Research Feature: Economic Lens
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The impact of forested watersheds and wildfires on drinking water treatment costs in Canada
Key messages
Water Treatment Costs Reduced by
per cent
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Summary
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Most of Canada’s drinking water originates from forested watersheds. Several international studies suggest that sustainable management of forested watersheds can, among others, help reduce the treatment costs of drinking water. Before forWater, no studies existed in Canada that made a link between land use management in forested watersheds and drinking water treatment costs. In forWater, two studies were conducted that establish this link based on available data from different information sources, for Ontario and for Canada as a whole.
The study in Ontario focused on the correlation between drinking water rates as a proxy for treatment costs and adverse treated drinking water quality incidents (AWQI), while the study for Canada as a whole correlated land use to source water quality and corresponding treatment costs. Both studies apply spatial econometric models to account for possible spatial spillover effects from land use in neighboring areas on source water quality and apply a two-step approach to derive the relationships of interests. |
In the study in Ontario, two hypotheses were tested. The first hypothesis is that a significant negative correlation exists between the share of forested land cover in the treatment unit and the water rate. A higher degree of forested watershed area that serves as green, natural resource-based water treatment infrastructure is expected to correspond to lower treatment costs that are reflected in lower water rates. The second hypothesis tested is that a significant negative correlation also exists between the share of forested land cover in the treatment unit and AWQI’s. A larger healthy forested watershed area can be considered analogous to green water treatment infrastructure. Thus, it is also expected to reduce the number of AWQI’s in a treatment unit due to the provision of natural pre-treatment that results in water quality improvement.
Both hypotheses are confirmed. We find a negative relationship between the share of forest cover and drinking water rates and AWQIs. As the share of forest cover increases by 1% in a municipality with its own drinking water supply system, the average drinking water rate per household is reduced by |
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around 0.4% per year. The same 1% increase in forest cover is furthermore associated with a similar 1% decrease in the likelihood of experiencing an adverse drinking water incident. In this latter case, we detect furthermore a non-linear relationship, showing that the effect increases more than proportionally as the share of forest cover increases.
The second study extends the first study to the national level and is able to estimate the impact of forest cover directly on drinking water treatment costs based on Statistics Canada’s bi-annual Survey of Drinking Water Plants (SDWP). This national |
study incorporates more detailed information about the drinking water treatment facilities that we can account for. We furthermore are able to measure the impact forest fires have on drinking water treatment costs based on another data source. Land use and forest fires are modelled to impact costs indirectly through their impact on raw water quality, but also directly. We find a significant negative relationship between forest cover and the variable water treatment costs through turbidity, and a significant positive relationship between forest fires and drinking water treatment costs.
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Publications
Pan, Z. and Brouwer, R. (2021). A Theoretical Modeling Framework to Support Investment Decisions in Green and Grey Infrastructure under Risk and Uncertainty. Journal of Forest Economics, 36(4): 407-440. http://dx.doi.org/10.1561/112.00000536
Pan, Z., Brouwer, R., Emelko, M. (2022). Correlating Forested Green Infrastructure to Water Rates and Adverse Water Quality Incidents: A Spatial Instrumental Variable Regression Model. Forest Policy and Economics, 140: 102756. https://doi.org/10.1016/j.forpol.2022.102756
Pan, Z., Brouwer, R., Emelko, M. (2022). Correlating Forested Green Infrastructure to Water Rates and Adverse Water Quality Incidents: A Spatial Instrumental Variable Regression Model. Forest Policy and Economics, 140: 102756. https://doi.org/10.1016/j.forpol.2022.102756
Photo: Working onsite with partner X.
Contributors
Roy Brouwer
Zehua Pan
Khusro Mir
Monica Emelko
Zehua Pan
Khusro Mir
Monica Emelko
