Price Works: Toronto's Water Policy and Water Consumption Decline

Canadian municipalities are continually seeking ways to address high water infrastructure costs while encouraging water conservation behaviour. New research shows that pricing water could help municipalities realize these objectives simultaneously. As prices for water use increased in Toronto by 6% to 10.8% over the last decade, residential water use declined by 24% on a per capita basis during the same time period. The research concludes that the price of water can have an impact on residential water consumption, and that water pricing is an effective tool for achieving water conservation goals.

Toronto's Water Policy and Water Consumption Decline is the first of Sustainable Prosperity's price works series features research showing how environmental price reform can work to provide both economic and environmental benefit to Canadians.

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About the Project

The goal of this project is to shed light on the relationship between economic activity and the environment by exploring the linkages between changes in our natural capital and our measures of productivity generally, and through the construction of an environmentally adjusted measure of productivity specifically.

While it is now commonly accepted that economic activity and the state of our environment are linked, many economic measures still fail to incorporate the environment – both the things we draw from it and the pollution we release into it. By developing and calculating measures of productivity that include natural capital, Canada may be able to better understand these linkages. This, in turn, may lead to the identification of strategies that can help Canada become more efficient and innovative in the use and protection of natural capital, and thus more productive and more prosperous.

Using the forestry sector as a case study, this project aims to construct an environmentally adjusted measure of multifactor productivity. In doing so, we aim to add another layer of understanding to the environmental and economic performance of this sector. The proposed measure will have relevance to the Canadian economy as a whole.