March 6, 2016
Last issue, I wrote about our aging infrastructure, and the process our governments take when choosing which projects to support, delay or abandon.
This time, I will be talking more specifically about what happens when governments delay or abandon — a hotbutton topic as many Western Canadian provinces, as well as the companies that operate within them, projecting deficits for the year ahead.
Generally, any infrastructure will have operation and maintenance requirements. But it will also have replacement costs. And if we chose to delay payment of this equipment to the next generation through deficit financing, we are also saddling those future taxpayers with substantial costs. We are not adequately financing the resource requirements to operate, maintain, or, in the future, replace the infrastructure.
Sometimes, it is worth considering the implications of constructing — or more specifically, not constructing — infrastructure. For example, it is not hard to visualize the impacts of delaying highway improvement projects and their respective costs due to driver delays in traffic gridlock and the loss of productivity, as well as increased carbon-dioxide emissions.
Victoria sewage treatment debate
The debate about delay has come to head in Victoria recently and its long-delayed sewage treatment facilities, which are now proposed to cost more than $1 billion to replace. By dithering for more than the past 30 years, the local government may have saved taxpayers the capital replacement costs of infrastructure. Yet those costs have now doubled.
This billion-dollar infrastructure project will require operations at a scale not currently provided, meaning new operations dollars for additional staff, training, monitoring and maintenance. While local taxpayers are committed to paying one-third of the cost over the next 20 years, there has been little discussion of the additional costs to maintain this infrastructure.
Frankly, local officials should be more concerned with adequately covering the costs of the life cycle costs, and less with supporting the deferred maintenance programs of the previous 20 years, which have contributed to the infrastructure gap Victoria currently faces.
Through the design decision process for infrastructure investment, perhaps we should consider the benefits of modular construction, which offers the ability to provide infrastructure in the area where it is most needed and at a scalable price. Modular construction can avoid large upfront capital costs, reduce the complexity of mega-construction projects and allow for innovation and greater participation by end users thanks to having the equipment near them (avoiding the NIMBYism that typically derails larger projects).
With infrastructure projects in wastewater normally located at the end of pipe, or lowest point in the system, they are susceptible to the impacts of rising sea levels, or increased intensity storm events. Decentralizing facilities can mitigate the location impacts, and also provide resiliency within the system, maintaining multiple systems during the events, which can take out a single centralized facility. Some critics are opposed to modular construction because the concept is generally not favoured by governments when awarding infrastructure grants.
Critics point out containerized facilities require replacement at a shorter lifespan compared to concrete. However, that pertains to the equipment housing, as appropriately specified equipment that is reliable and robust for a modular construction will last equally as long as that placed on a concrete foundation. That means this argument can be mitigated through consideration of more robust housing structures that still offer modularity.
With a modular approach, operators can consider matching capital costs with real demand, which can be more efficient use of the available dollars. Commissioning and ongoing operations are similar across the equipment, and can provide a better allocation of employee resources. Paying for necessary infrastructure now rather than running deficits should be a topic of conversation for all taxpayers. Balancing budgets so that governments can address infrastructure needs of today just makes sense.
If that means tax increases, or a better allocation of those taxpayer investments, then now is the time to have that discussion. Better to come up with meaningful ways to pay now rather than continue to mortgage the future of our grandchildren.
About the author: Mike Seymour has more than 25 years’ experience in water and wastewater treatment for small decentralized systems throughout B.C. He is currently involved with the BC Water and Waste Association. Seymour is also the principal with MSR Solutions Inc. in Victoria. He can be reached at 250.479.5164.