The image shows DWAs (Drinking Water Advisories) in First Nations Communities in Ontario Canada that were made public in 2012.
Government led by Aboriginal Affairs and Northern Development Canada (AANDC) provides
funding for water services and infrastructures such as the construction,
upgrading, operation and maintenance of water treatment facilities on First
Nation reserves. Health Canada helps to ensure that drinking water quality
monitoring programs are in place in First Nations communities. Environment
Canada develops standards and guidelines for wastewater systems on federal and
Aboriginal lands and provides advice and technical expertise on federal
legislation requirements. These agencies are responsible for development of the
capacity of First Nations to conduct their own source water assessments,
undertake monitoring of their source water, develop and implement source water
protection plans, and manage their water in a sustainable way. Implementing PPP
water solutions could provide an effective solution for the critical need to
improve access to safe drinking water.
PPP Projects for First Nations Communities in Canada
Three federal government agencies, Aboriginal
Affairs and Northern Development Canada (AANDC), Environment Canada and Health
Canada are agencies directly responsible for development of the capacity of First Nations to conduct
their own source water assessments, undertake monitoring of their source water,
develop and implement source water protection plans, and manage their water in
a sustainable way. Implementing
PPP water solutions could provide an effective solution for the critical need
to improve access to safe drinking water.
of January 31st, 2013, there
were 113 First Nations communities, of
a total of just over 650 communities, across Canada under a Drinking
Water Advisory. The reasons why many First Nations communities are on long-term
drinking water advisories vary. Many First Nations communities face the same
challenges in providing safe drinking water as do other small, remote or
isolated communities, such as difficulties in finding and retaining qualified
water treatment plant operators.
is clear that living conditions are poorer on First Nations reserves than
elsewhere in Canada. Analysis by AANDC supports this view. The Department has
developed a Community Well-Being Index based on a United Nations measure used
to determine the relative living conditions of developing and developed
countries. AANDC uses its index to assess the relative progress in living
conditions on reserves. In 2010, AANDC reported that the index showed little or
no progress in the well-being of First Nations communities between 2001 and
2006. Instead, the average well-being of those communities continued to rank significantly
below that of other Canadian communities. Conditions on too many reserves are poor
and are not improving, introducing a PPP solution to the infrastructure
deficits on reserves, including water, may provide a solution to this long
First Nations water/wastewater projects, being reflective of
community size, are typically very small. Size aside, these communities could
benefit from the efficiencies, competition, and risk models offered through the
PPP model. In particular, the shortage of qualified water/wastewater operating
staff in First Nations communities could potentially be well addressed by the
O&M components of P3 delivery models. Bundling of individual First Nations
projects into larger P3 projects is an obvious opportunity.
As with any P3 project, whether or not value will be delivered
by a P3 approach must be examined on a project-specific (or in this case,
bundle-specific) basis. Challenges to obtaining value from a bundled approach for
First Nations projects stem from geographic challenges (are projects close
enough together to allow contractor economies in design, construction, and
operations and maintenance, are projects so remote that they cannot
cost-effectively be serviced by a centralized model, etc.) and governance
challenges (the contractor needs a single counterparty to perform effectively,
yet each community may want project control). The governance challenges noted
above will be prominent and limiting unless an over-arching project governance
structure can be put in place that obviates the need for the P3 partner to deal
with each individual community for procurement, payment, performance reporting,
and contract management.
The expected “pipeline” of water/wastewater sector projects in
Canada consists of a handful of large projects with capital cost of over $200
million, with most projects being mid-sized. Project size is not an issue for
DBF or DBOM delivery models, but may be an impediment for DBFOM on mid-sized
projects where the interest and ability of the market to fund smaller debt
requirements is untested.
Many potential project opportunities are expected to be
brownfield projects in which the latent defect risk in the existing
infrastructure is not likely transferrable to the contractor. The extent to
which the existing infrastructure influences the project scope, and the extent
to which it can be inspected or tested, will dictate whether or not this
prevents Value for Money from being demonstrated. On a qualitative level, it
may not be worth the effort for a municipality to undertake a P3 procurement if
it is not getting a true turnkey project with full asset risk transfer.
with limited operating responsibility and lifecycle risk are not likely to
demonstrate Value for Money as DBFOM, as there is little benefit of risk
transfer within the term of the P3 to offset the incremental cost of private
financing. DBF and DBO models may be appropriate for network projects.
Remote projects may be expensive to bid (due to cost of access),
are likely to be small, and may limit the potential for innovation and/or
economies of scale that bidders can apply. Such opportunities may not be appealing
enough to the market to make for a competitive procurement process. However,
the crisis in quality of water available to this population and theinfrastructure deficit generally in First
Nations communities is at a tipping point, and further study and anaylsis by
government agencies will not slow the need or solve this problem.
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