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    Report April 2007

    Navigating the Shoals

    Assessing Water Governanceand Management in Canada

    ENERGY, ENVIRONMENT AND TRANSPORTATION POLICY

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    Preface

    Navigating the Shoals: Assessing Water Management

    and Governance in Canada is based on the results of acase study investigation of current institutional arrange-

    ments and the incentives, both positive and negative,

    used to achieve water management goals. It presents the

    results of this research in a series of recommendations

    that are likely to be required to enable managers to

    effectively deliver water services into the future.

    This is the first report published under the banner of the

    Leaders Forum on Water Resource Management and

    Governance, a three-year initiative with a mandate to

    help resolve policy challenges and conflicts related towater resource management as well as to improve North

    American governance of this important resource.

    Navigating the Shoals: Assessing Water Governance and Management in Canada

    by Greg Hoover, Al Howatson, Jason Churchill andJohn Roberts

    About The ConferenceBoard of Canada

    We are:

    A not-for-profit Canadian organization that takes

    a business-like approach to its operations.

    Objective and non-partisan. We do not lobby

    for specific interests.

    Funded exclusively through the fees we charge

    for services to the private and public sectors.

    Experts in running conferences but also at con-

    ducting, publishing and disseminating research,

    helping people network, developing individual

    leadership skills and building organizational

    capacity.

    Specialists in economic trends, as well

    as organizational performance and public

    policy issues.

    Not a government department or agency,

    although we are often hired to provide

    services for all levels of government.

    Independent from, but affiliated with, The

    Conference Board, Inc. of New York, which

    serves nearly 2,000 companies in 60 nations

    and has offices in Brussels and Hong Kong.

    2007 The Conference Board of Canada*Printed in Canada All rights reservedISSN 0827-1070 ISBN 0-88763-769-8Agreement No. 40063028*Incorporated as AERIC Inc.

    Forecasts and research often involve numerous assumptions and data

    sources, and are subject to inherent risks and uncertainties. This informationis not intended as specific investment, accounting, legal or tax advice.

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    CONTENTS

    Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

    Navigating the Shoals: Assessing Water Governance and Management in Canada . . . . . . . . . . . . . . . . . . . 1

    Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

    Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

    Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

    Governance and Management in Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

    Positioning the Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

    Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

    Appendix ABibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

    Appendix BRelated Products and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

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    North Americas abundant freshwater resources

    have long supported human development. The

    rivers and lakes have been navigated for trade

    and exploration. Theyve been harnessed to provide power

    for our economies. Theyve helped to feed us and washed

    away our waste. But the availability of fresh water in

    boundless quantities can no longer be taken for granted.

    In many regions of Canada, water quality and quantity are

    under stress. And in one notable public policy decision,

    the Government of Alberta recently announced that itwould no longer accept applications for new water allo-

    cations in the Bow, Oldman and South Saskatchewan

    River sub-basins.

    Population pressures, economic growth and a changing

    climate that is expected to alter the distribution of pre-

    cipitation in Canada are some of the challenges facing

    the countrys water institutions. Are these institutions

    adequately equipped to cope with these and other chal-

    lenges? Or are we bearing headlong toward the shallows,

    ill-equipped to navigate the shoals?

    Our water institutions arent ready for the challenges

    ahead, including economic growth and a changing climate.

    The Conference Board of Canadas Leaders Forum

    on Water Resource Management and Governance was

    formed to study these questions. And the members

    focused their first research efforts on identifying what

    works well in Canadaand what needs to be improved.

    The research looked at five Canadian watersheds. It

    identified problems and found that water managers do

    not always have the required policy clarity, mandates

    for action or information resources they need to deter-

    mine the optimal method of delivering water services

    into the future.

    Navigating the ShoalsAssessing Water Governance

    and Management in Canada

    EXECUTIVE SUMMARY

    At a Glance

    The basic services we demand from our

    water resources are water for drinking, for

    economic development and for maintaining

    robust aquatic ecosystems. These needs will

    determine the policy objectives of water gov-

    ernance and management into the future.

    Case study research on five Canadian water-

    sheds indicates that water managers do not

    always have the required policy clarity, man-

    dates for action or information resources to

    determine the optimal method of delivering

    water services into the future.

    This report presents six recommendations for

    improving Canadian water governance and

    management practices, citing examples from

    the case studies.

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    ii | The Conference Board of Canada

    The result is six recommendations aimed at improving

    governance and management of water in Canada. They

    include clarifying governance structures, improving inter-

    agency cooperation and integrating groundwater and

    surface water management. They encourage greater use

    of market-based instruments (such as pricing) to promotemore efficient use of water resources. They call for a

    nested approach to watershed governance. (Nesting

    tributary governance frameworks within a basin-wide

    governance framework allows decisions to be made at

    the most appropriate level by managers who are closest

    to the issues.) And they call for better prioritizing and

    budgeting to collect the information water managers

    need if they are to make better decisions. All of these

    recommendations are explored in detail in this report.

    Managing the expected hydrologic effects of climate

    change and the resource needs of a robust ecosystem

    in addition to managing the growing demographic and

    economic pressureswill prove even more challenging

    in the coming decades. Canadas current system of insti-

    tutions and incentives is leaving watershed managerswithout the resources they need to navigate the shoals

    ahead. But the forums research also found that policy-

    makers nationwide recognize the challenge and are

    initiating change. The implementation of the six recom-

    mendations outlined in this report will help tomorrows

    water managers steward Canadas freshwater resources

    in a manner that can sustain the ecosystem and support

    economic growth.

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    Smooth runs the water where the brook

    is deep.

    William Shakespeare,Henry VI, Part II

    INTRODUCTION

    North Americas abundant freshwater resources

    have supported human development for ages.

    They have been navigated for trade and

    exploration, been harnessed to power our economies,

    fed our hunger and washed away our waste. With few

    exceptions, these freshwater resources have provided

    human settlement in North America with a bounty of

    water for drinking and economic development and have

    maintained robust aquatic ecosystems. These remain the

    basic services that water resources provide today and

    will underlie the policy objectives of water governance

    and management into the future.

    But the availability of fresh water in boundless quantities

    can no longer be taken for granted. In a most notable

    public policy decision, the Government of Alberta

    announced in 2006 that it is no longer accepting appli-

    cations for new water allocations in the Bow, Oldman

    and South Saskatchewan River sub-basins. Furthermore,

    a changing climate is expected to alter the distribution

    of annual precipitation in Canada, leading to floods

    along some river systems and increased droughts inWestern Canada.1 Are we bearing headlong toward

    the shallows, ill-equipped to navigate the shoals?

    The Conference Board of Canadas Leaders Forum on

    Water Resource Management and Governance questions

    whether Canadas current water institutions and system

    of incentives are adequately equipped to cope with the

    multitude of challenges facing them in the near future.

    Accordingly, forum members have focused the first

    research efforts of this initiative on identifying what

    works well in Canada and what needs to be improved.

    1 Fiona J. Warren et al., Climate Change Impacts and Adaptation,p. 36.

    Navigating the ShoalsAssessing Water Governance

    and Management in Canada

    The Leaders Forum on Water Resource Management

    and Governance is a three-year initiative with a mandate

    to help resolve policy challenges and conflicts related to

    water resource management as well as to improve the

    North American governance of this important resource.

    Specifically, the Forum brings together business and

    government participantspolicy-makers, regulators and

    usersthat have a stake in this important resource. Forumparticipants enjoy the opportunity to build mutual under-

    standing of the issues and to identify their priorities, guide

    the Conference Board in its choice of research topics, and

    review the research in progress.

    The Leaders Forum on Water ResourceManagement and Governance

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    2 | The Conference Board of Canada

    This report translates the findings of case study

    research involving five Canadian watersheds (see box

    Research Methodology and Case Study Selection)

    into six recommendations to improve the governance

    and management of water in Canada:

    clarify governance structures;encourage a nested approach to watershed

    governance;

    improve interagency coordination;

    integrate groundwater and surface water management;

    prioritize and budget for adequate information to

    support decision-making; and

    explore greater use of market-based instruments.

    The report begins with an outline of the fundamental

    challenges that exist with water governance and man-

    agement in Canada, continues with a schematic outline

    of where and how the recommendations affect Canadian

    water managers, and concludes with a detailed discus-

    sion of the recommendations, citing illustrations fromCanadian watersheds.

    GOVERNANCE

    Governance involves the interactions

    among structures, processes and traditions

    that determine how power is exercised,

    how decisions are taken, and how citizens

    or other stakeholders have their say.

    Institute on Governance 2

    The concept of governance embraces the process and

    structure of decision-making. The three definitions

    presented in this report (see quotations in this section)

    contain three fundamentals: power, relationships and

    accountability.3 It is the interaction of these fundamen-

    tals that defines the governance structure of any organ-

    ization or group of organizations. Fundamentally, by

    establishing the systems for decision-making and the

    rights of stakeholders,4 good governance is the platform

    upon which effective water resource management is

    built. It establishes the policy objectives that water

    managers are tasked to achieve and the set of funda-

    mental values and decision-making processes through

    which to achieve them.

    2 Tim Plumptre and John Graham, Governance and Good GovernanceInternational and Aboriginal Perspectives, p. 3.

    3 Ibid.

    4 The Canadian Oxford Dictionarydefines stakeholder as a personwith an interest or concern in something. In the context of thisreport, stakeholders is an inclusive term to represent persons ororganizations such as, but not limited to, governments, farmers,the tourism industry, municipal utilities, hydro-power generators,the ecosystem, watershed managers, Aboriginals and industry.

    The recommendations in this report have been generated fromConference Board case study research on five distinct Canadian

    watersheds. Using national and international literature in addition

    to in-house and Leaders Forum on Water expertise, the Conference

    Board developed an interview guide to both qualitatively and quan-

    titatively assess the water resource governance and management

    framework in Canada. The Conference Board interviewed a number

    of experts from a broad range of stakeholders in each jurisdiction

    in order to generate insights into the governance and management

    framework of each watershed.

    The selection of the five case studies was also a cooperative exercise

    between the Conference Board and the members of the Leaders

    Forum on Water. The research project is designed to understand the

    adjustments that need to be made to Canadian water institutions

    and incentives to foster the efficient, effective and equitable delivery

    of future water services. The five watersheds chosen for case study

    analysis collectively:

    Illustrate the range of water governance and management problems

    in Canada, with specific attention to:

    transboundary challenges,

    methods of apportioning water supply,

    maintaining water quality, and

    groundwater-surface water interactions;

    Illustrate failures as well as successes in water governance and

    management;

    Illustrate water governance and management over a range of

    geographic densities (rural to urban);

    Illustrate a range of conflicting demands on the water supply; and

    Represent the regional diversity of Canada.

    Ultimately, the five watersheds chosen for detailed case study research

    are the AbbotsfordSumas Aquifer, Grand River Watershed, South

    Saskatchewan River Basin, Okanagan Basin and Ottawa River Basin.

    Research Methodology and Case Study Selection

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    The Conference Board of Canada | 3

    Water governance refers to the range of

    political, social, economic and admin-

    istrative systems that are in place to

    regulate the development and manage-

    ment of water resources and provision

    of water services at different levels of

    society.

    United Nations Development Programme5

    In practice, establishing a clear, consistent framework

    for decision-making that incorporates the rights and

    values of all stakeholders is a formidable challenge.

    Governors of water resourceswhich in Canada are

    the provincial and federal governments and the Yukon

    Territory on behalf of Canadian citizensmust estab-

    lish the framework in the context of three jurisdictional

    challenges:

    Intragovernmental Policy Coordination. Government

    departments and public sector agencies at all levels of

    government create policies and programs that affect

    water supply and quality. The sometimes competing

    interests of these departments and agencies create

    difficulties with respect to achieving clear and con-

    sistent watershed-level goals and policy.

    Fundamentally, good governance is the platform upon

    which effective water resource management is built.

    Federal/Provincial Coordination. The provincial gov-

    ernments and one territorial government have the

    constitutional right and responsibility for managing

    water in Canada. However, the federal government

    has responsibility for, and jurisdiction pertaining

    5 United Nations Development Programme, Energy and Environment:Water Governance.

    to, water including navigable waters, federal lands,

    international transboundary issues, the Fisheries

    Act, and the Canadian Environmental Protection

    Act. These overlapping responsibilities can create

    tensions and difficulties with respect to relationships

    and accountability.Alignment of Governance Frameworks With Watershed

    Boundaries.Watersheds do not always fall neatly

    into one province or nation. For example, the

    South Saskatchewan River and subsequently the

    Saskatchewan River traverses three Prairie provinces

    and one U.S. state. And the Ottawa River forms part

    of the OntarioQuebec boundary. Special governance

    arrangements and a willingness to work coopera-

    tively and collaboratively are required to establish

    effective watershed-level governance systems in

    these and other cases.

    Governance emphasizes process.

    It recognizes that decisions are made

    based on complex relationships between

    many actors with different priorities. It

    is the reconciliation of these competing

    priorities that is at the heart of the con-

    cept of governance.

    United Nations Human Settlements Programme6

    MANAGEMENT

    Water management involves planning, implementing and

    measuring to achieve policy objectives defined by the

    governors of water resources. It is at the management

    level that direct action with respect to water quality and

    quantity is taken.

    6 United Nations Human Settlement Programme, Shelter for All.

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    4 | The Conference Board of Canada

    As defined in the Canadian Oxford Dictionary,manage-

    mentis the process or an instance of managing or being

    managed and manage is defined as organize; regulate;

    be in charge of.7 In the context of this report, manage-

    mentwill refer to physical and administrative actions

    taken by the public and private sectors to implementthe policy directives of the governors.

    Most of the challenges that Canadian water managers

    face are policy- rather than technology-related and thus

    a function of the effectiveness of the governance structure

    of the watershed. In many instances, managers greatest

    difficulties are 1) identifying clear policy goals for the

    watershed, and 2) having the mandate to take action.

    This case study research analysisidentifies challenges

    to water resource management in Canada, such as:Regional Versus Local Interests. In the Okanagan Basin,

    for example, the watershed is the natural governing

    region. But the three major municipalitiesVernon,

    Kelowna and Pentictonview water as a necessity

    for municipal development. They are therefore wary

    of ceding their existing authority over the distribu-

    tion and use of water resources to a regional body.

    7 Katherine Barber, ed., The Canadian Oxford Dictionary.

    As a result, efforts to manage the Okanagan Basin

    at the watershed level are constrained by the lack of

    an agency with watershed-wide authority.

    Competing Users. Public managers of a water juris-

    diction must allocate water among agricultural users,

    municipalities, industrial plants, hydroelectricityfacilities, recreational users and needs of the eco-

    system. When water is plentiful, allocation decisions

    are not difficult. But when water becomes scarce,

    allocation can become problematic.

    Groundwater and Surface Water. Both are integral

    components of a watersheds resource capacity (i.e.,

    the quality and quantity of water resources). It is

    therefore vital that they be managed in an integrated

    manner for the long-term health of the resource. But

    in many jurisdictions, they are managed by differ-

    ent legislation, and sometimes different entities. Forexample, in B.C., Crown licences for the withdrawal

    of surface water have been in effect for a very long

    time, but the provinces Water Actdid not apply to

    groundwater resources until 2004, when the Ground

    Water Protection Regulation provisions were passed

    A phased implementation approach meant that these

    water quality regulations did not come into full force

    until the end of 2005. Unfortunately, these regula-

    tions do not yet cover groundwater allocation issues

    The long-term health of groundwater and surface water

    requires that they be managed in an integrated manner.

    But in many jurisdictions, this is not the case.

    Data. Decision-makers need requisite data and infor-

    mation for the decisions they make, whether for

    allocation decisions at the watershed level or policy

    decisions within provincial departments. But in many

    cases, these data are not available, or are not in a

    usable form. In the case studies examined, there

    tends to be sufficient information on either water

    quality or quantity, but rarely on both. For example,

    there is extensive information on water quantity in

    the main stem within the Ottawa River Basin, but

    little on quality. In contrast, for the AbbotsfordSumas

    Aquifer there is substantial water quality information

    (because of concerns about nitrate levels), but data

    are lacking on water quantity.

    Already, a number of populated areas in southern Canada

    particularlyin the Westare experiencing stress on water quantity and quality:

    The South Saskatchewan River drains most of the southern

    Prairies and is used extensively for irrigation. But the South

    Saskatchewan is reaching the limits of its available supply.

    Forecast population growth in Alberta is expected to increase

    unconstrained water demand by about 50 per cent by 2021, and

    100 per cent by 2046.1 Action is required now to avoid severe

    shortages later.

    In the Fraser Valley of B.C., the AbbotsfordSumas Aquifer under-

    lies the British ColumbiaWashington State boundary. On the

    ground, fertilizer use and livestock manures leach nitrates into the

    aquifer, creating water quality problems. Washington State has

    enforced groundwater regulations for decades, but B.C. is only

    now beginning to regulate groundwater.

    1 Alberta Environment, South Saskatchewan River Basin Non-IrrigationWater Use Forecasts[online]. (Edmonton: March 2002), [citedMarch 16, 2007]. p. 5.6 www3.gov.ab.ca/env/water/regions/ssrb/PDF_documents/SSRB_Non-Irrigation%20_Water_Use_Forecasts.pdf.

    Water Quality and Quantity Under Stress

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    The Conference Board of Canada | 5

    GOVERNANCE AND MANAGEMENTIN ACTION

    How do these two concepts of governance and manage-

    ment relate to each other? Consider the workings of the

    Nechako Watershed Council in B.C.s Upper FraserBasin.8 The governance of the watershed is set out in

    the constitution of the Council. The constitution emerged

    after 18 months of sometimes difficultbut invaluable

    discussion. During that time, decisions were made on who

    holds the power to make decisions in the watershed,

    who is accountable for the well-being of the watershed,

    and how the relationships among stakeholders in the

    watershed are defined. Ultimately, a process for decision-

    making (i.e., a governance framework) was established.

    Nechako River reservoir operations had maintained the

    quantity of water needed for spawning, but not the quality.

    Management activity in the Nechako Watershed is

    illustrated by the following action. Strategically, the

    governors had already agreed that improving spawning

    conditions in the watershed was an important policy

    goal of the Council. To this end, Council management was

    charged with accomplishing this goal, which required

    dam operators to manage the flow of water downstream

    andthe temperature of the water. Previous reservoir

    operations to manage the flow rate of the Nechako

    Rivercharacterized by a mass spill of surface water

    from the reservoirhad been sufficient to maintain the

    quantity of water needed for spawning, but not the quality

    of water (which in this instance was the required temper-

    ature of the water). Also, the large volumes of released

    water had caused significant riparian damage downstream.

    However, by communicating information about the

    quantity and quality of the water, and about the down-

    stream stakeholders perspectives, at the appropriate level

    8 As presented by Hugh Porteous, Alcan Inc., during a meeting of theLeaders Forum on Water Resource Management and Governance.

    of water resource governance, the Council provided the

    regions water managers with a clear goal. This example

    of revised reservoir operationscharacterized by the

    strategic purge of lesser quantities of much colder water

    from the depths of the reservoirshows how clarity in

    governance and policy directivefacilitates improvedwatershed management.

    POSITIONING THE RECOMMENDATIONS

    The six recommendations outlined in this report advocate

    change at many different stages of decision-making. To

    help communicate how each recommendation relates to

    the others, and to help the reader place these recommen-

    dations in the context of a day-in-the-life of a water

    manager, the Conference Board designed the exhibitDecision-Making in Watershed Management: Pressures

    and Actions. This simplified flow diagram indicates

    where the project recommendations (the numbers) most

    affect the elements of the diagram, and depict the:

    organizational guidance and pressures on water

    managers (the ovals);

    the actions taken by water managers (the rect-

    angles); and

    the decisions water managers must make (the dia-

    monds).

    Water resource governance and management involve

    a complex web of interjurisdictional, economic, and

    environmental policies and priorities.

    As revealed by the interviews, and highlighted often

    in the text of this report, water resource governance

    and management involve a complex web of inter-

    jurisdictional, economic and environmental policies

    and priorities.

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    6 | The Conference Board of Canada

    Exhibit 1Decision-Making in Watershed Management: Pressures and Actions

    Source: The Conference Board of Canada.

    The project recommenda-tions on the following pageare noted in this exhibitwhere they most affect theorganizational guidance andpressures on water managers(ovals), the actions thatmanagers take (rectangles)

    and the decisions they make(diamonds.)

    WatershedGovernanceFramework Public policy and

    regulatory framework

    Competing interests(anthropogenic,

    ecologic, economic)

    Clarify and confirmManagement goals

    Acquire data and informationfor decision-making

    Treat and return

    Usemarket-based

    instruments forallocation?

    Allocate water tocompeting demands

    Water Manager

    Use

    Design anappropriateframework

    Yes

    No

    #6

    #5

    #4

    #3

    #2

    #1

    Source

    Tap

    Source

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    The Conference Board of Canada | 7

    RECOMMENDATION #1: CLARIFY GOVERNANCE STRUCTURES

    Clarifying governance structures is vital to effective resource management

    because clarity in governance establishes what the policy directive is.

    To operationalize the consensus view that the watershed is the most

    appropriate level for managing water resources, a clear understanding

    of the roles, responsibilities and powers of the governors is crucial. This

    is especially important for Canada: regional, provincial, federal and inter-

    national bodies may have different authorities in a given watershed. In

    all situations, the respective governors of water resources should develop

    a robust governance framework to establish clear lines of accountability

    and authority within the watershed.

    RECOMMENDATION #2: ENCOURAGE A NESTED APPROACH TO

    WATERSHED GOVERNANCE

    Extending the concept of clear lines of accountability and authority in a

    watershed is the recommendation to develop governance frameworks

    based on nested watersheds. Effectively, nesting tributary governance

    frameworks within basin-wide governance frameworks allows decisions

    to be made at the most appropriate level by the managers who are closest

    to the issue. A nested approach allows users at the tributary level to

    communicatethrough community advisory bodieslocal concerns

    and knowledge to regional water managers.

    RECOMMENDATION #3: IMPROVE INTER-AGENCY COORDINATION

    Improved coordination among the many public sector agencies that

    have a vested interest in the distribution and use of water resources

    should assist in the development of consistent policy goals. A clear

    public policy and regulatory framework will promote better water man-

    agement decisions. The scale of this inter-agency cooperation should

    include all the agencies in the watershed, in order to enhance the water

    managers ability to make decisions for the watershed as a whole.

    Consider the potential conflict between the views of agencies respon-

    sible for environmental protection and industrial development. In the

    absence of coordinated policy between those agencies, the water

    managers will be pushed and pulled from different sides. However, if

    those agencieson a watershed basiscould identify and agree on the

    balance between the in-stream flow needs and economic development

    needs of the region, the water managers would have more certainty

    about the policy directives when making allocation decisions.

    RECOMMENDATION #4: INTEGRATE GROUNDWATER AND SURFACE

    WATER MANAGEMENT

    To maximize the use of resources of any kind in a manner consistent

    with sustainable development, decision-makers must understand the

    long-term availability of and relationships among the resource inputs.

    Water managers must therefore have the knowledge, authority and cap-

    acity to manage jointly groundwater and surface water extraction and

    use. This is fundamental for identifying the sustainable level of water

    resource development in a watershed and crucial for enabling water

    managers to make optimal allocation decisions.

    RECOMMENDATION #5: PRIORITIZE AND BUDGET FOR ADEQUATE

    INFORMATION TO SUPPORT DECISION-MAKING

    Good information facilitates good decision-making. Without adequate

    information, water managers cannot understand the implications of their

    decisions for the health of the watershed. To support the sustainability

    of the watershed, information such as the following is required: the

    annual recharge rate of underground aquifers, the seasonal flows of sur-

    face waters, the seasonal consumptive patterns of users, the in-stream

    needs of the ecosystem, the quality of water upon extraction and return,

    and the long-term economic growth prospects of the watershed. With

    limited financial resources available, water managers must prioritize the

    information collection activities.

    RECOMMENDATION #6: EXPLORE GREATER USE OF MARKET-BASED

    INSTRUMENTS

    Market-based instruments (i.e., tools to encourage efficient use of

    resources through price) have the potential to assist water managers in

    allocating an increasingly scarce resource to its highest value use. After

    the basic needs of the ecosystem and people have been met, utilizing

    market-based instruments in regions of water scarcity will identify thosecommercial and industrial interests that place the highest value on water

    as an input to their operations. Furthermore, establishing a price for

    water will create an incentive for users to be as efficient as possible,

    thereby decreasing overall demand for water resources.

    Project Recommendations

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    8 | The Conference Board of Canada

    RECOMMENDATION #1: CLARIFY GOVERNANCE

    STRUCTURES

    A watershed is the natural unit for governing and

    managing water resources. Without a comprehensive

    view of the watershed as an organic system, it is nearly

    impossible to satisfy all the competing demands ofindustry, agriculture, commerce, municipalities and the

    ecosystem. The first recommendation calls for clear

    rules for coordination among existing bodies to be

    established at the watershed level, to ensure effective

    integrated watershed management approaches. Shifting

    water governance and management to a watershed basis

    will entail transitional costs in the short term. But the

    potential long-term benefits of improved supply manage-

    ment, expanded scope for information and data gathering,

    and the ability to pool resources for watershed-level

    investment may well be great enough to make it worth-while to incur such costs.

    The public perceives the GRCA to be the watchdog of the

    watershed and the single window to water issues therein.

    Implementing this recommendation could be part of

    the solution to the lack of inter-agency coordination, as

    discussed further in Recommendation #3. The initial

    step to clarifying the governance structure is achieving

    agreement among the stakeholders to who:

    owns the water resources;

    will govern the water resources; and

    will manage the water resources in a given watershed.

    This is a difficult but invaluable discussion, as was

    referenced earlier in the Nechako Watershed Council

    example. Once the owners, governors and managers

    are identified, they can begin to establish the decision-

    making framework and information feedback process.

    The ideal outcome of doing so is the creation of a

    single water management agency with authority and

    jurisdiction over all facets of water use, treatment and

    conservation. However, the likelihood of establishing

    such an authority in Canada is low because of the

    multitude of stakeholders with a vested interest in water

    governance. In practice, it is more likely that a key agency

    would be established in a watershed and that it would become

    the centre of watershed-level management activity.

    The best example of such an agency from this case

    study analysis of water governance and management

    in Canada is in the Grand River Watershed in Ontario.

    The interview results clearly identify that citizens and

    stakeholders view the Grand River Conservation Authority

    (GRCA) as the manager of water in that watershed. And

    while the Authority does not have sweeping jurisdiction

    over all activities that affect water quality and quantity

    in the region, it has a clear mandate and specific roles

    to play in the watershed. It is a facilitator of important

    partnerships, the champion of consistent watershedpolicy, the focal point of successful water quality and

    quantity protection initiatives, and a valuable source of

    information for decision-makers both within and out-

    side the boundaries of the watershed.

    An example of the absence of clear mandates and coordin-

    ated policies is found in the Okanagan Basin. Interview

    results suggest that this situation stems from a failure to

    implement the recommendation of the 1974 Okanagan

    Basin Study 9 to create a single governance authority

    for the entire basin, complete with requisite resources

    and powers. This failure has had a major impact on the

    Okanagan Basins ability to identify the watersheds

    priority issues and to assign clear roles and responsibility

    for action. The resulting absence of timely and accurate

    basin-wide data is a consequence of a lack of centralized

    authority, as is the failure of agreement on basin-wide

    goals, principles and policies. Matters are made worse by

    jurisdictional issues between the federal and provincial

    governments, and competition among local governments

    within the basin for economic development projects and

    infrastructure funding.

    9 At the time, the report was considered the most comprehensivewater basin plan ever developed, and the recommendations notimplemented continue to resonate and demand attention.

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    The Conference Board of Canada | 9

    RECOMMENDATION #2: ENCOURAGE A NESTED

    APPROACH TO WATERSHED GOVERNANCE

    Development and action with respect to Recommenda-

    tion #2that watershed governance arrangements and

    management strategies be established via nested hydro-

    logic units10enhance the benefits of Recommendation #1.(The map in Exhibit 2 conceptualizes a nested watershed

    governance arrangement in the Ottawa River Watershed.)

    In practice, this requires that a high-level governance

    structure be agreed upon among the provincial and

    international jurisdictions in order to establish a basis

    and forum for the management of water resources in the

    region. Next, management bodies should be established

    at the appropriate level of the watershed to execute the

    directives of the governors and to meet the needs of

    competing demands on the water resource. Further, sub-

    basin working groups or advisory bodies should form

    the divisions of management to identify, monitor and

    address priorities in the watershed. It is at this sub-basin

    level that local groups should be engaged to assist the

    management agency in viewing the watershed from the

    bottom up.

    Two examples of this effort to nest hydrologic units in

    the same governance structure can be found in the case

    study regions.

    At the highest level, the Grand River Watershed is part of

    the Great Lakes Basin, which on the whole is governed

    by the International Joint Commission (a creation of the

    Canadian and U.S. federal governments). The next level

    of governance is the province of Ontario, which passed

    the Conservation Authorities Act, 1946, in response to

    water quality and broader environmental concerns arising

    from natural resource extraction and industrial growth.

    While supported by key Ontario ministries, the GRCA11

    is the management body responsible for the watershed.

    Within this authority there are a number of programs

    and projects to engage local interests and to seek infor-

    mation from the grassroots levels.

    10 For example, management of a tributary river is nested withinthe governance and management of the main river system.

    11 Formed in 1966 as it exists today, via the merger of the GrandValley Conservation Authority and the Grand River ConservationCommission.

    The second example from the case studies is the gov-

    ernance arrangement of the Prairie watersheds. With

    the provincial jurisdictional overlap addressed via the

    Prairie Provinces Water Board (PPWB), Alberta and

    Saskatchewan are both establishing water management

    agencies along nested hydrologic units. (See Exhibit 3.)

    In this nested agency approach, local stakeholder partici-

    pation and knowledge is as valuable in the stewardship

    and strategic planning for watersheds as the knowledge,

    analytical capacity and financial resources of the sup-

    porting levels of government.

    Achieving an effective level of coordination and cooper-

    ation among public sector agencies is fundamental to

    addressing the water resource governance challenges inCanada. Most watersheds in populated southern regions

    of the country contain multiple political jurisdictions

    RECOMMENDATION #3: IMPROVE INTER-AGENCY

    COORDINATION

    Achieving an effective level of coordination and cooper-

    ation among public sector agencies is fundamental to

    addressing the water resource governance challenges in

    Canada. Most watersheds in populated southern regions

    of the country contain multiple political jurisdictions,

    be they municipal, provincial or international. Notable

    examples of this challenge are the watersheds that cross

    the Canadian Prairies, but this may also be the region in

    which the challenge has been met most successfully.

    Prior to 1930 in the Prairies, water was a federal respon-

    sibility and the principle of first in time, first in right

    (FITFIR) was applied regardless of provincial bound-

    aries as they now exist. However, after jurisdiction over

    water resources was transferred to the provinces, there

    was no longer a single manager of water on the Prairies.

    This led to the establishment of an agreement among

    the Canadian, Alberta, Saskatchewan and Manitoba

    governments to form the PPWB in 1948. The original

    purpose of the PPWB was to recommend the best use

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    10 | The Conference Board of Canada

    Exhibit 2Why a Nested Approach to Watershed Governance?

    The exhibit below shows the major sub-basins of the Ottawa River watershed and helps illustrate how a nested approach to governance could

    be established. The water quality and quantity in the Blanche sub-basin, for example, influence the quality and quantity of the water in the Upper

    OttawaKipawa sub-basin, the Ottawa River downstream, the St. Lawrence River and, ultimately, the Atlantic Ocean.It follows that the governance and management of water resources in the St. Lawrence River should be informed by the circumstances in the Blanche

    sub-basin, and vice versa. This could be accomplished by the creation of a single management body at the level of the Ottawa River watershedwith

    authority and jurisdiction over all facets of water managementor by the creation of mandatory communication requirements, information feedback

    loops, and stakeholder engagement protocols among the existing conservation authorities and provincial departments. However it is accomplished,

    nesting water governance and management according to watershed boundaries will facilitate the development of consistent policy direction and

    better integrated watershed management.

    Sources: The Conference Board of Canada; Map courtesy of Ottawa Riverkeeper.

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    12 | The Conference Board of Canada

    of interprovincial water and recommend water alloca-

    tions between the provinces.12 Changes to its mandate

    were made in the 1960s as requests for water alloca-

    tions exceeded the ability of the PPWB to execute

    long-term planning.

    As a result, the respective governments developed a

    Master Agreement on Apportionment in 1969. This

    agreement states that each jurisdiction is responsible for

    passing through to its eastern neighbour 50 per cent of

    the natural eastward flow of water in its region. Broadly

    defined, natural flow is the volume of water that would

    flow in a particular river if that river had never been

    affected by human activity. While calculating this amount

    can be difficult, the result is straightforwardall three

    provinces end up with approximately equal shares of

    the total water flow, even in drought periods.

    Unfortunately, the type of interagency collaboration

    witnessed in the Prairies is not the norm.

    Perhaps the greatest strength of the PPWB governance

    arrangement is the duty to cooperate.13 Meeting twice

    a year and composed of one representative from each of

    the provinces and two representatives from the federal

    government, the PPWB is a mechanism that demands

    participation, and with participation comes knowledge

    and understanding. Each region recognizes that water

    development activities can impact its neighbours and

    that its own prosperity is strengthened by the prosperity

    of those neighbours.

    There are provisions in the mandate of the PPWB that

    call for coordination and planning across the watershed.

    For example, if one party to the agreement plans to

    dam a river, there is an obligation to ensure that the

    construction and operation of the infrastructure would

    not adversely affect other parties in the watershed.

    The PPWB has the additional responsibility to ensure

    that the impacts of any development in the watershed

    12 Prairie Provinces Water Board, home page.

    13 Wayne Dybvig, Prairie Provinces Water Board. Personal com-munication. August 2005.

    are clearly communicated among the partners so that

    the PPWB can monitor compliance with the Master

    Agreement on Apportionment.

    Unfortunately, the type of collaboration witnessed in

    the Prairies is not the norm; inter-agency cooperationneeds to be improved in other Canadian watersheds.

    One example is the Ottawa River Basin. While there is a

    very effective agency to manage the flow of water on the

    riverthe Ottawa River Regulation and Planning Board

    was created primarily to prevent flooding in Montral

    there has been a notable lack of cooperation to date

    between the governments of Ontario and Quebec with

    respect to water quality. This may be turning around,

    however, as the Agreement between the Government

    of Quebec and Ontario concerning Transboundary

    Environmental Impactsestablishes a formal informationexchange and joint cooperation between the provinces

    on transboundary pollution issues.14

    The Okanagan Basin is another region of Canada in

    which improved coordination between agencies could

    substantially benefit the watershed. The basin is sub-

    divided into three regional districtsNorth Okanagan,

    Central Okanagan and OkanaganSimilkameencentred

    respectively on the regions three major cities: Vernon,

    Kelowna and Penticton. The regional groups have com-

    bined their efforts to create the Okanagan Basin Water

    Board (OBWB) consisting of three representatives (who

    are elected local government officials) from each regional

    district.15 The current and historical focus of the OBWB

    has been primarily on controlling the invasive Eurasian

    milfoil and providing grants to local governments for

    liquid waste treatment infrastructure. But the OBWB,

    with agreement from the three regional districts, has

    broadened its focus to include water conservation and

    water quality. For example, these districts have empow-

    ered the OBWB to initiate a regional water management

    approach by forming the Water Stewardship Council.

    This groupmade up of government, private sector and

    non-governmental organization (NGO) membersacts

    14 Ministry of the Environment of Ontario and Ministre duDveloppement durable, de lEnvironnement et des Parcs duQubec. Ontario and Quebec Pledge to Cooperate.

    15 Okanagan Basin Water Board, Board of Directors: 19 August 2003.

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    The Conference Board of Canada | 13

    in an advisory role, and provides technical and policy

    recommendations to the OBWB on the management of

    basin water resources.16 However, the municipal govern-

    ments of Vernon, Kelowna and Penticton (in competition

    with each other) view access to water as critical to their

    urban development. They are therefore unwilling to cede tothe OBWB the authority and resources necessary to fully

    manage the basins water resources on a watershed basis.

    The Grand River Watershed could also benefit from

    improved inter-agency coordination, in this instance

    between the Grand River Conservation Authority (GRCA)

    and the Ontario Ministry of the Environment. For example,

    there is an absence of formal mechanisms for stake-

    holder engagement in policy-making. The interviewees

    reported that while the GRCAs insight and experience

    are often sought by provincial departments, in this casethe GRCA must attempt to lead from behind. Ideally,

    the local expertise and knowledge generated through

    the work of the GRCA would be communicated to the

    relevant provincial departments during regular policy

    reviews. Unfortunately, the last time the Ministry of the

    Environment completed a watershed strategy for the

    Grand River was 1982.

    RECOMMENDATION #4: INTEGRATE GROUNDWATER

    AND SURFACE WATER MANAGEMENT

    The fourth recommendation that emerges from the case

    study investigations encourages the integration of ground-

    water and surface water management in both the allocation

    and source water protection activities for the watershed.

    In a watershed, the quality and quantity of surface water

    and groundwater are interdependent. For example, in an

    agricultural region such as B.C.s Fraser Valley, water

    quality problems can frequently be traced to excessive

    nitrates leaching into groundwater and surface water

    from animal manure storage and field application of

    chemical fertilizers.

    In the AbbotsfordSumas Aquifer, the aquifer (ground-

    water) underlies the international border between B.C. and

    Washington State; thus the management of the surface

    water and groundwater resources on both sides of the

    border could naturally be considered a joint responsibility.

    16 Okanagan Basin Water Board, www.obwb.ca/.

    However this has not been the case historically, though

    recent legislation in B.C. is beginning to equip water

    managers to further the integration of water resource

    management. New groundwater and drinking water

    protection regulations are in the developmental stages

    under the Water ActandDrinking Water Protection Act,and the Ground Water Protection Regulationswhich

    came into force in late 2005represent the first phase

    of an envisioned three-phase legislative framework to

    protect water quality and to improve hydrologic data

    collection and reporting. In Washington State, by way

    of contrast, state management of the resource is strictly

    governed by permitting both annual and instantaneous

    quantities through a long-established water rights system

    that applies to both groundwater and surface water. The

    state has enforced groundwater regulations since 1945.

    Management of the surface water and groundwater

    resources should be integrated because their quality

    and quantity are interdependent.

    With respect to source water protection, one risk to the

    Grand River Watershed that has not been mitigated is

    the potential destruction of its moraines (i.e., the dis-

    ruption of moraine water recharge areas from economic

    development). Though covering a relatively small area,

    these moraines are significant recharge zones for the

    groundwater of the region and are therefore critical

    to the watersheds long-term health. At the moment,

    OntariosAggregate Resources Actprovides little assur-

    ance that the ecological importance of the moraines will

    be a significant consideration in any land-use decision.

    RECOMMENDATION #5: PRIORITIZE AND BUDGET

    FOR ADEQUATE INFORMATION TO SUPPORT

    DECISION-MAKING

    The fifth recommendation is that priorities for data collec-

    tion, and adequate budgets for such collection, need to be

    set. Watershed managers and provincial policy-makers

    need adequate data and information to support the deci-

    sions they make since monitoring and measuring tasks

    are critical to achieving management goals. The adequacy

    of information available to water managers varies across

    provinces and watersheds. A number of examples from

    the case studies illustrate this variability.

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    14 | The Conference Board of Canada

    In Saskatchewan, performance measures are clearly set

    out in the annual performance plans of the Saskatchewan

    Watershed Authority. Monitoring of and information on

    water quantity is adequate, but Saskatchewan Environment

    is working on improvements to water quality measures.

    In Alberta, the watershed planning advisory councils have

    begun to develop outcome and indicator measures for

    planning; for example, the Bow and Oldman councils

    have released state of reports. Alberta has established

    effective monitoring programs and, by using watershed

    planning advisory councils, has arms-length groups

    responsible for reporting to the public. A great deal of

    socio-economic information on water use is available to

    policy-makers and managers. The province is working

    to improve measures of aquatic health.

    In B.C., the fact that only limited data are available

    in the AbbotsfordSumas Aquifer has hampered the

    development of water management plans. In the past,

    there has been a significant bias in data collection toward

    water quality over quantity. Ideally, the groundwater

    and drinking water protection regulations that have

    come into force via the Water ActandDrinking Water

    Protection Actwill improve the timeliness and accuracy

    of information needed for managing the aquifer and

    will help in transforming historical raw data into a

    usable form.

    Perhaps due to high expectations within the GRCA,

    interviewees do not feel that a robust system of indicators

    and outcome benchmarks is in place for the quality and

    quantity of water in the Grand River Watershed. Part of

    the reason is that it can be very difficult to isolate and then

    quantify cause-and-effect results for some management

    actionsfor example, the effect of planting 2 million

    trees in the watershed. Established indicators have been

    measured and reported for over 30 years, yet interviewees

    express discontent with the quality of information that

    these provide. At the same time, interviewees note that

    the region has an excellent high- and low-flow indicator

    set, and highly effective response plans. Interviewees also

    note that stakeholders in the watershed are well aware

    of the limitations of the current system and are taking

    measures to improve it.

    In the Ottawa River Basin, although data documenting

    and evaluating take place, there is little integration of

    information or development of benchmarks for the entire

    basin. Federal, provincial and municipal monitoring

    operations, combined with the efforts of NGOs such

    as the Ottawa Riverkeeper and the Conseil rgionalde lenvironnement et du dveloppement durable de

    lOutaouais, provide monitoring of water quality and

    quantity. However, these NGOs do not offer formal

    third-party audits on monitoring. The Ottawa River

    Regulation and Planning Board collects and dissemin-

    ates high-quality data on water quantity and flows, but

    does not have the budget or the jurisdiction to collect

    water quality information. To some degree, quality

    information is collected by the respective provinces for

    tributaries of the Ottawa River, but to date no formal

    mechanism exists to share that information basin-widefor the purpose of developing a comprehensive picture

    of water quality in the Ottawa River.

    The adequacy of information available to water managers

    varies across provinces and watersheds.

    To assist water managers in their efforts to prioritize and

    budget for adequate information, the field of decision

    analysis can help managers estimate the value of infor-

    mation in different decision contexts. Decision analysis

    may be useful to provincial policy-makers and watershed

    managers as they consider the information they need,

    and the costs and benefits of acquiring it.

    RECOMMENDATION #6: EXPLORE GREATER USE

    OF MARKET-BASED INSTRUMENTS

    The final recommendation from the work of the Leaders

    Forum on Water Resource Management and Governance

    is a call for greater use of market-based instruments in

    watersheds facing scarcity, in order to reveal the economic

    value of water and to allocate water to its use of highest

    value. Currently, permits to take water are the dominant

    allocation tool in Canada. (See Table 1.) In many respects

    this reflects the reality that water scarcity has not been

    an issue in the past. Scarcity is, however, creeping up

    on Canadian watersheds and new tools are needed to

    aid in the allocation of water for the greatest net benefit

    to society.

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    The Conference Board of Canada | 15

    Table1

    UseofWaterAllocationInst

    rumentsintheCaseStudyWatersheds

    OttawaRiverBa

    sin

    SouthSaskatchewan

    RiverBasin

    Instrument

    AbbotsfordSumas

    Aquifer(B.

    C.)

    GrandRiverWatershed

    (Ont.)

    OkanaganBasin

    (B.C.)

    Ontario

    Quebec

    Alberta

    Sa

    skatchewan

    Withdrawal

    permits

    NoRegionalhe

    alth

    authoritype

    rmits

    watersystems

    (includingw

    ells),

    withafocuson

    waterqualit

    y

    concernsan

    d

    treatment

    Allocationtool

    usedthroughout

    theprovince

    Licen

    cesfor

    surfa

    cewaterbut

    notg

    roundwater

    Onlyforlarge

    amounts,over

    50,000litres

    Littlemacro-level

    analysis

    Us

    edfor:

    underground

    waterserving

    morethan

    20people

    orover

    75m3/day

    bottledwater

    Usedexten-

    sively

    Basedon

    historical

    patterns:

    FITFIR

    The

    Saskatchewan

    Wa

    terAuthority

    (SW

    A)approves

    allo

    cationsfor

    mu

    nicipal,indus-

    tria

    landagricul-

    turaluses

    FITFIRhasbeen

    withdrawn(but

    itstillappliesto

    lice

    ncesissued

    pre

    -1984)

    Long-term

    conservation

    planning

    Conservatio

    nis

    promoted,but

    fewenforce

    ment

    mechanismsare

    available

    Frameworkofthe

    GRCA

    Levelofaggressive-

    nessoftheseplans

    varieswithinthe

    watershed

    Someuseof

    long-term

    plan-

    ning,especially

    forfisheries

    management,but

    gene

    rallyunder-

    utilized

    Jurisdictionover

    tributaries

    Fewprotected

    areas

    Externalgroups

    advocatingfor

    greateraction

    So

    meactivity

    Embedded

    inthe2003

    Waterfor

    Lifestrategy

    Seenasa

    criticalneed

    inthecoming

    years

    The

    SWAhas

    dev

    elopedthe

    Wa

    terConservation

    Strategy

    Utility

    full-cost

    accounting

    No

    TheSustainable

    WaterandSewage

    SystemsAct,

    2002,

    makesitmandatory

    formunicipalities

    toassessandcost-

    recoverthefull

    amountforwater

    andsewerservices

    Oper

    ationalcost

    accountingis

    typic

    allyused

    No

    Us

    edextensively

    by

    somemunici-

    pa

    lities,relatedto

    infrastructure

    Notexten-

    sivelyused,

    butbegin-

    ninginsome

    municipalities

    IntheWater

    forLife

    strategy

    Usedbysome

    mu

    nicipalities

    (contdonnextpage)

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    16 | The Conference Board of Canada

    Table1(cont

    d)

    UseofWaterAllocationInst

    rumentsintheCaseStudyWatersheds

    OttawaRiverBasin

    SouthSaskatchewanRiverBasin

    Instrument

    AbbotsfordSumas

    Aquifer(B.C.)

    GrandRiver

    Watershed

    (Ont.)

    OkanaganBasin

    (B.C.)

    Ontario

    Q

    uebec

    Alberta

    Sa

    skatchewan

    Demand-s

    ide

    management

    programs

    No

    Programsatthe

    municipallevel

    Meteringisin

    place

    Vernonh

    as100percentof

    itsreside

    ntialusersmetered,

    usedwaterisreclaimed,

    andallw

    astewateris

    subjectt

    osecondaryand

    tertiarytreatment

    Kelowna

    hasanactive

    educationandconservation

    program

    andhaswitnessed

    adecline

    of19percentin

    peakwaterdemand

    Public

    education

    campaign

    inOttawa

    Pe

    rsonalized

    evaluations

    andimpact

    stu

    dies

    Municipalaction

    TheDepartmentof

    Agricultureworks

    withirrigationpro-

    jectsinruralareas

    Meteringand

    reportingformost

    licences

    For

    largeindustrial

    use

    rs

    Meteringformuni-

    cipalandindustrial

    use

    s,andlarge

    irrig

    ationprojects

    Pricingof

    water(not

    infrastruc-

    ture)

    Abbotsford

    incurredthe

    costofextend-

    ingthemuni-

    cipalsupply

    system

    into

    ruralareas

    primarilydueto

    nitrateissu

    es;

    autilityfee

    is

    levied

    No

    Kelowna

    hasintroduced

    increasin

    gblockratesfor

    consume

    rs,combinedwith

    aneduca

    tioncampaign

    TheOBW

    Bispromoting

    moreme

    teredwaterpricing

    TheRegionalDistrictof

    NorthOk

    anaganisencour-

    agingwa

    terconservation

    withahighcommodity

    priceand

    alowbaseprice

    Metering

    within

    Ottawa-

    proper,

    butnot

    therural

    sectionsof

    thecity

    No

    ,butpos-

    sib

    leinthe

    future

    Notusedtoallo-

    catewater

    TheAlbertaWater

    Councilisexploring

    thepotentialuse

    Not

    usedtoallocate

    wat

    er

    Industrialuserspay

    avariableroyaltyto

    the

    province

    Roy

    altiesimposed

    onhydroproducers

    (Sa

    skPower)pro-

    videabout50per

    cen

    toftheSWAs

    ann

    ualbudget

    Trading

    ofwater

    allocations

    No

    No,thepriority

    allocationsystemis:

    life(including

    human,animal

    andplant)

    commerce

    aesthetic

    (washing

    cars,watering

    lawns)

    Discussiononly,butthe

    concept

    haspotential

    No,there

    isnowater

    scarcity

    No

    ,there

    isnowater

    scarcity

    Transfersof

    licencescanbe

    approved

    Thereisaprivate

    marketfortem-

    porarytrading

    betweenFITFIR

    allocations

    Nopricetranspar-

    ency(sameasa

    landtransaction)

    Tradingofalloca-

    tion

    sbetween

    lice

    nseesisnot

    permitted(but95

    per

    centofthepro-

    vincialsupplyisnot

    con

    strained)

    Source:LeadersForum

    onWaterM

    anagementandGovernance,TheConferenceBoardofCanada.

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    The Conference Board of Canada | 17

    Canadas western provinces, where scarcity is especially

    acute, are leading the way in utilizing market-based

    instruments. The City of Kelowna in the Okanagan, for

    example, has implemented an increasing block rate

    scheme for water consumption. Although it is not direct

    pricing of water, this scheme is a method of encouragingwater conservation, charging users morenot lessfor

    increasing incremental use. In addition, the South East

    Kelowna Irrigation District implemented a demand

    management scheme for the agricultural community in

    1994. The initial phase consisted of an education cam-

    paign. This was followed by a conservation plan that

    combined water allotments with metered rate penalties

    for excessive water use. By 1998, the program had cost

    $784,000 but had succeeded in freeing up $1.2 million

    worth of water rights. By 2004, the strategy had suc-

    ceeded in reducing average demand conditions to 27.4per cent below the 29-year average consumption rate.17

    In the Alberta portion of the South Saskatchewan River

    Basin, the use of market-based instruments is being taken

    a step further. Largely due to the complete allocation of

    water resources under FITFIR administration and allo-

    cation principleswhich Alberta opted to retain under

    its Water for Life strategythe provincialgovernment

    allows some water users to temporarily trade or perma-

    nently transfer water allocations within a river basin

    (such as the Bow

    Oldman). To date, six transfers have

    been approved, with about 20 more in the process. The

    recipients of the transfers have been three municipalities,

    a large rural pipeline water cooperative, a cattle feedlot

    and a specialty crop grower.18 Typically, there are two

    or three licences per irrigation district, but hundreds of

    users. Private contracts exist, with the knowledge of the

    district, to allocate water to its highest value use. Although

    these contracts are private, and contract values are not

    required to be made public, knowledge of the contract

    price per volume of traded water does reveal the value

    of water to some rural users. Similar situations exist

    when municipalities hold two or three licences and

    provide water use contracts to industrial and domestic

    users within their boundaries.

    17 Toby Pike, Agricultural Water Conservation Program Review, pp. 3,6, 10.

    18 Alan Pentney, Alberta Environment. Personal communication.November 20, 2005.

    In addition, a process called assignments provides for

    the temporary sharing of water allocations between licen-

    sees to mitigate the impacts of drought and supply short-

    age due to the application of FITFIR. In 2001 this was

    used successfully by eight irrigation districts, 10 munici-

    palities, significant industries and water cooperatives tocollectively share a 40 per cent shortage in water supply.

    Approximately 600,000 acre-feet of water were shared

    over a 300-km wide district, from Waterton Lakes

    National Park in the west to Medicine Hat in the east.

    The assignments were privately constructed with Alberta

    Environment overseeing the legal and environmental

    issues.19 Although FITFIR has come under criticism, it

    nevertheless resolves the issue of priority rights to water,

    thus reducing court cases over water rights. True pricing

    of water is being explored by the Alberta Water Council.

    Canadas western provinces, where scarcity is especially

    acute, are leading the way in utilizing market-based

    instruments.

    The Conference Board researchers discussed the prospect

    of market-based water-trading in the Okanagan Basin

    with project interviewees because of the particular stresses

    and changing development profiles within the region.

    Currently the agricultural base is allocated 70 per cent

    of the available water, but a fast-growing urban popula-

    tion displaying high per capita water use patterns is

    placing significant stress on the remaining water in the

    basin. By some estimates, all of the available water in

    the basin will be allocated in the next 15 years. Similar

    to the situation in the South Saskatchewan River Basin,

    the reality of scarce resources requires new methods of

    resource allocation that communicate the limited avail-

    ability of the resource. In this situation, the Conference

    Board considers market-based water pricing to be a tool

    with potential. Price will identify those uses of water

    that have the highest value and will provide an incentive

    for all sectors to improve their efficiency of water con-

    sumption. The first consideration of designing what will

    be a very complex market is the in-stream needs of the

    basin. The second consideration is the social priorities

    of the basin.

    19 Ibid.

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    18 | The Conference Board of Canada

    Given a strong desire to support the agricultural founda-

    tions of the region to maintain the traditional character

    of the Okanagan Valley and its ability to produce food

    locally amid continuing pressures of urban development,

    one option may be to grant agricultural users tradable

    water rights at, or near, their historical levels of use. Thesewater rights would then become an asset for farmers,

    ensuring that they have sufficient water for their oper-

    ations. At the same time, this arrangement would estab-

    lish economic driversto agricultural users on the supply

    side and to commercial, industrial and residential users

    on the demand sideto conserve water. Farmers and

    orchardists would have incentives to invest in conservation

    practices in order to trade, permanently or temporarily,

    any surplus water to the marketplace. And commercial,

    industrial and residential users would have incentives to

    conserve in order to decrease the cost pressure of wateron their financials. Ultimately, more water resources

    would be available to all sectors in the basin as the

    efficiency of water use improved. The party that offers

    water to the marketplace today may also be the party

    that buys water resources in the future.

    Canadas current system of institutions and incentives

    will force watershed managers to navigate the shoals

    ahead without the resources to determine the best

    course.

    In contrast, the provinces of Ontario and Quebec, largely

    due to an abundant supply of water, have not yet found

    it necessary to propose the use of market-based instru-

    ments to aid in the optimal allocation of water resources.

    The priority system of allocation in Ontario is similar

    to that in Saskatchewan. In the rare situations of water

    scarcity, the primary goal is maintaining life (including

    human, animal and plant life), the secondary considera-

    tion is commerce, and aesthetic uses (for example, wash-

    ing cars, watering lawns) are the last consideration.

    Quebec currently manages its water resources through

    permitting and some long-term conservation planning,

    although pricing water at some point in the future,

    according to interviewees, is not out of the question.

    CONCLUSION

    The implementation of the above six recommendations

    for improving Canadas water governance and manage-

    ment institutions and incentives will help tomorrows

    water managers steward the nations freshwater resourcesin a manner that can sustain the ecosystem and economic

    growth. To do this, water managers need:

    clear governance structures to establish consistent

    and consonant policy goals within a watershed;

    a nested approach to watershed governance to

    incorporate the knowledge and expertise of man-

    agers at all levels into watershed decision-making;

    improved inter-agency coordination to limit and cope

    with the competing interests of government depart-

    ments at all levels;

    integrated management of groundwater and surface

    water to establish the long-term availability and

    limitations of a watersheds resources;

    adequate information and sufficient budgets to conduct

    the monitoring and measuring required for effective

    and sustainable management and stewardship of

    Canadas water resources; and

    to explore greater use of market-based instruments as a

    means of allocating increasingly scarce resources to

    their highest social and economic value.

    This case study research analysis reveals that Canadian

    water managers face significant challenges in maintaining

    Canadian water quantity and quality today. And manag-

    ing the expected hydrologic effects of climate change

    and the resource needs of a sustainable ecosystemin

    addition to managing growing demographic and economic

    pressureswill prove even more challenging as we

    approach the second and third decades of the 21st century

    It is clear that we are not bearing down the river of

    plenty without the opportunity to map future hazards.

    However, Canadas current system of institutions and

    incentives will force watershed managers to navigate

    the shoals ahead without the resources to determine the

    best course. Fortunately, the case study research also

    reveals that policy-makers nationwide are beginning to

    initiate changes. But if these preliminary steps do not

    adequately equip Canadian water managers to deliver

    water services well into the future, our riverboat may

    yet run aground in the decades ahead.

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    Bibliography

    APPENDIX A

    Alberta Environment. South Saskatchewan River

    Basin Non-Irrigation Water Use Forecasts [online].

    Edmonton: March 2002 [cited March 16, 2007],

    p. 5.6. www3.gov.ab.ca/env/water/regions/ssrb/PDF_

    documents/SSRB_Non-Irrigation%20_Water_Use_

    Forecasts.pdf.

    Barber, Katherine (Ed.). The Canadian Oxford

    Dictionary. Toronto: Oxford University Press, 1998.

    Ministry of the Environment of Ontario and Ministre

    du Dveloppement durable, de lEnvironnement et

    des Parcs du Qubec. Ontario and Quebec Pledge to

    Cooperate on Air Pollution, Smog and Climate Change.

    Press release. Toronto: June 26, 2006.

    Okanagan Basin Water Board. Board of Directors:

    19 August 2003 [online]. [Cited December 16, 2005.]

    http://nord.ca/services/obwb/docs/obwbdirectors.pdf.

    Okanagan Basin Water Board [online]. [Cited

    March 16, 2007.] www.obwb.ca/.

    Ottawa Riverkeeper. Ottawa Riverkeepers River

    Report, issue 1. Ottawa: Author, May 2006.

    Pike, Toby.Agricultural Water Conservation Review.

    Kelowna: South East Kelowna Irrigation District, 2005.

    Plumptre, Tim, and John Graham. Governance and

    Good Governance: International and Aboriginal

    Perspectives. Ottawa: Institute on Governance,

    December 3, 1999.

    Prairie Provinces Water Board. Home page [online].

    [Cited March 16, 2007.] www.pnr-rpn.ec.gc.ca/water/

    fa01/fa01s01.en.html.

    United Nations Development Programme. Energy and

    Environment Water Governance [online]. Website

    content. [Cited March 16, 2007]. www.undp.org/water/

    about_us.html.

    United Nations Human Settlement Programme. Shelter

    for All [online]. Website content [cited March 16, 2007].

    www.unhabitat.org/content.asp?typeid=19&catid=

    25&cid=2097.

    Warren, Fiona J., et al. Climate Change Impacts

    and Adaptation: A Canadian Perspective. Ottawa:

    Government of Canada, August 2004.

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    Related Products and Services

    APPENDIX B

    Business Council for Sustainability

    This cross-industry network is for senior executives

    whose responsibilities include environmental management

    and sustainability performance. Discover, by presenta-

    tion and hands-on learning, cutting-edge practices in

    environmental management and corporate sustainability.

    Risk and Opportunity in the Gathering Climate

    Change Storm

    Converging trends and forces are raising the profile

    of climate change and the need for carbon emissions

    reduction. Find out what to do to minimize risks and

    realize the opportunities.

    Operationalizing Adaptation to Climate Change

    In contrast to the healthy debate about the best way to

    mitigate Canadas contribution to climate change, there

    is a distinct lack of debate on how Canada will adapt to

    its effects. The Conference Board of Canada gathered

    some of the leading domestic adaptation thinkers for

    the first Private Sector Roundtable on Adaptation to

    Climate Change. This briefing reports on the Roundtable,

    its discussions and its conclusions.

    Carbon Disclosure Project 2007Canada Report

    InitiativeThe Conference Board of Canada is pleased to announce

    that in 2007 it will again be producing, in partnership

    with the CDP Secretariat and other leading organizations

    a CDP report focusing on the climate change risks and

    actions of Canadas most valuable corporations.

    Adapting to Climate Change: Is Canada Ready?

    Future climate change will have a major impact on Canada

    Are we prepared? This report focuses on strategies for

    adapting to climate change.

    Mission Possible: A Canadian Resources Strategy

    for the Boom and Beyond

    This volume ofMission Possible: Sustainable Prosperity

    for Canada looks at how Canada can maximize its

    opportunities in four major sectors (forest products,

    agri-food, mineral products and energy) over the next

    10 to 15 years in order to achieve longer-term prosperity

    and well-being. It does so through the lens of a tenet

    long advocated by The Conference Board of Canada:

    that economic growth, environmental integrity and social

    cohesion are inextricably linked. Boosting prosperity

    via our resource sectors must therefore be balanced

    with efforts to minimize or eliminate the negative

    environmental and social impacts.

    Go to www.e-library.ca to see other informative reports that would interest you.

    Phone 1-866-242-0075 for information on related products and services.

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