‘Big pipe’ infrastructure solutions may no longer be affordable for smaller towns and cities

By Trish Johnson and Alan Perks

Small- and medium-sized municipalities are facing increasingly stringent financial and regulatory pressures. As approximately 75% of a municipality’s capital asset inventory is represented by water, wastewater and roads, a growing proportion of their operating revenue must be devoted to building and maintaining water and wastewater infrastructure.

The situation regarding provincial grants for building public infrastructure has changed drastically in the last 25 years. In earlier days, regular grants were provided for two-thirds of the capital budget for building new infrastructure. Now, grant programs are usually delivered on a targeted basis, requiring “shovel ready” projects. In many cases, the projects brought forward represent either rushed efforts or projects that have languished on municipal shelves for a decade.

A recent survey by the authors of municipal managers across Canada indicated that, without the large provincial grants that were provided decades ago, they would not have the expensive infrastructure they currently operate.

Municipal councils have two primary objectives: cost reduction and economic growth. These competing objectives drive public policy and decision-making with regards to water and wastewater servicing. This often results in costly expansion and upgrade of existing facilities, even those subjected to high levels of leakage, wastage and operational inefficiency.

Under these conditions, the size, complexity and cost of infrastructure upgrades need to be seriously questioned and optimization measures must to be carried out first.

Infrastructure for smaller towns and cities

Conventional “big pipe” solutions, considered on a life cycle cost basis, may no longer be affordable, nor appropriate, for many small- and medium-sized towns and cities. Providing water and wastewater services to a typical home should cost no more than, at the most, $40,000 – $50,000 per connection. Many municipalities charge $25,000 per lot, and sometimes less. Decentralized options, involving small bore systems, can be installed for a similar low cost and often a lower carbon footprint.

The authors reviewed numerous water and wastewater servicing schemes for First Nations communities and small towns across Canada, and found that, when conventional servicing solutions are proposed for small communities, the costs often become exorbitant, sometimes in excess of $150,000 per house. Such costs are simply unaffordable and not in the best public interest. Planners and designers of public infrastructure must take this into account and further consider life cycle costs.

High cost drivers

Certainly one of the high cost drivers has been the public and planning perception that “bigger is better.” Smaller scale decentralized technologies, capable of cost-effective environmental protection, now exist, but the will required to implement them is still lacking.

Another driver is the business model used for design services. Over the last 25 to 30 years, there has been a shift away from providing consulting engineering services on a retainer basis by senior consultants able to consider low-cost, easy to operate solutions for clients. Today, it is  a project oriented business model, better adapted to increasingly larger projects and specialized design teams.

The concept of benefit-cost analysis has also been lost. Projects are now usually conceived, developed and presented on a lump sum basis. When true benefits and costs are considered, whether it be cubic metres of water treated, kilometres of road constructed, or number of houses serviced, exorbitant project costs clearly stand out, whether on a capital, operational or life cycle basis.

Another driver in Ontario is the Municipal Class Environmental Assessment process itself. This encourages performance indicators and comparison matrices that mask the true benefit cost of solutions being compared. This is often through lump sum costs and matrices of red green and yellow dots, comparing alternatives but masking the true financial cost benefit ratios. In addition, the municipal process encourages the design team involved in conducting the environmental assessment to proceed, after public consultation, through to the final design and implementation stages. This only facilitates the selection of preconceived and often exorbitant solutions.

Innovation pays off

Perth, Ontario is an example of a small town that has realized considerable savings by doing things differently. The town has implemented an innovative onsite dewatering and residue treatment system for its water treatment plant, using geotubes. Savings have resulted not only from lower capital and O&M costs but they have also come about because there is no’ lost opportunity cost’ for development of 80 new homes from flows that would have been directed to the sewage lagoon.

The path forward

What is the path forward for many small- and medium-sized towns? How can these municipalities stretch their infrastructure budgets? How can more appropriate solutions be conceived and implemented?

The first strategy is to optimize existing infrastructure as fully as possible, before embarking on any upgrade or renewal investment. Many municipal water and wastewater systems are subject to large inefficiencies through leakage, infiltration and excessive demand. These should be addressed and optimized first, as they can represent 20% – 40% of the annual operating budget. By not addressing leakage and infiltration, growth capacity is wasted and lost tax revenues are considerable.

The second key strategy is demand management, applied to both existing and new infrastructure. Municipal infrastructure is usually designed and operated to meet short-term peak demands, an inherently inefficient process. Managing and reducing those demands through “peak shaving” and conservation efforts can reduce the overall cost of operations significantly.

The third key strategy is the “fresh eyes” approach. This means adopting a threshold of project cost ($/m³, $/km, $/house) that, when exceeded, subjects the project to independent review by a professional third-party. If such a threshold were adopted, billions of dollars could be saved, without compromising service delivery.

Finally, adopt a carbon neutral criterion for all new infrastructure. Climate change and greenhouse gas restrictions will only serve to reinforce concerns. As most of the energy use in municipal water and wastewater infrastructure is related to the pumping of water, carbon neutral solutions will soon become mandatory. This will only serve to reinforce the need for low cost, easy to operate water and wastewater solutions.

Some of these are available in the form of package water and wastewater treatment plants, small bore linear infrastructure, and other decentralized facilities. These are well able to meet the needs of new development, while protecting the environment, but have not yet found widespread municipal acceptance.

Planners and designers must now carefully consider the affordability of the solutions they propose to municipalities. The costs of “big pipe” solutions are no longer affordable for small municipalities. Also, every extra dollar that goes towards a more elaborate project than is truly needed is a dollar that cannot go towards other community programs. For these reasons, we must all focus on stretching municipal infrastructure budgets.

Trish Johnson and Alan Perks are with R.V. Anderson Associates Ltd. This article appears in ES&E Magazine’s April 2016 issue.