Author: IT Admin OWE

  • David Rosenberg: How investors can navigate the global water crisis

    David Rosenberg: How investors can navigate the global water crisis

    One of the most pressing issues that will need to be addressed in the coming years is the worsening global water shortage. According to the World Bank, 2.2 billion people don’t have access to safely managed drinking water, while more and more regions are resorting to imposing stringent water restrictions, including parts of the United States and Australia.

    With global water demand set to outstrip supply by 40 per cent by 2030, achieving the United Nations’ Sustainable Development Goal 6 (“ensure access to water and sanitation for all”) requires a call for urgent action to resolve the chronic supply-demand imbalance for freshwater resources, particularly as climate change, robust population growth and rising geopolitical tensions work against us in the fight for global water security.

    But with these kinds of challenges often come opportunities, so knowing about water risks and the wave of innovations spurred by these concerns can help guide investors’ long-term decision-making.

    With extreme weather events on the rise as a result of climate change, the impact on already depleted water supplies is being exacerbated. Indeed, as excessive rainfall, drought and natural disasters are ravaging the world at a greater frequency than before (the UN reported that extreme climate-related disasters were up almost 83 per cent in 2000-2019 versus 1980-1999), we find ourselves in a state of emergency with struggles on both the demand and supply side.

    The key demand-driven problem is the overconsumption of water, which results in an overuse of the filtration process — a process that is highly energy intensive and ultimately raises the carbon footprint. As the world’s population is projected to keep climbing in the coming decades, problems surrounding the overuse of water are expected to dramatically worsen. By 2050, international water demand is forecasted to rise between 20 and 30 per cent (and by 50 to 70 per cent in urban areas), according to the World Bank.

    With respect to the availability of water, the natural allocation of resources on the globe remains an ongoing issue in many parts of the world. For example, India is undergoing a continuous dispute with China over the construction of a hydropower plant on the Brahmaputra River in Tibet. This action is sparking concern over regulation of the direction of waterflow between the two countries.

    On the other side of India, the country continues to experience ongoing tension with Pakistan over the regulation of water flow through rivers resulting from the division of states during the partition of British India in 1947. The already relatively scarce supply of water over the long run is threatened even further as the source of the water — the Himalayan glaciers — continues to melt in the face of global warming. The melting may boost water supply in the short run, but the overall depletion of water will devastate supply in the medium to long term, especially when compounded by the impacts of a growing population over the same period.

    This isn’t an issue that is strictly confined to emerging markets. For example, at present, more than half of the U.S. experiences droughts, and 231.4 million acres of U.S. crops are subjected to arid conditions. In the face of unstable global food supplies induced by Russia’s invasion of Ukraine, rapidly worsening drought conditions put further pressure on already tight supply chains in agriculture.

    The water crisis is severe and set to worsen if we continue along the current trajectory, but the encouraging news is that disruptive technologies aimed at achieving sustainable supply-demand dynamics in the market for water are in the pipeline. These innovative solutions can be broken down into two categories: solutions to mitigate water demand, and solutions to increase available supply.

    More than 70 per cent of global water use is directed towards agriculture, and with demand for food rising in tandem with population growth, the need to disrupt current farming practices through breakthrough technology is imperative. To target wasteful use of water in agriculture, Internet of Things (IoT) devices, including smart irrigation systems, are being used to identify crops that are being overwatered or underwatered, while artificial intelligence-based thermal imaging technology can determine areas of leakage across water distribution networks.

    Similar technology is being used to prevent wasting water in homes. Smart metering and leakage prevention systems used in apartment buildings in India successfully curbed water consumption by 35 per cent. Applied on a large scale, these water management technologies could be game changers. Indeed, the U.S. Environmental Protection Agency estimates the average household can account for nearly 10,000 gallons of wasted water (nearly 250 full bathtubs per household) each year.

    Other remedies to the crisis lie with technology that aims to increase the amount of available water, largely within the desalination and groundwater access spaces. Recent advancements in desalination equipment and facilities have made this traditionally expensive and energy-intensive practice a more viable option. As for groundwater, emerging extraction and treatment technologies are improving quality and access to this vital source upon which one-third of the global population depends. In the U.S., these innovations could prove particularly useful as more than 90 per cent of the nation’s freshwater lies below the Earth’s surface.

    The disruptive technology that has emerged in recent years as a result of the global water shortage presents many opportunities for investors. But there are also options that exist outside the tech realm. As water demand continues its ascent as the global population rises, we expect the S&P 500 water utilities sector to make headway over a longer-term horizon. Water exchange-traded funds are also another solid alternative for equity investors, such as the Invesco Water Resources ETF and First Trust Water ETF.

    All in, significant public and private sector investment will be needed to both mitigate demand through promoting water-saving technologies and boost available supply as the global water crisis becomes more acute over the coming decades. In light of the double-hit impact to supply-side constraints of water through ongoing geopolitical tensions and climate-change impacts, investing in countries that are lower risk geopolitically and well-endowed with resources (Canada serves as the prime example here) is advised.

    As a result, investors who adjust their portfolios to reflect shifts in the global market for this vital resource are likely to be rewarded, whether it be through investing in emerging tech aimed at solving the chronic undersupply (and overdemand) issue, investing in water ETFs and utilities, or in water-related infrastructure.

    David Rosenberg is founder of independent research firm Rosenberg Research & Associates Inc. Julia Wendling and Alena Neiland are economists there. You can sign up for a free, one-month trial on Rosenberg’s website.

  • Cobourg water rates increase by over 7% annually.

    Cobourg water rates increase by over 7% annually.

    PAYMENT RELIEF

    Lakefront Utility Services recognizes that this is a difficult time for everyone, and we want our customers to know that we are here to support them. As part of Lakefront’s commitment to customers, we have offered:

    1. Increased payment flexibility to customers experiencing hardship. If you are concerned about paying your bill, or have been impacted by the pandemic, Lakefront wants to help. Please call us to discuss payment arrangements in order to provide more time to pay outstanding balances.
    2. Lakefront extended the water shut-off/disconnection moratorium until May 25th, 2021.

    TO MAKE A BILL PAYMENT

    • Telephone and online (internet) banking through your bank/financial institution
    • Bank branch or financial institution instant teller
    • Cheque via mail
    • Credit Card payment service available through Paymentus – 1-888-896-0976 or this link: https://ipn.paymentus.com/otp/stde/lfu
    • You may continue to use our drop box at 207 Division St.
    COBOURG

    Cobourg Monthly Consumption Charges for Water & Sewage Services

    Water ConsumptionWater Rates ($/m3 & Gallons)Sewage Treatment Rates ($/m3 & Gallons)
    2022202120222021
    First 22.73 m3 (5000 Gallons water consumed)1.571.471.681.61
    Second Block consumption beyond 22.73 m3 to 35 m3 water consumed.1.961.832.102.01
    Third Block over 35 m3 water consumed.2.472.302.102.01

    Cobourg Fixed Base Monthly Charges for Water & Sewage Services

    Water Meter Size2022 Base Charge for Water Services2022 Base Charge for Sewage Services
    5/8″, 3/4″$15.79$16.41
    1″$60.56$62.95
    1 1/2″$86.88$90.33
    2″$113.21$117.70
    3″$174.88$181.82
    4″$243.91$253.58
    6″$380.86$395.97
    8″$518.77$539.37

    Water from hydrant, with special approval, or from pump house/fire department shall be charged $2.06 per cubic meter. Key Holders pay a service charge of $7.00 per month plus usage.

  • St. Catharines residents consuming more water at home as rates go up

    St. Catharines residents consuming more water at home as rates go up

    St. Catharines residents have increased their use of water at home by close to a million cubic metres since the pandemic began, council learned Monday as it set 2022 water and wastewater rates.

    Working from home and other COVID-19 related reasons for staying put is being seen as the main driver for the jump. From 2019 to 2021, residential usage in St. Catharines went up 958,000 cubic metres.

    “This trend continued into 2021 as the pandemic went on and it is expected to continue to affect the 2022 consumption level,” said Lucia Chen, manager of budgets and procurement, during the meeting Monday.

    Residential customers overtook the industrial, commercial and institutional sector significantly in 2020 as the city’s lead water consumption group.

    Their bills will be slightly higher when 2022 water and wastewater rates come into effect, starting March 1, but the city says the rates are still second-lowest in the region.

    City council approved the 2022 rates Monday with an increase of about six per cent, with the city’s portion being 1.6 per cent and the Region’s increase the remaining 4.4 per cent.

    It means the average household with an annual water consumption of 170 cubic metres will pay $53.24 more than last year.

    “What we’re responsible for is 1.6, and that’s a very effective rate we’re able to pass on for our ratepayers today considering the costs that have been incurred,” Mayor Walter Sendzik said.

    Niagara Region, which treats water and wastewater and is responsible for bulk distribution, increased its water and wastewater budgets by 5.15 per cent, resulting in the city having to pay more to the Region for purchasing and treating water.

    Regional charges represent 64 per cent of the average St. Catharines customer’s bill.

    Compared to eight other Niagara municipalities, St. Catharines’ average $943 annual bill is lower than all but Pelham — where the average bill is $1 less at $942.

    Port Colborne is the highest at $1,604, followed by Fort Erie, Welland, Niagara-on-the-Lake, Thorold, Lincoln and Niagara Falls.

    Chen said St. Catharines residents can purchase a case of 24 bottles of water at the grocery store for $2.97, but they can get a lot more value for their money at home.

    “For 85 cents less, residents can not only drink the same amount of water, but they can take a shower, do a load of laundry, do a load of dishes and bathe their children.”

    While residents in St. Catharines are using more water at home during the pandemic, annual water usage in the city has generally decreased since 2000 as customers have adopted conservation efforts.

    A staff report said annual water purchases from the Region have decreased 41 per cent in that time, to 13.6 cubic metres in 2021 from 22.7 million cubic metres.

    The city is still dealing with rising costs for infrastructure replacements, particularly for underground construction works.

    Anthony Martuccio, director of engineering, facilities and environmental services, said between 2008 and 2014, the cost per metre of pipe installed underground was in the range of $400 to $800. Today, costs have escalated to the range of $1,000 to $2,000 per metre.

    That means budget dollars for underground assets don’t stretch as far as they used to.

    Municipal works director Darrell Smith said there were 93 watermain breaks in 2021 scattered across St. Catharines. Municipal works staff also responded to a similar number of private water connections and various valve issues throughout the city.

    The city’s 2022 capital budget includes $11 million for watermain and sanitary sewer capital works. Of that, $6.1 million will be funded from the 2022 water and wastewater rates.

  • City of Toronto 2022 rate-supported budget for Toronto Water

    City of Toronto 2022 rate-supported budget for Toronto Water

    Toronto Water’s key priorities are delivering clean, safe drinking water, treating wastewater, and managing stormwater in an environmentally and fiscally responsible way for the city’s residents, businesses and visitors. During the COVID-19 pandemic, Toronto Water has provided uninterrupted critical services to residents and businesses. Toronto Water is recommending a 2022 capital budget of $1.4 billion – the largest capital program delivered by Toronto Water in its history – and a 10-year capital plan (2022 to 2031) of $15.1 billion. It is important to ensure the City can continue to provide quality drinking water and wastewater treatment services while dealing with the impact of extreme storms, aging infrastructure and significant growth.

    Toronto Water service overview

    • Provides approximately 435 billion litres of safe drinking water to more than 3.6 million residents and businesses in Toronto and portions of York Region annually.
    • Collects and treats approximately 400 billion litres of wastewater (from sources including toilets, dishwashers and washing machines) every year.
    • Protects the environment and private property, including basement flooding protection, from stormwater runoff (rain and melted snow). In 2013, City Council approved an expansion to the Basement Flooding Protection Program, increasing the number of basement flooding study areas from 31 areas in 2006 to 67. A total of 43 study areas have now been completed; 24 new studies were initiated in 2019 and will be completed in 2022 and 2023.
    • These major multi-year capital projects (total value of approximately $723 million) will begin in the remainder of 2021 or in 2022:
    • Ashbridges Bay Wastewater Treatment Plant (ABTP) D Building and Polymer Upgrade construction projects ($60 million and $112 million respectively);
    • Fairbanks Silverthorn Tunnel Local Sewers Contracts 3 and 4 ($142 million);
    • Highland Creek Wastewater Treatment Plant (HCTP) Firm Capacity and Fluidized Bed Incineration construction projects ($230 million and $118 million respectively);
    • Clark Water Treatment Plant Stand-by Power ($62 million).
    • Toronto Water’s asset valuation: Historically, Toronto Water’s core assets were valued at $28 billion for water, wastewater and stormwater infrastructure based on historical costs of constructed assets inflated to estimate its replacement as well as appraisal valuations.
      • In 2017, the Province of Ontario enacted a new regulation to support improvements in municipal asset management.
      • Toronto Water’s Asset Management Planning was completed in 2021 and the updated replacement cost of Toronto Water’s infrastructure is $83 billion.
      • The updated asset replacement valuation takes into consideration recent appraisal reports for facilities and average unit rates for pipe installation based on bid pricing. The replacement costs will continue to be evaluated as costs can vary significantly based on site constraints and conditions, project delivery approach, project bundling, market conditions and material price fluctuations.

    Budget overview

    The recommended 2022 Toronto Water budget consists of:

    • an operating budget of $471.2 million plus a capital reserve contribution of $975.8 million for a total operating budget of $1.4 billion.
    • a fully funded capital budget of $1.4 billion (gross) (spent on water, wastewater and stormwater infrastructure projects).
    • a capital reserve used for construction of new assets and the development and renewal of existing infrastructure.
    • 10-year (2022 to 2031) capital plan of $15.1 billion includes:
    • $4.4 billion for water treatment and supply
    • $6.6 billion for wastewater treatment and collection, including:
      • $3.4 billion for wastewater treatment plant upgrades;
      • $2.3 billion for sewer replacement and rehabilitation, and trunk sewer rehabilitation.
    • $4.1 billion for stormwater management, including:
      • $1.32 billion for Don River and Central Waterfront & Connected Projects
      • $2.27 billion Basement Flooding Protection program
  • $15 Billion Cost to be levied on ratepayers over next 10 years for Toronto Water.

    $15 Billion Cost to be levied on ratepayers over next 10 years for Toronto Water.

    Toronto Water’s key priorities are delivering clean, safe drinking water, treating wastewater, and managing stormwater in an environmentally and fiscally responsible way for the city’s residents, businesses and visitors. During the COVID-19 pandemic, Toronto Water has provided uninterrupted critical services to residents and businesses. Toronto Water is recommending a 2022 capital budget of $1.4 billion – the largest capital program delivered by Toronto Water in its history – and a 10-year capital plan (2022 to 2031) of $15.1 billion. It is important to ensure the City can continue to provide quality drinking water and wastewater treatment services while dealing with the impact of extreme storms, aging infrastructure and significant growth.

    Toronto Water service overview

    • Provides approximately 435 billion litres of safe drinking water to more than 3.6 million residents and businesses in Toronto and portions of York Region annually.
    • Collects and treats approximately 400 billion litres of wastewater (from sources including toilets, dishwashers and washing machines) every year.
    • Protects the environment and private property, including basement flooding protection, from stormwater runoff (rain and melted snow). In 2013, City Council approved an expansion to the Basement Flooding Protection Program, increasing the number of basement flooding study areas from 31 areas in 2006 to 67. A total of 43 study areas have now been completed; 24 new studies were initiated in 2019 and will be completed in 2022 and 2023.
    • These major multi-year capital projects (total value of approximately $723 million) will begin in the remainder of 2021 or in 2022:
    • Ashbridges Bay Wastewater Treatment Plant (ABTP) D Building and Polymer Upgrade construction projects ($60 million and $112 million respectively);
    • Fairbanks Silverthorn Tunnel Local Sewers Contracts 3 and 4 ($142 million);
    • Highland Creek Wastewater Treatment Plant (HCTP) Firm Capacity and Fluidized Bed Incineration construction projects ($230 million and $118 million respectively);
    • Clark Water Treatment Plant Stand-by Power ($62 million).
    • Toronto Water’s asset valuation: Historically, Toronto Water’s core assets were valued at $28 billion for water, wastewater and stormwater infrastructure based on historical costs of constructed assets inflated to estimate its replacement as well as appraisal valuations.
      • In 2017, the Province of Ontario enacted a new regulation to support improvements in municipal asset management.
      • Toronto Water’s Asset Management Planning was completed in 2021 and the updated replacement cost of Toronto Water’s infrastructure is $83 billion.
      • The updated asset replacement valuation takes into consideration recent appraisal reports for facilities and average unit rates for pipe installation based on bid pricing. The replacement costs will continue to be evaluated as costs can vary significantly based on site constraints and conditions, project delivery approach, project bundling, market conditions and material price fluctuations.

    Budget overview

    The recommended 2022 Toronto Water budget consists of:

    • an operating budget of $471.2 million plus a capital reserve contribution of $975.8 million for a total operating budget of $1.4 billion.
    • a fully funded capital budget of $1.4 billion (gross) (spent on water, wastewater and stormwater infrastructure projects).
    • a capital reserve used for construction of new assets and the development and renewal of existing infrastructure.
    • 10-year (2022 to 2031) capital plan of $15.1 billion includes:
    • $4.4 billion for water treatment and supply
    • $6.6 billion for wastewater treatment and collection, including:
      • $3.4 billion for wastewater treatment plant upgrades;
      • $2.3 billion for sewer replacement and rehabilitation, and trunk sewer rehabilitation.
    • $4.1 billion for stormwater management, including:
      • $1.32 billion for Don River and Central Waterfront & Connected Projects
      • $2.27 billion Basement Flooding Protection program