Big Relief for Taxpayers Facing Mounting Municipal Infrastructure Costs: New Revenue Streams and GHG Reduction Through Bold, Integrated Water and Energy Recovery

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Abstract:

The 21st Century faces a complex of daunting challenges including 2 billion new urban dwellers, an expanding middle class with economic and consumption expectations, dramatic increases in economic and social costs arising from sharp increases in extreme weather events, geopolitical instability, rising energy costs, coupled with declining clean water supplies, and, perhaps the two most troubling issues – depletion of global Natural Capital and unpredictable consequences of a changing climate. One specific imperative, arising from the convergence of the above issues is the need to finance the replacement and expansion of an ailing, centuries old municipal infrastructure. Shifting from the traditional open loop, use-once, waste management infrastructure model to a closed loop, resource recovery revenue generating design provides significant tax payer relief, enhances energy and water security, whilst yielding significant GHG emission reductions.

Metro Vancouver requested the evaluation of opportunities for Integrated Resource Recovery (IRR) for organic solid and liquid wastes on the North Shore communities consistent with its recently developed liquid and solid waste management plans. This analysis was completed in March 2011. The genesis for this analysis was the requirement that Metro Vancouver upgrade an existing wastewater treatment plant to meet new environmental standards by 2020 and to implement resource recovery from solid waste by 2015. Six IRR scenarios were evaluated and compared with a modified traditional waste management option.

All six IRR scenarios produce higher net financial benefits compared with wastewater treatment alone. Four that combine centralized treatment with an energy centre for processing solid waste are financially superior and may be profitable. Three appear capable of returning a dividend to the taxpayer. The results do not support undertaking resource recovery at the wastewater treatment plant alone. Distributed treatment plants are also financially unattractive on the North Shore due to its steep topography and high pumping costs, but may have merit as part of hybrid solutions or elsewhere in Metro Vancouver.

There are significant revenues extending over the projected 50-year cash flow, offsetting high upfront costs to construct both basic wastewater treatment and resource recovery infrastructure. We tested different financing methods and identified that combining an optimized IRR approach with long-term financing may be able to reduce taxpayer costs to an average as low as 10 per door per year for approximately the first six years of the project, during which time the maximum funding required is in the order of 180 per door. This is in contrast with the 1300- 1400 per door annual projected cost of wastewater treatment alone. This alternative finance model for addressing strategic municipal infrastructure capital and O&M costs is crucial given the global challenge meeting financial debt at all three levels of government.

In terms of other triple bottom line factors, IRR will reduce greenhouse gas emissions by 20% for the North Shore and will improve ecological values in some streams and wetlands through reducing water withdrawals and stream augmentation with reclaimed water. Although IRR will create disruption through constructing up to 50 km of district energy systems and will require a high degree of source separation, we believe that, on balance, it will result in significant reductions to the taxpayer.

Enhancing source separation into clean waste streams and use of aligned conversion technologies (anaerobic digestion, gasification, cogeneration and heat pumps) was assessed. The combination of recovering heat and electricity close to a major industrial centre and creation of a utility corridor to distribute those resources to the community improves the business case for the taxpayer.

The challenges in adopting “Smart, clean and green towns and cities of the future”, requires a new approach to strategic municipal infrastructure design and management. Adopting an IRM revenue generating municipal infrastructure design will significantly enhance our capacity to address four imperatives – water, energy, loss of Natural Capital, and a changing climate. Globally, this study reveals the imperative of transformational change in strategic municipal infrastructure design requires a geopolitical champion, a city in crisis and new political-financial governance structures.
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  • Proceedings of the Water Environment Federation is an archive of papers published in the proceedings of the annual Water Environment Federation® Technical Exhibition and Conference (WEFTEC® ) and specialty conferences held since the year 2000. These proceedings are not peer reviewed.

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