research institutions, but even a
network of experts can provide an information resource
and foster further dialogue, research and policy development on DSM.59 In Canada, the Canadian Water
Network (CWN) within the Networks of Centres of
Excellence provides a potential platform for coordinating
research and creating such a network (CWN 2004). This
type of knowledge network is most effective in conjunction with a national clearinghouse of best practices.
In 2000, Arizona enacted a 0.6% increase in its sales
tax specifically earmarked for education funding. This

See the National Water and Wastewater Benchmarking Initiative Web site at http://www.nationalbenchmarking.ca
The UWDM Project initiated just such a network in 2003 (Maas 2003: 31-51).
60
See the CSIRO urban water Web site at http://www.cmit.csiro.au/research/urbanwater
61
See the NIWR Web site at http://wrri.nmsu.edu/niwr/
62
See Arizona's Water Sustainability Program Web site at http://www.uawater.arizona.edu/
58
59

At a Watershed   79

 funding enabled the University of Arizona to establish
the Water Sustainability Program. It provides education
for grades K-12 through graduate school, and supports
collaborative research and technology transfer initiatives.
It has fostered partnerships with over 70 businesses,
governments, NGOs, water management districts,
schools and industry associations.

7.3 Labelling
Helping consumers to make conservation-oriented
choices through labelling of products is a potentially
powerful means of supporting water-efficiency.
Specifically, such labelling programs:
• allow purchasers to identify and select the most
water-efficient products that meet their needs;
• allow local authorities to choose suitable models for
giveaway and rebate programs; and,
• increase the visibility and market penetration of
water-efficient products.
In the United States, a “WaterStar” labelling program
is being developed as part of the voluntary Water
Efficiency Product Market Enhancement Program operated by the EPA’s Water Efficiency Program (Flowers
2004). Initiated in 2003, the final WaterStar program
will apply labels with water use performance information
to a range of products, such as plumbing fixtures, appliances, and landscape irrigation equipment. Canada has
had success with such labelling programs, most related to
energy, and there is significant interest in Canada to
make the WaterStar banner applicable across North
America. For example, a number of Canadian government agencies, utilities, and NGOs participate as stakeholders in discussions related to the WaterStar proposal
(Dietemann 2004).
The European Union already runs such a multi-jurisdictional voluntary labelling scheme (known as
“Ecolabel”) that denotes both energy and water efficiency, and even indicates whether a manufacturer offers
free take-back of products for recycling (EU Ecolabel
2004). Australia has found such voluntary programs to
be of only limited success, and is therefore developing a
mandatory water efficiency-labelling program.
In Canada, CSA currently certifies ultra-low-flush
toilets (ULFTs) but has in the past certified a number of
poorly performing toilets (Maas 2003: 12,13). Such situations can actually reduce water savings from DSM
programs by undermining consumer confidence in new
technology. This situation made some provinces reluctant to mandate the use of ULFTs. More generally, such
problems have raised concerns over the CSA certification
80   POLIS Project

Box 49: Australia’s mandatory Water
Efficiency Labelling and Standards (WELS)
Scheme
Australia’s successful mandatory energy labelling system
produced improvements in energy efficiency of 50% for
refrigerators and freezers over a 13 year period, with
projected improvements of 70% over 25 years. Australia is
now moving to a similar mandatory labelling system for
water-using products (WELS 2004).
Since 1988, the Water Services Association of Australia ran
a voluntary National Water Conservation Rating and
Labelling Scheme with only modest success because few
suppliers chose to label their products, and those that did
tended to label only their better performing products (for
obvious reasons). This experience suggested the need to
switch to a mandatory program.
The Australian Government is currently working with State
and Territorial governments to introduce a national mandatory Water Efficiency Labelling and Standards (WELS)
scheme that will label and set minimum performance standards for domestic water-using devices. WELS is expected to
produce a reduction in total household water use of about
5% by 2021 with a net saving of $267 million, as well as
associated energy and greenhouse gas reductions.
Source: (DEH 2004: 10,12)

process itself (Burrell 1997). Clearly collaborative
labelling/certification processes must be carefully
designed and monitored.

7.4 Conservation pricing
The Organization for Economic Cooperation and
Development (OECD 1999) has called Canadian water
“cheaper than dirt” and repeatedly reprimanded Canada
for its lack of effective use of economic instruments to
reduce overconsumption of water by end users. As
discussed in Chapter 3, municipal water rates in
Canada—the retail prices to end-users—are among the
lowest in the world, and flat-rate pricing is still widespread (Brandes and Ferguson 2004: 13). This combination of low prices and poor market signals associated
with flat rates ensures wasteful water habits, and is a
primary reason that urban Canadian’s are such profligate
water users. Evidence suggests that per capita water use
can be up to 70% lower with volume-based (over flat
rate) pricing (Environment Canada 2001a: 10; Pearse
2002: 15-3).
Carefully designed conservation pricing can provide

 more accurate information of the true cost of water,
create incentives to reduce use, and generate funds for
infrastructure and conservation programs. It also
provides a catalyst for other water conservation initiatives. High volume water users will need ways to reduce
their water use when a shift is made to conservation
pricing. In 1991, California’s Irvine Ranch Water
District (IRWD) shifted to conservation pricing, which
prompted a water conservation program that includes
recycling, water conserving landscape design, and an
education program for all types of customers (Wong
1999). The result was “a significant drop in per-capita
water use.”
Many OECD countries are united in the goal of
internalizing full marginal costs (including environmental costs) in water pricing (OECD 1999).63 Most
OECD countries use volumetric pricing. To further
promote reducing water use, increasing block tariffs
allow for financial incentives to increase as the user’s inefficiency decreases.
European Union member states have specifically

agreed to implement pricing reforms as part of the EU
Water Framework Directive (EU Directive 2000/60/EC;
EUROPA WFD 2004; Ast and Boot 2003; Rijswick
2004). The Directive requires member states, by the year
2010, to ensure that their water pricing policies provide
adequate incentives to use water resources efficiently, and
that different water users (such as industry, households
and agriculture) are each required to make an adequate
contribution to the cost recovery of water services.
Individual Canadian communities have taken steps
to adopt progressive pricing schemes. Kelowna, British
Columbia began a large-scale program in 1996 to install
water meters to allow for volume-based pricing. The
City’s volumetric charge (which is in addition to a
monthly base rate and a water quality enhancement fee)
has helped the City reduce average residential water use
by over 20% (Cohen et al. 2004). To create an even
greater incentive to reduce use, the City has recently
proposed a move to an increasing block rate structure
(Kelowna 2005). Barrie, Ontario, which has water
meters for all its customers moved from a decreasing to

Box 50: Conservation pricing in Irvine, California
Irvine Ranch Water District serves the City of Irvine,
California. The District uses volume-based pricing, and
replaced its single rate-per-unit charge with an innovative
increasing block rate structure in 1991.
Each residential customer is given a “base allocation” of
water according to the number of household residents, the
size of the lot, and other factors such as weather and evapotranspiration rates for the area. Customers using 41-100%
of their allocation pay a “conservation base rate” for each
unit of water use. Those who use less than 40% pay only
75% of this base rate for each unit of water. However, those
using between 101-150% of their allocation pay the “inefficient rate” (two times the base rate), those using 151200% pay the “excessive rate” (four times the base rate),
and those using over 200% of their allocation pay the
“wasteful rate” (eight times the base rate). Customer bills
clearly show the customer’s baseline water allocation and
indicate when water use goes into the “inefficient,” “excessive,” or “wasteful” penalty blocks, helping to build

customer awareness.
The District’s rate structure is regarded as a long-term water
management tool. It is broadly credited with forming the
foundation of a larger water conservation program,
strengthening a water conservation ethic, and intensifying
customer participation in District conservation programs. For
example, the District responds to customer complaints
about water rates by offering them a water audit and landscape analysis, help with fixing leaks, and replacement of
plumbing fixtures and toilets. The information so gathered
about water use also helps the District identify patterns of
excessive use or other problems that need to be addressed.
During the first six years of using the rate system, average
residential water use fell by 12%. The revenues from penalty
prices for wasteful use have been directed to a Conservation
Fund that subsidizes efficient water use, recycling infrastructure, and conservation programs.

Source: (Wong 1999)
Marginal cost pricing sets the price for a good equal to the cost to produce one more unit (although modifications are required to make it practical
in the water sector). It is considered optimal by basic economic theory, and is forward-looking in the sense that if increasing demand will require
supply-side infrastructure expansions, then current prices will include those future costs (thus creating an incentive to use less water). In contrast,
“average cost pricing” simply divides the total current costs of a utility (including debt repayments for previous infrastructure expansions) by the total
water delivered. While commonly used, this simple approach is backward in that it does not include price signals related to future infrastructure expansions resulting from rising demand. It is a poor system for attaining the optimal mix of supply expansions and conservation efforts.
63

At a Watershed   81

 an increasing block structure in 2002.64
7.4.1 Assistance, collaboration and conditional
funding
Developing conservation rate structures to capture
marginal costs and maintain revenues can be complex.
Because it requires universal metering, a shift to volumebased pricing carries substantial up-front costs. Such
pricing reform does, however, represent an improvement
in equity because low water users will no longer subsidize
high water users. Nevertheless, it can gather significant
opposition from large water users thus, leading many
municipal politicians to avoid the issue (Maas 2003:
23,27). Assistance and encouragement from senior
governments, professional associations and others is
therefore of great use in motivating such beneficial
pricing reform.
In the United States, the EPA’s Water Efficiency
Program provides technical assistance and information
to assist local authorities in developing conservation
water pricing structures (Flowers 2004; EPA WEP
2004). Similarly in Canada, the CWWA has produced a
rate manual for utilities to provide guidance on pricing.
It recommends a two-part tariff, consisting of a volumebased charge based on marginal costs, and a flat rate
charge to ensure full cost recovery.
Australia provides a good example of senior government collaboration to help shift the national paradigm
on water pricing. In the recent Intergovernmental
Agreement on a National Water Initiative (NWI), state
and territorial governments agreed to pricing policies
that facilitate efficient water use (COAG 2004). As an
educational tool, they agreed to develop national guidelines for a billing system that provides urban customers
with information on their water use relative to equivalent households in the community. Conditional funding
has been used to provide further motivation to actually
implement such reforms.
By mandating full-cost accounting, Ontario has
provided an impetus to re-examine local pricing policies. Collaboration has also proved successful.
Signatories to the California MOU (which include
almost half of the urban water utilities in the state) have
pledged to implement rates that are consistent with
conservation pricing. Additionally, the signatories are
collaborating through the California Urban Water

Box 51: Conditional funding under the
National Competition Policy in Australia
In 1995, Australian governments agreed upon a National
Competition Policy (NCP) to promote enhanced competition across the country. This included an agreement to
implement related reforms, including the COAG water
reforms. As a result, States and Territories must implement
these water reforms if they are to receive their full share of
federal government payments under the Competition
Policy.
A separate body, the National Competition Council, has
been responsible for assessing jurisdictions’ progress in
implementing the reforms and for recommending the level
of payments. Since the 2004 intergovernmental agreement on the National Water Initiative, the Competition
Policy assessments for water reforms are now to be
conducted by a new National Water Commission.
In December 2001, COAG senior officials agreed to make
national water reform commitments a priority in each of
the 2002 to 2005 NCP assessments. For example, the
2003 NCP assessment focused on urban water pricing and
cost recovery, institutional reform, intrastate trading
arrangements, integrated catchment management and
water quality reforms.
Source: (National Competition Council 2004)

Conservation Council (CUWCC) to develop new
BMPs on economic incentives, such as pricing rate
structures (including consideration of seasonal rates
and increasing block rates).
7.4.2 Citizen input on setting rates
Citizen participation in rate setting is important to
defuse potential opposition but it can also promote
public understanding that helps to ensure “ownership” of
pricing reforms. In El Paso, Texas, a new tariff policy was
designed by a 27-member citizens’ committee representing interest groups in the local community,
including industries, environmental NGOs, and trade
unions (Kallis and de Groot 2002). Similarly, the Los
Angeles Department of Water and Power encouraged
broad participation in its pricing reform efforts.

64
Every cubic meter of water used over 45m3 costs twice as much as the first 15 cubic meters. Note that sewage charges are not applied to water use
over 30m3 on the assumption that such usage is mostly for irrigation, which may have the effect of reducing the economic incentive of the increasing
block pricing structure (Barrie 2005).

82   POLIS Project

 Box 52: Broad participation in setting rates in Los Angeles
In Los Angeles, a drought resulted in rates being raised by the
Department of Water and Power so that it could maintain its
revenues in the face of reduced water usage. This raised
concerns, however, that it might be penalizing conserving
consumers. The Mayor of L.A. therefore appointed a Blue
Ribbon Committee on Water Rates to investigate and propose
a new rate structure to City Council.
The 24-member Committee was composed of 12 citizen
members with voting privileges, and 12 non-voting members
from the Department, the Mayor’s office, and City Council.
The voting citizens were representatives of a broad range of
interests, including homeowners, renters and landlords, business owners, organized labour, developers, and environmentalists. The Committee was provided technical assistance from
the Department, but was given a budget to hire an independent consultant who reported directly to the Committee.
At over 75 meetings, Committee members were educated on
water rate structures, heard the experiences of other jurisdictions, and learned to appreciate the needs and concerns of
fellow stakeholders. Public hearings, hosted by the
Committee, provided additional citizen input. At the hearings,
the Committee learned that people wanted a fair rate struc-

ture that encouraged conservation but that did not penalize
conserving consumers with rate increases if the Department
revenues dropped.
In the Committee’s final report, they recommended eliminating the fixed charge portion of the previous billing system
and creating higher per unit rates for high users. When the
new rates were brought into effect, however, some citizens
felt they were unfair to homeowners with large lots who were
taking conservation measures. As a result, the committee was
reconvened with additional members to better represent
those concerned. The rates were modified to address such
concerns while maintaining efficiency incentives. In the end,
the process:
• created efficiency incentives;
• addressed equity issues (it expanded coverage of lowincome reduced rates from 60,000 to 160,000 households);
• created a citizens’ group of experts able to offer leadership
on water issues, previously the sole domain of the
Department; and
• created a durable rate-setting decision, because it was
responsive to the interests of the community.
Source: (Pacific Institute 1999: Chapter 3)

7.5 Reuse & recycling
In many parts of the world reclamation of wastewater
is widespread. Israel, for example, treats 70% of its
wastewater, which is then used for agricultural irrigation
(Gleick 1998). As noted by Vassos, “The scale for water
reuse is unlimited—from household greywater systems
to communal collectives to municipal wastewater reclamation” (quoted in Maas 2003: 13). At the household
scale, on-site reuse of wastewater might simply involve
reusing bathwater for toilet flushing or irrigating the
garden. At the municipal-wide scale, water utilities can
collect and treat wastewater centrally for reuse in specific
applications (such as for irrigating golf courses or nearby
agriculture) or for general redistribution through a dualplumbing system (Marsalek et al. 2002).
Water recycling may not always be the least-cost
alternative, but it does offer the long-term economic
benefit of future reliability, in addition to environmental
benefits that other alternatives may not offer.
At present, water reuse and recycling in Canada is
practised on a relatively small scale and varies regionally
depending on the availability of water supplies and regulatory flexibility (Schaefer et al. 2004). Typical examples

Box 53: Closing the loop
By using municipal water supplies twice—once for domestic
use and again for irrigation—would-be pollutants become
valuable fertilizers, rivers and lakes are protected from
contamination, irrigated land boosts crop production, and
reclaimed water becomes a reliable, local supply.
Unfortunately, conventional sanitary engineers tend to
emphasize the linear approach to managing water and
sewage—use, collect, treat thoroughly, and then dispose of
waste. And the benefits of closing the cycle—use, collect,
treat partially, and then use again—go unrealized. St.
Petersburg, Florida, for example, closed its cycle completely
by reusing all of its wastewater and discharging none to
surrounding lakes and streams. The city has two water distribution systems: one that delivers fresh water for drinking and
most household uses, and another that distributes treated
wastewater for irrigating parks, road medians, residential
lawns, and other functions that do not require drinking water
quality. For residents hooked up to the dual system, the
reclaimed water costs only about 30% as much as the drinkable supply. Also, because of the nutrients it contains, using
reclaimed water cuts down on the use of lawn fertilizers.
(Postel 1997: 128, 134)

At a Watershed   83

 include using treated municipal wastewater to irrigate
agricultural non-food crops, urban parkland, landscaping, golf courses, some isolated facilities, and experimental housing.
Roughly 3% of wastewater is reused in British
Columbia, and reuse is already a component of B.C.’s
water conservation strategy (Schaefer et al. 2004: 200).65
Vernon has recognized for some time that reclamation is
not only a treatment method, but also an alternative
supply approach. Other leading international examples
of using recycled water for agriculture include the Cities
of Visalia and Santa Rosa in California, which use
secondary-treated wastewater on fodder and fibre crops.
However, growers are also irrigating fruits and vegetables
with tertiary treated water, and producing high-quality
crops and high yields (Fidell and Wong 1999). The
Laguna water treatment plant provides water to about
4,100 acres of fodder, sod, and pasture, 500 acres of
urban landscaping, 700 acres of vineyard, 250 acres of
row crops, and seven acres of organic vegetables66 (Fidell
and Wong 1999: 144). Both projects pushed current
boundaries of acceptable uses for reclaimed water and
have met almost no resistance. There have been no
public complaints or marketability problems.
A significant barrier is negative public perceptions
over the reuse of wastewater, and so educational
programs, and safeguarding health regulations, are critical. As working modes do exist, the pubic fear and engineering professions reluctance of re-using “contaminated” water in Canada is outdated. Converting existing
buildings to use reclaimed wastewater can be costly,
however, even prohibitively expensive. It is all the more
important therefore to initiate “future-proofing” with
plumbing and building codes that requires dual piping
systems to be installed in new construction so, when the
time comes, reuse projects will be economically feasible
(Brandes and Ferguson 2004: 48).
7.5.1 Health and safety regulations
Valid health concerns do exist with wastewater reclamation, but they are addressed through clear standards
and guidelines on quality and treatment levels to protect
public health. Where reclamation of wastewater has been
most successful (Israel, Tunisia, South Africa, California,

Florida and Arizona), regulations set the basic conditions
for safe reuse of wastewater. Many countries and regions
follow or base their own rules on the guidelines established by the World Health Organization. In the United
States, the EPA has developed a set of detailed
Guidelines for Water Reuse, which includes a description of health concerns, treatment requirements, and
numerous case studies (EPA 2004).
In Canada, only British Columbia and Alberta have
regulations that set standards for the reclamation and
reuse of wastewater (Marsalek et al. 2002: 9,13,14). The
B.C. Municipal Sewage Regulation (1999) and its associated Code of Practice for the Use of Reclaimed Water
(2001) allow for large-scale water reclamation projects,
and specify water quality standards and detailed guidelines for appropriate end-uses for reclaimed water (Maas
2003: 21,22). Smaller scale projects, however, require
permitting by the B.C. Ministry of Health.
Health ministries are often unduly reluctant to issue
such permits due to fears of potential contamination,
suggesting a need for further collaborative efforts to
develop mandatory requirements and practical guidelines for safe on-site reuse. The CWWA, CMHC, the
Centre of Sustainable Communities Canada (CSCC)
and others are developing national water quality guidelines for reclaimed water, and protocols for research,
validation and commercialization of on-site reuse technologies (Maas 2003: 14).
7.5.2 Promoting reuse in California and
Florida
California

California is the undisputed pioneer of water recycling in the United States, having used recycled water
since the 1800s (SWRCB 2004). The California Water
Code states that “the primary interest of the people of the
state in the conservation of all available water resources
requires the maximum reuse of reclaimed water” (§461),
and sets a state goal of achieving one million acre-feet of
recycled water per year by 2010 (§13577).
California’s Department of Health Services sets water
reuse regulations that require different levels of treatment for different water uses based on the potential for

In 2001, British Columbia produced the fact sheet “Guide to Irrigation System Design with Reclaimed Water” (BCMAFF 2001) to provide a reference for the design of irrigation systems, using reclaimed water in accordance with the Municipal Sewage Regulation. In May 2001, the Province
published a Code of Practice for the Use of Reclaimed Water (BCMELP 2001), which serves as a guide for using reclaimed water in the province, and
is designed to support the requirements of the Municipal Sewage Regulation (Schaeffer et al. 2004).
66
The row crops are primarily several varieties of squash, started with recycled water then switched to well water when the fruit sets. Walnut yields
in Visalia have increased since switching from surface water to recycled water.
65

84   POLIS Project

 public contact, and sets requirements for treatment plant
design (California Code of Regulations, Title 22, Division
4). In 1992, the State also legislated a requirement that
pipes containing recycled water be purple, providing one
element of the necessary standardization to accommodate widespread and safe reuse (WateReuse 2003).
Other California regulations include the Uniform
Plumbing Code provisions, which contain requirements
for the construction, installation, and repair of reclaimed
water systems such as for toilets and urinals. Use of recycled water for these applications is limited to non-residential buildings. California also authorizes public water
agencies to require the installation of separate systems for
use of recycled water on private property (California
Water Code §1009,13550-13556 and Government Code
§65601-65605).
The California Department of Water Resources plays
a central role in the promotion of reclamation and reuse
in the State. The California Water Code requires the
Department to conduct studies on the availability and
quality of wastewater, the uses of reclaimed water for
beneficial purposes, and on technology for reclamation
and reuse (§462,463). Through the Water Reuse and
Desalination program in the Office of Water Use
Efficiency, the Department provides technical assistance
to local authorities that are considering reclamation projects or in the process of implementation (OWUE 2004).
Dedicated funding for recycling projects is provided
through the Office of Water Recycling (SWRCB 2004).
This includes the Water Recycling Facilities Planning
Grant program (provides funds to local public agencies
to study the feasibility of water recycling in their area),
and the Water Recycling Construction Program
(provides low-interest grants and loans to local agencies
for design and construction of water recycling facilities).
As part of its efforts to meet its reuse targets, and with
urging from the Governor’s Advisory Drought Planning
Panel, California legislatively created a State Recycled
Water Task Force in 2001 (OWUE 2004). The Task Force
was given 15 months to come up with recommendations
on how to triple recycled water use (from the almost
500,000 acre-feet recycled in 2000 to 1.5 million acrefeet). A diverse membership was appointed, including
representatives from all levels of government, water
suppliers, industry, environmental NGOs, and individuals.
Task Force members joined working groups with
consultants, university professors, and others to address
specific issues, and state agencies provided technical
advice. The Task Force focused on identifying obstacles

and disincentives to increased use of recycled water and
explored ways to overcome them. The final recommendations of the Task Force were designed to make it clear
that recycled water can be safe, reliable, and economically viable; to coordinate the regulatory requirements of
recycling programs; and to promote them to water
suppliers (Recycled Water Task Force 2003). Specific
recommendations included:
• increase grant (not loan) funding;
• develop a uniform method for cost-benefit analysis
of recycling projects that incorporates “non-market
values” (i.e. environmental and social externalities);
• establish a Water Recycling Committee to coordinate with funding agencies;
• appoint an independent review panel on the safety
of indirect potable reuse to reassure state residents;
• involve the public in the early stages of project planning; and,
• coordinate local regulatory and enforcement agencies to ensure that recycled water ordinances exist,
are clearly written and can be easily enforced.
Florida

Florida is another leader in state-wide action on water
recycling in the United States. In addition to authorizing
the use of reclaimed water for certain outdoor and
indoor uses, and health regulations to help ensure that
recycling is undertaken safely, Florida makes some reuse
mandatory and has developed extensive coordinating
processes.
Under Florida law, Water Management Districts
(WMDs) can designate an area with critical water supply
problems as a “resource caution area.” Within such areas,
applicants for permits to construct or operate a domestic
wastewater treatment facility must prepare a reuse feasibility study, and must then implement reuse to the
extent feasible. Several WMDs also provide considerable
funding for such reclaimed water projects within their
areas (Reuse Coordinating Committee 2003: 27).
To ensure the State takes advantage of opportunities
to match potential sources of reclaimed water with
potential customers, coordination of the different state
agencies is necessary. For example, the Department of
Environmental Protection (DEP) issues permits for
domestic wastewater treatment facilities (which are
potential sources of reclaimed water), and Water
Management Districts issue consumptive use permits to
potential users of reclaimed water.
In 1992, Florida established the Reuse Coordinating
Committee to coordinate such activities and promote
At a Watershed   85

 communication between state agencies. Together, they
identify areas where reuse is not occurring, develop
strategies to encourage and promote reuse, and identify
opportunities to bring users and suppliers of reclaimed
water together (Reuse Coordinating Committee 2003:
26). The Department of Health (DOH) serves as a technical advisor for public health issues on the
Coordinating Committee, and is also represented on the
Reuse Technical Advisory Committee.
Agencies also work together to integrate government
actions into a progressive state-wide strategy. The
Department of Community Affairs, for example, worked
with DEP to make the state’s Building Codes consistent
with Florida legislation that allows for reuse within
buildings. Several MOUs have been signed to help
clarify the roles and responsibilities among the various
authorities. The Public Service Commission (PSC) and
the five WMDs have signed an MOU committing the
PSC to helping the WMDs review reuse feasibility
studies submitted by PSC-regulated utilities.
The Southwest Florida WMD is a leader in encouraging efficient use of reclaimed water. Since 1987, the
District has provided more than $180 million in grants
for over 200 reclaimed water projects. It has recently
announced dramatic goals of 75% utilization and 75%
efficiency of reclaimed water flows by 2020 (Reuse
Coordinating Committee 2003: 27). The District has
also produced a Reclaimed Water Guide to share its experiences on successful reuse projects, which includes ordinances, contracts, financial information, etc. One of the
most outstanding examples of reuse in the United States
occurs in the City of St. Petersburg, located within the
Southwest Florida WMD.

7.6 Conclusion
Immediate benefits from demand management
include saving infrastructure costs, and reducing ecological impacts. However, water conservation does not just
happen. It requires significant effort from a range of

86   POLIS Project

Box 54: Closing the loop in St. Petersburg,
Florida
Closed-loop –”zero effluent”– systems are now feasible.
With such a system all treated wastewater is kept within
the human water management loop rather than being
discharged to the surrounding environment. The City of St.
Petersburg, Florida, has already achieved this objective.
In the mid-1970s, the City of St. Petersburg initiated a
regional water reclamation system to help stabilize potable
water demand and to reduce discharges to the adjacent
coastal water of Tampa Bay. This nationally-recognized
program has made the city the largest community in the
United States achieving zero-discharge into surface waters.
As part of the $100 million program, all four of the city’s
water reclamation facilities were upgraded, an extensive
(over 250 mile) piping network was constructed to provide
reclaimed water for residential landscape irrigation
throughout the city, and ten deep injection wells were built
to allow highly treated effluent to be pumped into the saltwater aquifer when the demand for reclaimed water falls
below the plant discharge rate. By 1995, almost 21 million
gallons of reclaimed water was being used by over 8,000
customers each day. As the system expands, it is estimated
that approximately 17,000 customers could be served, irrigating almost 9,000 acres.
Source: (Grobicki and Cohen 1999)

stakeholders and, in particular, leadership from senior
governments. Chapters 6 and 7 have outlined, in some
detail, the many opportunities for senior governments to
demonstrate leadership and their commitment to water
conservation. By embedding demand management in
local institutions and by facilitating demand management
practices, a comprehensive, integrated and long-term
approach to DSM can become reality. This approach can
start in the urban sector. Ultimately, however, it must
travel up and down the watershed to be truly effective.

 Chapter 8

Thinking like a watershed
When we try to pick out anything by itself, we find it hitched to
everything else in the universe.
John Muir, 1911
A watershed is a complex ecosystem. Soil, vegetation,
animals, humans, water and climate are all integral and
interacting parts. Water extraction, land use changes,
urban developments, and industrial, forestry and agricultural operations all impact the watershed. The cumulative impacts of these human activities often lead to
problems with water quantity and timing of surface
flows, as well as with water quality, groundwater
recharge, and floodplain maintenance. Only by
addressing these concerns in an integrated management
approach can we ensure watershed and ecosystem health,
as well as adequate water supplies.
It is now widely accepted that management of water
should be accomplished at a full watershed level.
Watershed-based management requires water managers
to account for the complex interactions in the watershed,
and encourages them to, in effect, “think like a watershed” especially where interactions between naturally
occurring and human activities are involved.
Recognition of the watershed’s importance to society is
not new; integrated public management on a watershed
basis is.
Opportunities for such management are the major
theme of this report. These include integration of water
supply and conservation planning, surface and ground
water management, waste and storm water management,
and urban design. The watershed is the logical context
for a holistic integration that moves away from end-ofpipe treatment toward watershed-specific identification
of water quality and quantity problems and solutions
(Gabor et al. 2005: 7). To maintain reliable future water
supplies, healthy aquatic ecosystems, adequate instream
flows and groundwater balance, all actions will have to
be considered for their cumulative impact on the entire
watershed. Demand management is a foundational tool
for watershed managers that must be applied not only in
the urban sector but also to other water users, such as
power generation, industry and agriculture.

Watershed management is not an end point. Quite
the opposite. This report concludes by considering how
the watershed is the starting point for sustainable water
management. By examining all actions in the context of
the watershed, we begin to move towards an ecosystem
governance regime. The focus moves to managing people
within the watershed, not trying to control the watershed itself. The ecosystem is the physical foundation and
long-term, sustainable ecological governance of society is
the goal.
Box 55: Watershed management
“While water managers generally understand and advocate
the inherent powers of the concept of a watershed as a unit
of management, where surface and groundwater quantity
and quality are inexorably connected, the institutions which
have developed to manage the resource have historically
followed these tenets only in the exception.”
(Wolf 2003: 168)

8.1 Finding the proper scale for
management
Many problems at the watershed level are the result of
wasteful water use, widespread non-point pollution and
other dispersed activities throughout the area. Involvement
and “buy-in” by the various groups in the watershed is
fundamentally required to solve such problems.
Watersheds are generally selected as the proper scale
of management based on the idea that water management organizations should reflect the physical unity of
water bodies to account for potential sources of conflicts.
The river basin—comprised of many watersheds—is a
logical administrative unit to handle the regional externalities linked to water pollution and conflicts of use.
Such institutions can bring relevant groups together to
work on problems collaboratively and—provided sufficient management authority is devolved to them—
At a Watershed   87

 Box 56: Water parliaments
French River Basin Committees (RBC), described as local
“water parliaments,” serve as consultative bodies responsible for analyzing any subject relevant to the river basin.
Various parties concerned with the water management are
represented such as communities, water users and the
central administration (which comprises less than half of
the representatives). On this decentralized committee,
stakeholders resolve conflicts related to water quality and
water availability. By assembling the interested parties in
the river basin, RBC decisions are expected to reflect the
general interest of all users and stakeholders.
Water Agencies (WAs) are the executive branch of the
RBCs. Financially autonomous, they are in charge of
collecting the water charges that finance their activities.
Through loans and subsidies, they finance private and
municipal investment projects intended to reduce pollution
and increase water availability. Financial assistance is aimed
at giving polluting firms and communities incentives to
reduce pollution and at water-saving investments. Eligible
investment must be in accordance with the priorities
defined by the WA (and later approved by the RBC) in the
multi-year working plan, established for a five-year period.
The plans are supposed to reconcile demands for multiple
water users and set priorities for the most important pollution reduction actions and water availability measures to be
taken in the river basin during the period.
Source: (da Motta et al. 2004: 37)

implement solutions (EPA 1997; EPA 2002; Ruhl et al.
2003; Schoefield et al. 2003: 35).
France has embraced this approach with its water
parliament system. Water Agencies and River Basin
Committees exist in each of the six French river basins.
The water agencies perform executive functions and the
River Basin Committees act as the central clearinghouse
and consultative bodies, as discussed in Box 56 (da
Motta et al. 2004: 4).
Australia is also managing activities on a watershed
scale. The Australian focus has shifted from government
as the administrator of policy on behalf of industry and
the community as passive recipients to government as
“enabler” and “facilitator.” This way, government
supports an empowered industry-community alliance to
articulate catchment strategies. This brings together the

three pillars of governance outlined in Chapter 2.
In the United States, a number of state governments
also use the watershed as the unit for water management.
To deal with pollution discharge permits and ambient
water quality monitoring, the State is split into a number
of watershed management units. For any particular unit,
state management activities are spread over a five-year,
five-step process: 1) data collection and monitoring, 2)
assessment and prioritization, 3) strategy development,
4) basin plan review and approval, and 5) implementation (EPA 2002).
Once the first “round” of activities for a management
unit is complete, the cycle is repeated, in recognition that
watershed management is not a one-time planning
process but an ongoing, adaptive one. To help distribute
government resources effectively, these five steps are staggered between watersheds. Thus in any one year,
different management activities are undertaken for
different management units. Mechanisms for agency-toagency coordination (such as a multi-agency steering
committee) can attempt to integrate different sectors.
Processes to increase public involvement are often
included.67
8.1.1 Watershed management in Canada
The importance of a watershed focus has certainly
been recognized in Canada. The 1987 Federal Water
Policy (Environment Canada 1987) states: “Increasingly,
watersheds are becoming the preferred spatial unit for
water resource planning. It is an approach that makes
sense at any scale of planning.” In Ontario, as far back as
1946, the creation of Conservation Authorities
embodied a watershed approach.
Other more recent initiatives that embrace a watershed approach include the Saskatchewan Watershed
Authority, Manitoba Water Strategy, Alberta Water for
Life Strategy, source water protection reforms in Ontario
and the Quebec Water Policy. Canadian policymakers
increasingly recognize that sound management practices
implemented at the watershed level will protect
ecosystem functions, and protect water resources as well.
This evolution in thinking puts watersheds at the centre
of environmental decision making. The challenge is
translating this understanding into an appropriate, effective and collaborative governance regime.

Successful integration and participation in mainly government-run watershed management schemes such as those in the United States have, however,
been limited. The management of different sectors in the watershed remains fundamentally split between government agencies with varying mandates.
“Turf battles” between agencies are common. And experience in a number of states has shown that attendance by NGOs and citizens at governmentled basin meetings is poor, likely because many perceive the government agency to be simply “going through the motions” (EPA 2002: 26).
67

88   POLIS Project

 8.2 Collaborative governance at the
watershed level
The U.S. Environmental Protection Agency (EPA
2002: 26), in a review of state-wide watershed management experiences, noted: “[s]tates often describe their
most notable successes as occurring in watersheds with
strong stakeholder groups supported by state and other
resources. While it may be difficult in some cases for
states to devolve agenda-setting and priority-establishing
powers—and the associated funding—to local entities,
such an approach enhances the prospect for local buy-in,
support, and action.”
Similarly, Washington State’s Watershed Management
Act states: “the local development of watershed plans for
managing water resources and for protecting existing
water rights is vital to both state and local interests. The
local development of these plans serves vital local interests by placing it in the hands of people who have the
greatest knowledge of both the resources and the aspirations of those who live and work in the watershed, and
who have the greatest stake in the proper, long-term
management of the resources. (Revised Code of
Washington §90.82.010).
The evolution of watershed management in
Washington State provides an example of the growing
recognition of a need to shift away from centrally-driven
efforts towards more collaborative watershed-based
approaches that embody an “experimentalist” ethic (see
Box 57). Australia has become a world leader in statewide “integrated catchment management” (ICM)—the
Australian term for watershed management—under the
leadership of COAG and the Murray-Darling Basin
Initiative. A number of Australian states have also
expressly legislated the devolution of powers to the
catchment level (see Box 58).
For large watershed basins, a “nested scale” approach
is often appropriate, as illustrated in the French Water
Parliament example discussed above. A management
authority for the basin develops policies and plans that
address basin-wide problems. These provide guidance to
the management bodies of smaller, nested watersheds,
which develop detailed action plans tailored to local
problems. This approach is used in the Chesapeake Bay
and the Great Lakes programs, as well as in the MurrayDarling Basin in Australia (EPA 1997: 27; Karkkainen
2002: 209).
Watershed management institutions must include
broad participation from the watershed community.
Local people and businesses should be invited to participate in various ways, including representation and

consultation during planning, and direct involvement in
implementation and monitoring (Webler and Tuler
2001; Chess et al. 2000). Participation by non-local
interests may also be included, such as representatives
from higher level governments or national NGOs, to
ensure these watershed bodies do not become too heavily
weighted toward local economic or political interests at
the expense of broader ecological goals (EPA 2002: 27).
Raising public awareness of watershed management
issues is also critical. Significant transformative potential
exists by ensuring meaningful public participation in
watershed management, shifting how citizens and institutions relate to one another and to their watersheds and
providing a broad-based societal sense of place (Cannon
2000: 419-425). A volunteer program in Oregon’s
McKenzie Watershed, for example, engages students
throughout the watershed in the evaluation and monitoring of water quality parameters. This program allows
for monitoring of activities at a number of diverse sites
on a weekly basis, and has proved an effective outreach
tool, helping citizens link their personal actions with
watershed problems (EPA 1997: 30).
Watershed management bodies require adequate and
secure long-term funding. A common frustration is the
lack of resources for implementation after so much effort
has gone into the planning process. Options for funding
include state grants, watershed levies, and dedicated
water withdrawal revenues for watershed management.
8.2.1 Government role in nested watershed
management
The multi-tiered governance structure discussed
above embodies the experimentalist principle of
subsidiarity, with each level of governance addressing
those issues that are most appropriately handled at its
scale of management. Watershed management bodies
must be given sufficient authority to plan and ensure
their plans are implemented. However, such devolution
must also ensure sufficient higher (senior government)
and lower (municipal and regional bodies) level government involvement.
A hierarchy of plans and policies is usually created by
the various governing bodies, starting with international
and inter-provincial water sharing agreements, moving
down through provincial land and water use policies,
individual basin and watershed plans, and finally to
local/municipal DSM and land-use plans.
Vertical integration between these levels of governance is important. Legislation can require lower level
plans and policies to be consistent with higher-level
At a Watershed   89

 Box 57: Evolving watershed management in Washington State, U.S.
Washington State’s first state-wide
watershed management framework
splits the State into 23 Water Quality
Management Areas (WQMAs), with
each WQMA assigned to a Regional
Office of the State Department of
Ecology. A five-step, five-year rotating
management process establishes a
point-source pollution permitting
(NPDES) procedure and a Total
Maximum Daily Load (TMDL) program,
two requirements of the federal Clean
Water Act.
Watershed Management Act (WMA),
enacted in 1998, initiated a second,
more locally-led and collaborative statewide watershed management program.
Under this program, the State was split
into 62 Water Resource Inventory Areas
(WRIAs) based on watershed boundaries. Local citizens, NGOs, governments and native tribes can voluntary
form a Planning Unit for one or more
WRIAs. State agencies, such as the
Department of Ecology, provide grants,
technical assistance, training and if
requested can serve on Planning Units.
The only legislated requirement of a
Planning Unit is a water quantity plan to
address the competing demands for
water. Planning Units may choose to
address a number of other issues,
including water quality, aquatic and
riparian habitat, and in-stream flows.

The planning process proceeds in four
phases.
1) Start-up. Initiating governments
(counties, the largest city, tribes, or the
highest volume water utility within a
WRIA) can apply for an organizing
grant of up to $50,000.
2) Assessment. Planning Units may
apply for up to $200,000 per WRIA to
fund watershed assessments, which
gather information on surface and
ground water availability, current
human use, and recharge rates of
aquifers and surface waters. An additional $300,000 is available to Planning
Units that pursue the optional (nonquantity) issues.
3) Plan development. Up to $250,000
per WRIA is available for development
of a Watershed Management Plan. If
the Planning Unit approves the Plan by
consensus, governments at the table
are obligated to implement the plan,
which is then submitted to each county
government in the WRIA for ratification. If the Planning Unit develops
instream flow recommendations, they
can be adopted as binding State rules
that limit subsequent water withdrawal
permits.

grant of up to $100,000 per year for
the first three years, and $50,000 for
the next two years, is available per
WRIA.
As of March 2003, 42 of the 62 WRIAs
were represented by 33 Planning Units,
a number of which have recently
completed
their
Watershed
Management Plans. For example, the
Elwha-Dungeness
Planning
Unit
recently completed its draft plan after
five years of work. The Planning Unit
chose to address all the optional issues,
and the resulting draft plan includes
recommendations on water quantity
and quality, habitat, instream flows,
stormwater, land use and management, education and outreach.
As for water conservation, the ElwhaDungeness draft plan includes a
detailed examination of water quantity
issues, including urban DSM efforts
within the WRIA. Some of its innovative
recommendations include: a conservation plan developed by all water
suppliers, annual maintenance shutdowns scheduled by industry during
low water flow periods, reduction
targets established for water utility
system leakage, and the elimination of
taxes on conservation materials and
equipment.

4) Implementation. Once a Plan has
been approved, an implementation
Source: (Elwha-Dungeness Watershed Plan; EPA 2002: 25,64,65)

ones. This creates accountability mechanisms up
through the hierarchy, and ensures that higher-level
bodies provide guidance and assistance to lower level
ones. Efforts in various Australian states, including
South Australia and Victoria provide fine examples of
such nested integration.
Horizontal integration between governance entities at
the same level is also important, such as coordinating
actions between watershed management bodies and
helping them learn from one another. For example, a
Common Implementation Strategy (CIS), discussed in
Chapter 4, consists of a number of work groups and
90   POLIS Project

expert advisory bodies to develop practical guidelines
and tools to promote information sharing as part of the
European Union Water Framework Directive (WFD) to
adopt river basin management (EU Directive
2000/60/EC; Ast and Boot 2003; Rijswick 2004).
In the United States, the EPA has provided significant assistance to state watershed management efforts
over the past decade (EPA 1997; EPA 2002). This has
included training for state personnel, organization of a
National Watershed Forum and regional roundtables,
comprehensive Internet training tools, and funding and
awards programs.

 Box 58: The Murray-Darling Basin Initiative in Australia
The Murray-Darling Basin covers most
of inland south-east Australia. It is over
one million square kilometres, and
spans five states/territories. Intense
development pressures led to rising
salinity levels, reduced instream flows
and endangered native fish populations. Federal, state and territorial
governments responded by creating
the Murray-Darling Basin Initiative, the
largest integrated catchment management program in the world, and a
model for governance. Three key
governance bodies have been created.
• The Murray-Darling Basin
Ministerial Council (MDBMC)
determines major basin-wide policy for
the Initiative. It consists of ministers
responsible for land, water and environmental resources from each of the
collaborating governments, and acts by
unanimous votes so that decisions
reflect government consensus across
the basin.
• The autonomous Murray-Darling
Basin
Commission
(MDBC)
provides assistance and advice to the
Ministerial Council, and coordinates
implementation of Council measures. It
consists of senior public servants from
each signatory government, and is
assisted by a Strategic Investigations

and Education (SI&E) program to fund
scientific research for policy development.
• The Community Advisory
Committee (CAC) advises the
Ministerial Council, participates in
basin-wide policy development, and
disseminates Council decisions to basin
communities. Its 21 members include a
representative from each of the catchments across the basin, five from
national special-interest stakeholder
groups, and two Indigenous representatives.
These governing bodies have initiated a
broad range of programs.
• In 1990, the Ministerial Council called
for integrated catchment management
(ICM) and community-government
partnerships across the basin. Since
then, 19 catchment management
organizations have been created under
state ICM programs.
• In 1993, the Ministerial Council initiated an Audit on Water Use in the
Basin, which led to the Council placing
a cap on diversions. This limits collaborating states to the volume of water
that would have been diverted under
1993/94 levels of development.

• In 2000, the Ministerial Council initiated the Sustainable Rivers Audit, an
ambitious assessment of river health
and ecological conditions to obtain
consistent, basin-wide information.
• In 2001, the Ministerial Council initiated the Living Murray Initiative, aimed
at restoring instream flows of the River
Murray. In 2003, the collaborating
governments agreed to provide $500
million over five years to address water
over-allocation in the basin.
• In 2001, a new Integrated Catchment
Management (ICM) Policy Statement
was released. Jointly developed by the
Ministerial Council and the Community
Advisory Committee, it commits the
Commission to setting and achieving
resource condition targets for water
quality, consumptive uses and environmental flows, the re-establishment of
native aquatic species, etc. Recognizing
its ambitious agenda, the ICM Policy
concludes: “Significant costs will be
incurred in establishing the arrangements outlined in this document and in
managing the basin’s catchments into
the future. However, these costs are
dwarfed when compared with the
inevitable costs-economic, environmental and social-if current management practices are not changed.”

Source: (MDBC 2004; COAG 2004; Bellamy 2002: 42; Purdie 2003)

In Canada, provincial and federal governments will
need to collaborate to provide an effective legislative
framework and suitable assistance to facilitate crossCanada watershed management. A national strategy on
water sustainability is key. Local governments also have
important roles to play, both as planning partners on
watershed bodies and in the implementation of watershed strategies and plans, such as urban water DSM.
Australia has devoted considerable efforts to improving
such catchment-municipal linkages. For example, the
Australian National Heritage Trust (NHT) has undertaken a project entitled “Incorporating integrated catchment management into local government planning.”

8.3 From reactive to proactive watershed management
A number of high profile watershed management
initiatives have been undertaken in response to
mounting ecological crises or lack of existing controls.
These include:
• New York City’s Watershed Protection Program. In
an attempt to avoid building an expensive water
filtration plant, a Memorandum of Agreement
(MOA) was signed in 1997 by the City, the State,
the federal EPA, five environmental groups, seven
counties, and 71 watershed towns and villages.
Under the MOA, watershed management is being
At a Watershed   91

 implemented on a scale unprecedented in the
United States. It includes an acquisition program to
buy water-sensitive lands, a set of rules controlling
activities close to bodies of water, funds for environmentally conscious development, and a set of best
practices for agriculture and forestry to reduce water
impacts. The initiative is expected to cost the City
$1.5 billion over 10 years (NRC 2000; Kimmerling
et al. 2000-2001; Yaggi 2000-2001).
• The Murray-Darling Initiative in Australia. Under
this initiative, the federal and five state/territorial
governments cooperate to address the over-demand
for and degradation of water and land resources in
the Murray-Darling Basin (see Box 58).
• The CALFED Bay-Delta Program in California.
Under this program, the state and federal governments cooperate to address poor water quality, the
water needs for endangered aquatic species, and the
competing and increasing water demands of the
Bay-Delta area. Water conservation plays a significant role in CALFED. $1.8 billion was proposed for
urban and agricultural conservation, including water

92   POLIS Project

recycling, with a baseline level of water use efficiency a condition for permitting new surface
storage projects (Dyballa 1999: 45; Adler and
Straube 2000-2001).
These initiatives have achieved notable successes, and
provide many important lessons in designing ongoing,
dynamic, collaborative management processes, especially
in inter-jurisdictional contexts. They are, however, “reactive” responses to existing or mounting problems and are
applied on an ad hoc basis. Such an approach allows
problems to grow until they are difficult and costly to
remedy, not only because of the significant ecological
damage that has occurred, but also because of the deeply
entrenched and conflicting positions that have often
formed.
One of the main lessons to be learned from these three
examples is that the crises and lack of controls that necessitated them should (and could) be avoided with a proactive approach. Province-wide collaborative watershed
management is required to achieve this, ideally as a
central component of a national water sustainability
strategy.

 Chapter 9

Conclusion and future directions
In the context of natural resource management, with all its many forms of externalities,
neither the price mechanism nor the creation of property rights can provide a durable
solution. Therefore, policy prescriptions, which have moved from ‘getting the prices
right’ to ‘getting the property rights right’, now center on ‘getting institutions right.’
(Saleth and Dinar 2004: 23)
The Commissioner of the Environment and
Sustainable Development (2001) declared that “water is
becoming the world’s most sought after resource…The
availability and management of fresh water is becoming
one of the greatest environmental, political, and social
challenges of the 21st century.” Even for Canada, a nation
relatively rich in freshwater resources, achieving sustainable freshwater management poses a significant challenge.
Canada is indeed at a watershed as it moves from a
situation of historic abundance of water, to a future of
freshwater scarcity. Yet, Dr. David B. Brooks (2003a:
42), Canada’s foremost water conservation specialist,
warns that “[o]ur management systems for fresh water in
Canada are becoming less, not more, sustainable…”
The question is not about whether Canada must use
water more efficiently. It is to what extent Canada will go
beyond increasing efficiency to a more fundamental
change—a paradigm shift in water management.
Political and institutional constraints are considerable. Institutions that will creatively manage and accel-

erate the adoption of sustainable solutions are needed. At
a Watershed demonstrates that change is possible and that
long-term solutions to water scarcity exist.
Canada has the opportunity to break from its historical pattern of wasting water. A future different from the
past is possible. Financial, technological, legal and social
tools are available to grapple with water issues before
they reach crisis proportions. But the long-term solution
requires a fundamental shift to watershed or ecosystem
governance. It requires an institutional shift towards
ecologically-based water allocations, the soft path for
water, ecosystem-based management, and innovative
urban water management.
The challenge now is to ensure that these new
approaches, resources and institutional arrangements are
implemented across the country. Senior government
must provide the leadership to make this happen and
take steps to ensure water agencies have the capacity and
incentives to implement comprehensive solutions at the
local level.

At a Watershed   93

 94 POLIS Project

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At a Watershed   105

 POLIS Project on Ecological Governance:
An Organization for Transformative Solutions
Created in 2000, The POLIS Project on Ecological Governance,
seeks to discover and implement solutions to pressing issues
that can build healthy and sustainable communities. Among the
many research centres investigating and promoting sustainability world-wide POLIS is unique in its focus on multidisciplinary research and action and in that its work strives to blend
academic research with community engagement.
The concept of ecological governance is exciting in that it offers
an alternative to extractive, linear and unsustainable systems
that continue to level ancient forests, displace indigenous and
local communities and clog and choke our global cities. Instead
ecological governance asks how we might foster circular
systems in which we reduce our demands on distant (and
local) ecological systems.
Whether it be through investigating the shift from supply to
demand management in our use of minerals or water,
re-imagining new forms of urban ‘smart growth’ such as the
eco-innovative university campus, or reforming local land
tenures for indigenous and local community, revitalization or
overhauling national environmental laws, the thrust of all of our
research is guided and informed by the concept of ecological
governance.
How to contact us:
The POLIS Project on Ecological Governance
PO Box 3060, University of Victoria
Victoria, BC
V8W 3R4
email: polis@uvic.ca
www.polisproject.org

POLIS Project
on

Ecological Governance
U n i v e r s i t y

o f

V i c t o r i a