Issues and Implications of Carbon-Abatement Discounting and Pricing for Drinking Water System Design in Canada

Water utilities generate greenhouse gas (GHG) emissions when they construct, retrofit, and operate their water distribution systems. The prospect of introducing carbon-abatement strategies such as carbon pricing and using low discount rates for project planning could potentially change the manner in which water utilities plan and design their drinking water systems. The objectives of this paper are to: (i) Review the current issues and controversies surrounding the choice of discounting rate and carbon prices in Canada to reduce the GHG emissions linked to operating water systems in Canada; (ii) Review previous research that has examined the impact of discounting and carbon pricing on design decisions in water supply and distribution systems, and; (iii) Illustrate the possible implications of carbon-abatement strategies (discounting and carbon pricing) on the design of Canadian water systems by way of a real-world case study. The implications of discount rate and carbon price uncertainty on water distribution system design are illustrated with the Amherstview-Odessa water transmission system in Ontario, Canada. The results of the Amherstview study indicated that lowering discount rate led to significant increases in electricity costs. The study results also suggested that for a sufficiently low discount rate of 1.4%, increasing carbon price led to a larger pipe size and pipe cost to offset carbon costs levied on fossil-fuel based electricity to operated the pumps for the life of the system. Additional studies are needed on large-scale water systems to inform decisions on system upgrades taken by water utility managers.