INTERGOVERNMENTAL AFFAIRS ADVISORY COMMITTEE. TUESDAY, July 19, 2016, AT 10:00 A.M. ROOM th FLOOR ABBOTSFORD CITY HALL AGENDA

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1 INTERGOVERNMENTAL AFFAIRS ADVISORY COMMITTEE TUESDAY, July 19, 16, AT 10:00 A.M. ROOM th FLOOR ABBOTSFORD CITY HALL AGENDA 1. CALL TO ORDER 2. ADOPTION OF MINUTES.1 Minutes of the Intergovernmental Affairs Advisory Committee meeting held May 31, 16 (attached) (p. 2 ) 3. PRESENTATIONS None. 4. DELEGATIONS None. 5. BUSINESS OUT OF MINUTES None. 6. REPORTS.1 Verbal report by the City Manager regarding RBC s Housing Trends and Affordability Report - RBC Housing Trends and Affordability Report June 16 (attached) (p. 4 ).2 Verbal report by the City Manager regarding Action Canada Groundwater Report - Resolutions to be considered at future FCM Annual Conference (attached) (p. ) 7. NEW BUSINESS 8. ADJOURNMENT 1

2 Minutes of the Intergovernmental Affairs Advisory Committee meeting, held on May 31, 16, at 10:07 a.m. in Room 530 of Abbotsford City Hall Committee Members Present: Councillor Ross (Chair); Councillor Barkman; Councillor Blue; and Mayor Braun Staff Present: City Manager G. Murray; Director, Communications, Marketing and Strategic Planning K. Treloar; Director, Legislative Services/ City Clerk B. Flitton; Deputy City Clerk (Legal Services) S. Davis; and Executive Coordinator R. McAvoy Others Present: Councillor D. Loewen; and Councillor M. Gill Public Present: None 1. CALL TO ORDER The meeting was called to order at 10:07 a.m. 2. ADOPTION OF MINUTES Moved by Councillor Blue, seconded by Mayor Braun, that the minutes of the Intergovernmental Affairs Advisory Committee meeting held April 28, 16, be adopted. IAAC CARRIED. 3. DELEGATIONS None. 4. BUSINESS OUT OF MINUTES None. 5. MINUTES AND CORRESPONDENCE None. 6. REPORTS.1 Verbal report by the City Manager regarding the 16 Federation of Canadian Municipalities (FCM) Resolutions for discussion Committee members had a brief discussion with regards to their ongoing concerns around FCM s resolution process. The Committee then went on to discuss the four 16 Resolutions being presented this year: Homelessness Partnering Strategy; National Orange Shirt Day; National Pharmacare Program; and FCM Support for the Government of Canada s Commitment to the COP21 Paris Climate. The Mayor indicated that he would try to address the Homelessness partnering Strategy on the floor as the program is currently disproportionate and needs to be updated. 2

3 Minutes of the Intergovernmental Affairs Advisory Committee meeting, held on May 31, 16, at 10:07 a.m. in Room 530 of Abbotsford City Hall Moved by Councillor Blue, seconded by Mayor Braun, that staff recommend to Council that the Mayor send a letter to the FCM President asking what the Board s criteria is when deciding which resolutions make it to the floor at the annual convention. IAAC CARRIED..2 Verbal report by the City Manager regarding the Provincial response to the 15 Union of British Columbia Municipalities Resolutions Chair Ross shared her comments with the Committee regarding item B64 - Reforestation of Production Agriculture Land and advised that she did not want to see the practice completely eliminated. She stated that trees on the perimeters of farms help to stop the wind from taking the soil cover. The Committee had further commented with regards to whether the trees (even on the perimeters) are an appropriate land use of good agricultural land in our area and agreed that there is a range of perspectives with regards to this topic. The City Manager provided a brief update to the Committee with regards to a recent discussion he had with Deputy Minister Derek Sturko from the Ministry of Agriculture. He advised that the Ministry will not be making any legislative changes for at least 18 months and he suggested that now is the time to advocate with the Ministry on agricultural issues as a package. Moved by Councillor Blue, seconded by Councillor Barkman, that the verbal report by the City Manager regarding the Provincial response to 15 Union of British Columbian Municipalities Resolutions, be received for information. IAAC CARRIED..3 Verbal report by City Manager regarding a Regional Prosperity Initiative Councillor Blue advised the Committee that she was introduced to this initiative at a Leadership Roundtable session put on by the Chamber of Commerce in New Westminster where Metro Vancouver s Board Chair, Greg Moore spoke at. She felt that this initiative might be worth taking a look at and whether it aligns with Council s objectives and goals. Moved by Councillor Blue, seconded by Councillor Barkman, that the Framework for Regional Prosperity Initiative Green Paper, be referred back to staff in the City s Economic Development Department to analyze and to bring back a report to this Committee. IAAC CARRIED..4 Verbal report by City Manager regarding Fraser River Industrial Association (FRIA) Within the discussion of item.3, Councillor Blue also referred to the backgrounder for the Fraser River Industrial Association (FRIA). 3

4 Minutes of the Intergovernmental Affairs Advisory Committee meeting, held on May 31, 16, at 10:07 a.m. in Room 530 of Abbotsford City Hall Moved by Councillor Blue, seconded by Councillor Barkman, that the backgrounder for the Fraser River Industrial Association, be referred back to staff in the City s Economic Development Department to analyze and to bring back a report to this Committee. IAAC CARRIED. 7. NEW BUSINESS None. 8. ADJOURNMENT Moved by Councillor Blue, seconded by Councillor Barkman, that the Intergovernmental Affairs Advisory Committee meeting be adjourned. (10:29 a.m.) Certified Correct: CARRIED. P. Ross R. McAvoy Chair Recording Secretary 4

5 HOUSING TRENDS AND AFFORDABILITY June 16 RBC Housing Affordability Measures - Canada Ownership costs as % of median household income RBC Housing Affordability Measures - major markets Ownership costs as % of median household income Canada Victoria Vancouver Calgary Edmonton Regina Saskatoon Winnipeg Toronto Ottawa Montreal Quebec City Halifax Saint John St. John's Single-detached Condo Aggregate Q2 16 value Long-term average Historical range Housing affordability takes a hit in Canada s hot spots, erodes mildly in other markets in Q1/16 The picture for housing affordability continues to show marked divergence by regions across Canada at the start of 16; however, the majority of local markets saw a rise in ownership costs relative to household income in the first quarter. Nationwide, RBC s aggregate affordability measure rose for the fourthconsecutive quarter by 0.8 percentage points to 47.1% in the first quarter of 16 (an increase represents deterioration in affordability). Both the singledetached and condo apartment segments contributed to the increase. It continued to be the case that Canada s housing hot spots the Vancouver and Toronto areas experienced the more substantial erosion in affordability. Rises in ownership costs relative to income were modest in most other areas. Generally, home price increases were the main factor contributing to higher ownership costs, especially in the single-detached home segment. In Calgary and Edmonton, affordability slipped mainly due to a decline in household income. Owning a single-detached home at market price in the Vancouver area has become out of reach for all but just a minority of higher-income households. RBC s affordability measure for the area in the first quarter of 16 was the worst ever recorded anywhere in Canada. RBC s measures also indicated significantly stretched affordability conditions in the Toronto-area s single-detached segment. Conditions were much less severe for condo apartments. The current state of demand and supply points to further affordability deterioration in Vancouver and Toronto in the near term. Source: Brookfield RPS, Statistics Canada, Bank of Canada, Royal LePage, RBC Economics Research Craig Wright Chief Economist (416) craig.wright@rbc.com Robert Hogue Senior Economist (416) robert.hogue@rbc.com The heat is still definitely on in Vancouver and Toronto The seemingly inexhaustible housing boom in Vancouver and Toronto continues to gather tremendous attention in Canada and for good reasons. Home prices not only still rise rapidly in both markets, but also they are doing so at an accelerating rate, thereby raising concerns about overheating. To be sure, the Vancouver and Toronto markets are supported by favourable economic fundamentals including impressive job growth in the past year however, in the case of Vancouver where single-detached prices recently surged at a rate exceeding 25% relative to a year ago, it has become increasingly apparent that something else might be at play. Such a pace of appreciation is often symptomatic of expectations of further gains, rather than fundamentals, driving property values to ever dizzying heights. In addition, housing affordability is being crushed in the process. RBC s aggregate affordability measure for the Vancouver area in the first quarter of 16 recorded its largest increase (6.5 percentage points) since the mid-1990s. Owning a single-detached home the category that accounted for the most deterioration at market prices in the area would require nearly 1% of a typical household s income. In other words, it is out 5

6 HOUSING TRENDS AND AFFORDABILITY JUNE 16 RBC Housing Affordability Measures Victoria Ownership costs as % of median household income Single-detached Aggregate Condo Source: Brookfield RPS, Statistics Canada, Bank of Canada, Royal LePage, RBC Economics Research of reach. Yet housing demand remains strong as ever. Owning a singledetached home in the Toronto area also is a stretch but a less severe one than in Vancouver. Fortunately, condo ownership still constitutes a reasonably viable option for many Toronto households, with condo affordability remaining largely stable in the past four years. Few affordability obstacles in the majority of other markets Other than in parts of British Columbia and Southern Ontario, housing affordability is not a major obstacle to home ownership in Canada. RBC s affordability measures generally continue to be in line with historical norms. There was broad-based deterioration across the country in the first quarter of 16; however, the extent of it was minimal for the most part, and the generally constructive picture remained little changed. Winnipeg, Regina, and Saskatoon bucked the trend and saw improvement in affordability for some or all housing categories in the first quarter. Regional contrast persists, but Vancouver and Toronto move the national needle In short, Canada s housing market continues to be sharply divided regionally in terms of housing affordability. Because of their magnitude and size of the markets involved, developments in Vancouver and Toronto continue to dominate at the national level. In the first quarter, RBC s aggregate measure for Canada rose by 0.8 percentage points to 47.1%, the highest level since the second quarter of 10. Only the Vancouver and Toronto measures exceeded the national aggregate, and only those areas and Victoria recorded a larger increase than the all-canada measure in the latest period. The influence of Vancouver, Toronto, and to a lesser extent, Victoria on the national figure is strongest in the single-detached category where they were the main contributors to a 1.0 percentage-point rise in the national measure to 52.0%, an eightyear high. Deterioration in the Canada-wide condo apartment measure was comparatively more modest, however, rising by just 0.4 percentage points to 35.4%. This measure has been quite stable since 13. More of the same ahead We expect little change from the divided affordability picture in Canada in the period ahead. Despite signs of topping up recently, home resale activity remains very strong in Vancouver (and other parts of BC s Lower Mainland) and Toronto at this stage, and demand continues to exceed supply by a wide margin in both markets. We expect such market conditions to fuel further rapid price increases in Canada s hottest markets in the near term. This would mean that owning a home especially a single-detached dwelling at market price is likely to become even less affordable in those markets. On the other hand, balanced conditions in the majority of other markets are likely to keep affordability within reasonable levels in most of Canada. British Columbia Victoria Good times indeed but at a cost Victoria s housing market clearly has thrived recently with home resales booming and prices rising rapidly. These good times have taken a toll on housing affordability, however. After maintaining an improving trend between 10 and 14, RBC s aggregate measure for the area rose throughout 15 and continued to do so in the first quarter of 16, climbing by 1.0 percentage point to 47.4%. This represented the third largest increase (after Vancouver and Toronto) among the local markets that we tracked during that period. The single-detached home segment accounted for most of this deterioration, thereby reflecting the hefty price gains that occurred in this segment. In fact, single-detached affordability in Victoria is quite stretched compared to most cities across Canada. This contrasts with more favourable affordability RBC ECONOMICS RESEARCH 2 6

7 HOUSING TRENDS AND AFFORDABILITY JUNE 16 conditions for condos apartments, which eroded only slightly in the first quarter. Vancouver Epic surge in prices crushes affordability The combination of very strong demand and limited supply of homes for sale has led to an epic surge in prices in the Vancouver area. Aggregate prices jumped by 8.0% between the fourth quarter of 15 and the first quarter of 16 the strongest quarterly increase in 26 years. Relative to a year ago, aggregate prices soared by more than 24% in the latest quarter. Gains were especially strong (up nearly 25% year over year) for single-detached homes, which have been heavily coveted by deep-pocketed buyers. While a solid advance can be justified on the basis of a robust local economy, such a parabolic rise in prices signals the presence of buyer over-exuberance in Vancouver s single-detached segment. It also means that housing affordability is being crushed in the area. RBC s aggregate measure surged by 6.5 percentage points to 87.6% in the first quarter. The measure for single-detached homes rocketed higher by 9.9 percentage points to an astounding 119.5%. The situation was less severe in the condo apartment segment where RBC s measure rose by 1.7 percentage points to 46.0% in the first quarter. Unfortunately, further price acceleration in recent months suggests that affordability will likely deteriorate even more in the period ahead. RBC Housing Affordability Measures Vancouver Area Ownership costs as % of median household income Single-detached Aggregate Condo Alberta Calgary Weakening prices versus weakening incomes Calgary s housing market has faced serious challenges since plunging oil prices unsettled confidence in the late stages of 14. Resale activity plummeted by 29% in 15, thereby knocking off support for home prices in the process. Amid this gloom, improving housing affordability had been a bright spot until the end of last year with weakening home prices helping to lower the costs of home ownership; however, the persistence of Alberta s recession and mounting employment losses took an increasing toll on Calgarians income in the first few months of 16 and in turn weighed on housing affordability in the area (housing affordability is calculated as a share of household income). RBC s aggregate affordability measure edged 0.5 percentage points higher to 35.1% in the first quarter of 16 despite home prices falling by 0.7%. The main factor for the deterioration was a 1.9% decline in household income. Those dynamics were at play in both the single-detached and condo apartment segments. Softness in prices and incomes are likely to continue to be the offsetting forces shaping affordability in the near term. Edmonton Affordability unlikely to be an impediment Housing affordability eroded slightly in Edmonton in the first quarter due primarily to downward pressure on household income, mirroring developments in Calgary. RBC s aggregate measure for the area rose by 0.4 percentage points to 31.2% despite a slight 0.5% easing in prices. Nonetheless, this change did not alter the relatively stable trend at an attractive level that the measure has exhibited since 12. In other words, affordability is unlikely to be a major impediment for homebuyers at this stage. The downturn in the provincial economy no doubt is a greater source of worry and cause for buyers to remain on the sideline. Home resales fell by 13.8% in the first quarter to their lowest level since the second quarter of 10. A more recent pick-up in activity since the first quarter lows may be a sign that confidence may be rebuilding in the market. Calgary Ownership costs as % of median household income Edmonton Ownership costs as % of median household income Single-detached Aggregate Condo Single-detached Aggregate Condo Source: Brookfield RPS, Statistics Canada, Bank of Canada, Royal LePage, RBC Economics Research RBC ECONOMICS RESEARCH 7 3

8 HOUSING TRENDS AND AFFORDABILITY JUNE 16 RBC Housing Affordability Measures Saskatoon Ownership costs as % of median household income Regina Ownership costs as % of median household income Single-detached Aggregate Condo Single-detached Aggregate Condo Saskatchewan Saskatoon Soft start to 16 It has been a rather soft start to 16 in Saskatoon s housing market. Home resales eased further (down 8.1% in the first quarter relative to the fourth quarter of 15), and eroding demand-supply conditions (the sales-to-new listings ratio fell further) offered little support to prices. The market still contends with a large inventory of unsold new units. Against this backdrop, housing affordability was largely unchanged in the area in the first quarter. RBC s aggregate measure inched marginally higher by 0.1 percentage points to 32.8%, which is very close to the historical average. The market s main challenge at this point continues to be a lacklustre provincial economy with approximately 5,000 jobs lost in the area in the first five months of 16, and the unemployment rate reaching 6.9% most recently. Regina Affordability at a nine-year best In Regina, the housing market was mostly quiet in the early part of 16 with still plenty of supply available (both existing and new) relative to demand. Home prices continued to drift lower (except for condo apartments), thereby extending a trend that began in 12. Mirroring this trend, housing affordability in the area generally improved further in the first quarter of 16. RBC s aggregate affordability measure fell by 0.5 percentage points to a nine-year low of 27.8%. The measure for single-detached homes registered a slightly larger decline of 0.6 percentage points (to 29.4%) that reflected more intense weakness in prices. The condo apartment category bucked the trend and saw some deterioration in affordability in the first quarter. Overall, the cost of owning a home at market price in Regina takes a smaller share of household income than in most major Canadian cities. Manitoba Winnipeg Ownership costs as % of median household income Single-detached Aggregate Condo Winnipeg Finding an extra gear Winnipeg s housing market has found an extra gear this year, with home resales recently moving into record territory. There were almost 13,100 homes that changed hands in the first quarter (on a seasonally adjusted and annualized basis), thereby surpassing the previous high-water mark of 12,800 set in the second quarter of 08. This represented a strong gain of 6.8% from the fourth quarter of 15. One of the factors driving demand higher in the Winnipeg area is affordability. Housing affordability has been on an improving trend since 12, and this continued to be the case in the first quarter of 16. RBC s aggregate measure fell by 0.4 percentage points to 29.7% the lowest level in more than six years. Despite solid demand, home prices have softened in the area due to plentiful availability of homes for sale, resulting in part from strong construction a few years back that produced a large inventory of unsold units (most of which were condos). Prices eased further in the first quarter; however, demand-supply conditions have tightened since then, which suggest that the stage might be set for some firming in the period ahead. Ontario Source: Brookfield RPS, Statistics Canada, Bank of Canada, Royal LePage, RBC Economics Research Toronto Keeps on going, and going, and The multi-year housing boom in the Toronto area continues to defy expectations of a slowdown, although there is tentative evidence that strained affordability may be starting to have a restraining effect. Housing affordability has deteriorated significantly in the area since 10 mostly in the single- RBC ECONOMICS RESEARCH 4 8

9 HOUSING TRENDS AND AFFORDABILITY JUNE 16 detached home segment early this year reaching the most stressed levels since RBC s aggregate measure rose further by 1.1 percentage points to 60.6% in the first quarter of 16, ranking second only to Vancouver among Canada s major markets. Affordability stress is most intense in the singledetached segment where it would take 71.7% of a typical household income to cover ownership costs at market prices. Condo apartments requiring 36.5% of household income to cover ownership costs in the first quarter remained a more affordable option. Somewhat surprisingly, early signs of restraint due to strained affordability appear to be on the supply side of the home resale equation. Active listings have declined by more than 30% from a year ago, and there is a growing notion that would-be sellers are staying put because they are concerned about their ability to afford buying another property in the area. On the demand side, things still look very strong. Home resales set a new record high of 110,000 units (annualized) in the first quarter, which was up 5.4% from the fourth quarter of 15. Ottawa On a bumpy road Ottawa s market hit a bump on the road earlier this year when home resales fell by 6.2% in the first quarter. This followed encouraging gains during most of 15, which gave hope that the market was finally springing back to life last year after stagnating in the previous five years. Nonetheless, modest tightening of demand-supply conditions in 15 has led to a slight firming in prices this year. This firming was more evident for single-detached homes than condos, which continued to be weighed down by a still-large inventory of newly built units. Housing affordability is at generally attractive levels in the area, and the modestly improving trend in place since late 13 remains largely intact, although some minor deterioration has occurred in the first quarter of 16. RBC s aggregate measure rose by 0.5 percentage points to 33.0% which is still below the long-run average of 35.0% in the area. There were small increases in both the single-detached and condo segments. Quebec Montreal Momentum is (re)building The Montreal-area market continued to evolve constructively in the early part of 16. Home resales rose further in the first quarter (up 10% from the same period a year ago) building on a 6.0% advance in 15 and demandsupply conditions tightened modestly. Most housing categories showed balanced conditions; however, the condo segment still favoured buyers due to high levels of inventories (despite being drawn down). Price increases while continuing to be subdued were a little heftier for the most part than in 15 (aggregate prices rose 3.4% year over year in the first quarter of 16 compared to 2.0% in 15), except for condos which remained under downward pressure. As has been the case since 12, housing affordability was little changed in the first quarter, thereby indicating that buyers did not face any significant increase in ownership cost burden (unlike Vancouver and Toronto). RBC s aggregate measure edged slightly higher by 0.3 percentage points to 42.9%. The measure for condo apartments held steady at 32.7% and the measure for single-detached homes rose by 0.2 percentage points to 42.4%. Quebec City Stable activity despite some economic headwinds The picture for Quebec City s housing market has seen little difference at the start of 16 than it was during most of 15. Resale activity was more or less at the same level (rising by just 2% from a year ago in the first quarter), and prices extended their diverging trends across housing segments. Demand- RBC Housing Affordability Measures Toronto Area Ownership costs as % of median household income Single-detached Aggregate Condo Ottawa Ownership costs as % of median household income Single-detached Aggregate Condo Montreal Area Ownership costs as % of median household income Single-detached Aggregate Condo Source: Brookfield RPS, Statistics Canada, Bank of Canada, Royal LePage, RBC Economics Research RBC ECONOMICS RESEARCH 9 5

10 HOUSING TRENDS AND AFFORDABILITY JUNE 16 RBC Housing Affordability Measures Quebec City Ownership costs as % of median household income Saint John Ownership costs as % of median household income Single-detached Aggregate Condo Halifax Ownership costs as % of median household income Aggregate Single-detached Aggregate St. John's Ownership costs as % of median household income Single-detached Aggregate Condo Single-detached Condo Source: Brookfield RPS, Statistics Canada, Bank of Canada, Royal LePage, RBC Economics Research supply conditions still favoured buyers, and the small changes in ownership costs that took place left affordability at broadly neutral levels. RBC s aggregate measure rose modestly by 0.4 percentage points to 32.1% in the first quarter, although this masked opposite movements in the single-detached and condo segments the measure for the former rose by 0.4 percentage points and the measure for the latter eased by 0.2 percentage points. A softening local economy this year may have generated some headwinds for the Quebec City s resale market. Labour statistics show that employment in the area fell by approximately,000 in the first five months of 16. Atlantic Canada Saint John On a (slow) recovery path Housing market conditions continue to be on the soft side in Saint John, but there are signs that activity is picking up a little. Home resales increased for a third consecutive time in the first quarter. While the gain was quite modest (a rise of 0.9% relative to the fourth quarter of 15), it came on the heels of more significant advances in the two previous quarters. Saint John homebuyers benefit from attractive affordability levels. In fact, RBC s measures for the area are the lowest (i.e., home ownership is the most affordable) among all the cities that we track in Canada. It is interesting to note that it is more affordable for a Saint John buyer to own a single-detached home than it is for buyers in many large cities to own a condo apartment. Despite edging 0.3 percentage points higher in the first quarter, RBC s aggregate measure (27.5%) remained below its long-run average (28.1%). Recent developments in the market have resulted in a tightening in demand-supply conditions, thereby bringing the Saint John market back into balance. Halifax Becoming even more affordable Halifax s already attractive housing affordability position continued to improve in the first quarter. RBC s aggregate measure fell by 0.5 percentage points to 29.0%, which is the lowest level on record since the mid-1980s. This latest quarterly decline was a continuation of a trend in place since 08. We have no doubt that such a healthy affordability backdrop has helped Halifax s market recovery gain more traction in the first quarter of 16. Home resales increased by a robust 7.0% from the previous quarter, following a smaller 1.6% advance in the fourth quarter of 15. Still, the level of activity remains quite soft from a historical perspective (nearly 12% below the 10-year average), which likely to continues to weigh on prices in the area. Property values softened further in both the single-detached and condo segments in the first quarter. A rise in local employment in more recent months, if sustained, would bode well for a further strengthening resale activity. St. John s Under pressure The provincial recession and rising unemployment in St. John s pose substantial challenges for the area s housing market. Home resale activity, which has been sluggish since 14, fell by 4.8% in the first quarter of 16. New listings surged by more than 10% during the same period no doubt reflecting a loss of confidence caused by the economic downturn. Demand-supply conditions sharply turned in favour of buyers this year, which has intensified downward pressure on prices. Indeed, home prices fell for all housing types in the first quarter (quite significantly in the case of condos). Normally, a drop in price benefits housing affordability. In St. John s case, however, this benefit was more than offset by a decline in household income itself a product of weakening labour market conditions. RBC s aggregate affordability measure inched higher by 0.2 percentage points to 27.8%, although this small increase has had little effect on the generally improving trends in place since 10. RBC ECONOMICS RESEARCH 6 10

11 HOUSING TRENDS AND AFFORDABILITY JUNE 16 How the RBC Housing Affordability Measures work The RBC Housing Affordability Measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities based on the average market price for single-family detached homes and condo apartments, as well as for an overall aggregate of all housing types in a given market. Current home prices are sourced from Brookfield RPS, and established from sales prices from monthly transactions, which are filtered to remove extreme values and other outliers. The aggregate of all categories includes information on prices for housing styles not covered in this report (semidetached, row houses, townhouses and plexes) in addition to prices for single-family detached homes and condominium apartments. In general, single-family detached homes and condo apartments represent the bulk of the owned housing stock across Canadian markets. The affordability measures are based on a 25% down payment, a 25-year mortgage loan at a five-year fixed rate, and are estimated on a quarterly basis for 14 major urban markets in Canada and a national composite. The measures use household income rather than family income to account for the growing number of unattached individuals in the housing market. The measure is based on quarterly estimates of this annual income, created by annualizing and weighting average weekly earnings by province and by urban area. (Median household income is used instead of the arithmetic mean to avoid distortions caused by extreme values at either end of the income distribution scale. The median represents the value below and above which lays an equal number of observations.) The RBC Housing Affordability Measure is based on gross household income estimates and, therefore, does not show the effect of various provincial property-tax credits, which could alter relative levels of affordability. The higher the measure, the more difficult it is to afford a home. For example, an affordability measure of 50% means that home ownership costs, including mortgage payments, utilities, and property taxes take up 50% of a typical household s pre-tax income. Summary tables Aggregate of all categories Price Market Q1 16 Q/Q Y/Y Q1 16 Q/Q Y/Y Avg. since '85 ($) % ch. % ch. (%) Ppt. ch. Ppt. ch. (%) Canada 477, Victoria 568, Vancouver area 992, Calgary 476, Edmonton 391, Saskatoon 378, Regina 312, Winnipeg 278, Toronto area 643, Ottawa 365, Montreal area 373, Quebec City 294, Saint John 217, Halifax 289, St. John's 324, Single-family detached Price RBC Housing Affordability Measure Market Q1 16 Q/Q Y/Y Q1 16 Q/Q Y/Y Avg. since '85 ($) % ch. % ch. (%) Ppt. ch. Ppt. ch. (%) Canada 523, Victoria 648, Vancouver area 1,380, Calgary 513, Edmonton 418, Saskatoon 399, Regina 321, Winnipeg 289, Toronto area 768, Ottawa 402, Montreal area 355, Quebec City 297, Saint John 225, Halifax 294, St. John's 342, Condominium apartment Price RBC Housing Affordability Measure RBC Housing Affordability Measure Market Q1 16 Q/Q Y/Y Q1 16 Q/Q Y/Y Avg. since '85 ($) % ch. % ch. (%) Ppt. ch. Ppt. ch. (%) Canada 358, Victoria 368, Vancouver area 493, Calgary 307, Edmonton 247, Saskatoon 230, Regina 284, Winnipeg 1, Toronto area 371, Ottawa 300, Montreal area 286, Quebec City 215, Saint John n/a n/a n/a n/a n/a n/a n/a Halifax 300, St. John's 283, Source: Brookfield RPS, Statistics Canada, Bank of Canada, Royal LePage, RBC Economics Research RBC ECONOMICS RESEARCH 11 7

12 HOUSING TRENDS AND AFFORDABILITY JUNE 16 Mortgage carrying costs by city Our standard RBC Housing Affordability Measure captures the proportion of median pre-tax household income required to service the cost of a mortgage on an existing housing unit at market prices, including principal and interest, property taxes and utilities; the modified measure used here includes the cost of servicing a mortgage, but excludes property taxes and utilities due to data constraint in the smaller CMAs. This measure is based on a 25% down payment, a 25-year mortgage loan at a five-year fixed rate, and is estimated on a quarterly basis. The higher the measure, the more difficult it is to afford a house. The dashed line represents the long-term average for the market. Source: Brookfield RPS, Statistics Canada, Bank of Canada, Royal LePage, RBC Economics Research RBC ECONOMICS RESEARCH 8 12

13 HOUSING TRENDS AND AFFORDABILITY JUNE 16 Aggregate home price St. John's %change, year-over-year Charlottetown % change, year-over-year Halifax % change, vear-over-year Saint John %dlange, year-over-year Moncton %change, year-over-year 30 25~ H :i~ 6 48~ ~ ~ ~ ~ H Fredericton % change, year-over-year Trois-Rivieres % change, year-over-year Sherbrooke % change, year-over-year Quebec City % change, year-over-year Montreal % change, year-over-year z 0 ~~~ Z Kingston % change, year-over-ye<1r Ottawa % change, year-over-year Toronto % change, year-over-year Hamilton %change, year-over-year St. Catharines %. change, year-over-year O& ::~ ;~ ~ ~ Kitchener % change, year-o\ier-year 15 10~ London % change, year-over-year Windsor % change, year-over-year Winnipeg %change, year-over-year Regina %change, year-over-year :~ :'.~ ~~ 6.z Saskatoon % change, year-o... er -year :~ Z Calgary % change, year-over-year Edmonton % change, year-over-year I\ v 0 /""\.. ~ Vancouver % change, year-over-year ~ "-'\ M rj -~ v v M Victoria % change, year-over-year ~~ Source: Brookfield RPS, RBC Economics Research I... RBC ECONOMICS RESEARCH 13 9

14 HOUSING TRENDS AND AFFORDABILITY JUNE 16 Home sales-to-new listings ratio Source: Canadian Real Estate Association, RBC Economics Research The material contained in this report is the property of Royal Bank of Canada and may not be reproduced in any way, in whole or in part, without express authorization of the copyright holder in writing. The statements and statistics contained herein have been prepared by RBC Economics Research based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This publication is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities. RBC ECONOMICS RESEARCH 10 Registered trademark of Royal Bank of Canada. Royal Bank of Canada. 14

15 British Columbia RBC HOUSING AFFORDABILITY - PROVINCIAL FACT SHEET Key Centre Highlights Victoria Good times indeed, but at a cost Home resales are booming in Victoria and prices are rising rapidly, which has taken a toll on housing affordability. RBC s aggregate measure for the area continued to rise in the first quarter of 16, climbing by 1.0 percentage point to 47.4 per cent. This represented the third largest increase (after Vancouver and Toronto) among the local markets that RBC tracks. The affordability of single-detached homes in Victoria is quite stretched compared to most cities across Canada, while the affordability measure for condo apartments eroded only slightly in the first quarter, said Craig Wright, RBC Chief Economist. Vancouver Epic surge in prices crushes affordability The combination of very strong demand and limited supply of homes for sale has led to an epic surge in prices in the Vancouver area. Aggregate prices jumped by 8.0 per cent between the fourth quarter of 15 and the first quarter of the strongest quarterly increase in 26 years. First-quarter prices for single-detached homes in Vancouver surged nearly 25 per cent year-over-year, and such a parabolic rise in prices signals the presence of overexuberance in this segment of Vancouver s market that is not fully justified by the robust local fundamentals, said Craig Wright, RBC Chief Economist. The aggregate affordability measure jumped by 6.5 percentage points to 87.6 per cent in the first quarter. While the situation was much less severe in the condo apartment segment, affordability in this segment also eroded modestly to 46.0 per cent in the first quarter. Alberta Calgary Weakening prices and weakening incomes The persistence of Alberta s recession and mounting employment losses took an increasing toll on Calgarians income in the first few months of this year and this weighed on housing affordability in the area (housing affordability is calculated as a share of household income). RBC s aggregate affordability measure edged 0.5 percentage points higher to 35.1 per cent in the first quarter of 16 despite home prices falling by 0.7 per cent relative to the fourth quarter. The main factor for the deterioration was a 1.9 per cent decline in household income, said Craig Wright, RBC Chief Economist. We expect that softness in both prices and incomes will continue to affect affordability in the near term. /2 15

16 - 2 - Edmonton Affordability unlikely to deter buyers As in Calgary, housing affordability eroded slightly in Edmonton in the first quarter due primarily to downward pressure on household income. RBC s aggregate measure for the area rose by 0.4 percentage points to 31.2 per cent despite a slight 0.5 per cent easing in prices. The measure has been stable since 12 and affordability is unlikely to be a major impediment for homebuyers, said Craig Wright, RBC Chief Economist. A recent pickup in resale activity since the first quarter may be a sign of confidence rebuilding in the market. Saskatchewan Saskatoon Soft start to 16 Home resales in Saskatoon were down 8.1 per cent in the first quarter relative to the fourth quarter of 15, and the market still contends with a large inventory of unsold new units. RBC s aggregate affordability measure inched marginally higher by 0.1 percentage points to 32.8 per cent, which is very close to the historical average. The market s main challenge continues to be a lackluster economy, with approximately 5,000 jobs lost in the Saskatoon area in the first five months of 16, said Craig Wright, RBC Chief Economist. Regina Affordability at a nine-year best In Regina, there is plenty of housing supply available relative to demand and home prices generally drifted lower in the first quarter of 16. Housing affordability in the area improved further in the first quarter. RBC s aggregate affordability measure fell by 0.5 percentage points to a nine-year low of 27.8 per cent. Overall, the cost of owning a home at market price in Regina takes a smaller share of household income than in most major Canadian cities, said Craig Wright, RBC Chief Economist. Manitoba Winnipeg Finding an extra gear Home resales in the Winnipeg area recently moved into record territory: almost 13,100 homes changed hands in the first quarter (on a seasonally adjusted and annualized basis), surpassing the previous high of 12,800 set in the second quarter of 08. One of the factors driving demand higher in the Winnipeg area is affordability, which has been improving since 12, said Craig Wright, RBC Chief Economist. RBC s aggregate measure fell by 0.4 percentage points to 29.7 per cent, which is the lowest level in more than six years. Demand-supply conditions have tightened since the first quarter, which suggests prices may firm in the period ahead. /3 16

17 - 3 - Ontario Toronto Keeps on going, and going, and The multi-year housing boom in the Toronto area continues to defy expectations of a slowdown. Housing affordability has deteriorated significantly so far this year (mostly in the single-detached home segment). RBC s aggregate measure rose by 1.1 percentage points to 60.6 per cent in the first quarter of 16, ranking second only to Vancouver. In the single-detached segment it would take 71.7 per cent of a typical household income to cover ownership costs at market prices in Toronto, said Craig Wright, RBC Chief Economist. Condo apartments, which required 36.5 per cent of household income to cover ownership costs in the first quarter, remain a more affordable option. Ottawa On a bumpy road Home resales in the Ottawa market fell 6.2 per cent in the first quarter, although the modest tightening of demand-supply conditions in 15 has led to a slight firming in prices this year. RBC s aggregate measure rose 0.5 percentage points to 33.0 per cent, which remains below the long-run average of 35.0 per cent in the area. The condo segment continued to be weighed down by a still-large inventory of newlybuilt units, and housing affordability is at generally attractive levels in the Ottawa area, said Craig Wright, RBC Chief Economist. Quebec Montreal Momentum is (re)building Most housing categories in the Montreal-area market showed balanced conditions; however, the condo segment still favoured buyers due to high levels of inventories. Price increases, while subdued, were a little more substantial in the first quarter -- aggregate prices rose 3.4 per cent year over year, compared to 2.0 per cent in 15, said Craig Wright, RBC Chief Economist. RBC s aggregate affordability measure for Montreal edged slightly higher by 0.3 percentage points to 42.9 per cent. The measure for condo apartments stood still at 32.7 per cent and the measure for single-detached homes rose to 42.4 per cent. Quebec City Stable activity despite some economic headwinds Resale activity in Quebec City s housing market rose by just two per cent in the first quarter from a year earlier. RBC s aggregate affordability measure rose modestly by 0.4 percentage points to 32.1 per cent in the first quarter. A decline in employment in the first five months of 16 may have generated some headwinds for Quebec City s resale market, and demand-supply conditions still favoured buyers, said Craig Wright, RBC Chief Economist. Prices in the first quarter continued to diverge based on housing segments. The single-detached affordability measure rose by 0.4 percentage points while the measure for condos eased by 0.2 percentage points. 17 /4

18 - 4 - Atlantic Canada Saint John On a (slow) recovery path Home resales in the Saint John market increased for a third consecutive quarter, although the latest gain was quite modest (a rise of 0.9 per cent from the fourth quarter of 15). RBC s affordability measures for the area are the lowest (i.e., home ownership is the most affordable) among all the cities that RBC tracks in Canada: the aggregate measure in the quarter was 27.5 per cent, which is below its long-run average of 28.1 per cent. It is more affordable for a Saint John buyer to own a single-detached home than it is for buyers in many large cities to own a condo apartment, said Craig Wright, RBC Chief Economist. Halifax Becoming even more affordable Halifax s already attractive housing affordability position continued to improve in the first quarter. RBC s aggregate measure fell 0.5 percentage points to 29.0 per cent, the lowest level on record since the mid-1980s. In the first quarter of 16, home resales increased by a robust 7.0 per cent from the previous quarter but activity remains quite soft from a historical perspective, said Craig Wright, RBC Chief Economist. Property values softened in both the single-detached and condo segments in the first quarter. If the recent rise in local employment is sustained, it bodes well for continued strengthening in resale activity. St. John s Under pressure, yet affordability slips The provincial recession and rising unemployment in St. John s pose substantial challenges for the area s housing market. Home resale activity fell by 4.8 per cent in the first quarter of 16 and new listings surged by more than 10 per cent during the same period, forming conditions that favour buyers this year. Home prices fell for all St. John s housing types in the first quarter, and quite significantly in the case of condos, said Craig Wright, RBC Chief Economist. Normally, a drop in price benefits housing affordability but in the case of St. John s, this benefit was more than offset by a decline in household income. RBC s aggregate affordability measure inched higher by 0.2 percentage points to 27.8 per cent. 18

19 Housing Trends & Affordability Canadian housing affordability slips in Q1 as Vancouver, Toronto dominate national measure _s }e Housing affordability is the cost of owning a home at market price as a share of household income, so a higher number means housing is less affordable. In Ql, RBC's housing affordability measure rose to 47.1%, the highest level since Q2 10. Vancouver area Q1 affordability surged to 87.6%, the highest ever recorded in Canada. Measures for Saint John, New Brunswick area are most affordable among all Canadian cities. Generally, home price increases were the main factor contributing to higher ownership costs. Victoria area market affordability measure climbed by 1.0 percentage point to 47.4% in the first quarter of 16. Affordability for some or all housing categories improved in ~egi na, Saskatoon, Winnipeg, Ottawa and Halifax. I... 19

20 From Data to Innovation Ottawa February 16

21 About Action Canada Action Canada is Canada s premier leadership program. A non-partisan multi-sector fellowship, Action Canada is building a valuable network of leaders. Centered around regional conferences and teamwork, Fellows examine historical and current issues, hone leadership skills, present and publish a public policy report. At the completion of the fellowship year, they join our network of outstanding leaders dedicated to the future of Canada. Theme for the year Canada has a proud history of invention. New ideas in science, technology, education, government, public and private enterprise have informed the last 150 years. Drawing on lessons from these past creative disruptions, what policies does Canada need to support future economic or societal innovations? Disclaimer This project has been undertaken pursuant to an Action Canada fellowship. Action Canada Foundation (ActionCanada.ca), doing business as Action Canada, is a registered charity funded in part by the Government of Canada with a mandate to build leadership for Canada s future. The views, opinions, positions and/ or strategies expressed herein are those of the author alone, and do not necessarily reflect the views, opinions, positions or strategies of Action Canada, Action Canada Foundation, or the Government of Canada. Action Canada, Action Canada Foundation, and the Government of Canada make no representations as to the accuracy, completeness, reliability, noninfringement or currency of any information in this paper, and will not be liable for any errors or omissions in this information, or any losses, costs, injuries or damages arising from its display, use or publication. About the Authors Jennifer Arnold Jennifer Arnold is a management consultant at McKinsey & Company Canada. Ayesha Harji Ayesha Harji is a Senior Policy Advisor in the International Affairs Division of Public Safety Canada. Taylor Love Taylor Love is a real-estate entrepreneur and MBA candidate at the University of Alberta. Taylor Martin Shoshanna Saxe Shoshanna Saxe is a Professional Engineer and a post-doctoral researcher at the University of Toronto. Kevin Quinlan Kevin Quinlan is the Deputy Chief of Staff to the Mayor of Vancouver. Jim Mitchell (Task Force Advisor) Jim Mitchell is a former public servant and consultant, now a Senior Fellow at the University of Ottawa. Taylor Martin works in health administration at St. Joseph s Health Centre Our Groundwater Our Future

22 From Data to Innovation Ottawa February 16 Contents Executive Summary... 4 Introduction...5 Current State of Groundwater Policy in Canada...7 Jurisdictional Challenges and Complications... 8 Groundwater Data Initiatives... 9 Enabling Opportunities for Innovation Recommendations...12 Conclusion...13 References Acknowledgements This report was made possible by the dedication and support of Action Canada, its staff and board, and its community. Our deepest gratitude goes to Jim Mitchell, our Task Force Advisor, for his patience, teaching, and generous spirit. We wish to recognise Janet Smith and Malcolm Rowe for their advice and direction, as well as the numerous experts in groundwater science and policy whose knowledge informed our recommendations and challenged our assumptions. Finally, we are grateful to Cathy Beehan, Action Canada s CEO, for her leadership over the fellowship year. 22

23 Executive Summary Canada is a country that perceives itself as water rich, yet one quarter of Canadian municipalities experienced water shortages between 1994 and In communities that depend on groundwater, the figure is even higher. In many parts of Canada, citizens, utilities and industries all compete for a portion of the country s finite groundwater resources. Despite the critical importance of groundwater to the lives and prosperity of Canadians, few understand how much is hidden below the ground. The lack of data on the size and renewal rate of vital aquifers hinders innovation and the development of smart public policy related 2 to how groundwater is managed in Canada. 4 Groundwater extractions are not consistently recorded, and provinces and territories lack standardized reporting models that could facilitate better cross-jurisdictional comparison. This report calls for the expanded collection of data on existing groundwater resources; for provincial and territorial governments to each empower a centralized body to oversee groundwater; and for greater groundwater policy and planning integration across all levels of government. Crucially, it is recommended that the groundwater data collected be made publicly available in order to foster both public and private sector innovation. 23 Our Groundwater Our Future

24 Introduction Thirty-five million Canadians rely on surface and groundwater for residential and industrial uses. One third of the residents in Ontario, everyone in PEI and 80% of rural residents nationally depend on groundwater for their daily personal use.2 Without continued, sustainable access to groundwater sources, the viability of these communities is threatened. The ability to power industry, grow crops and supply water necessary for drinking, cooking and cleaning is dependent on groundwater. To ensure the availability of water sources for the future, Canada must ensure that the supply and demand for water are held in balance. This is no sure thing: population growth, climate change and industrial demands are putting increasing 2 stress on Canada s water resources. Canada s federal, provincial, territorial and municipal governments need a modern, 21st century approach to water policy, starting with access to accurate and timely data on water availability, water usage and replenishment rates. More specifically, they need this information for groundwaxter, which, by virtue of being underground and out of sight, has often been neglected in water policy. This is a critical oversight, especially in light of Canadians current water usage patterns. Canada s water consumption increased 25% over the years leading up to 05.1 Per capita, Canadian residential water use is more than double that of Europeans.2,4 Compounding this challenge is the expansion of new types of energy production, such as hydraulic fracturing (fracking) for natural gas, which requires vast amounts of water. In British Columbia, more than 8 billion litres of water were used for fracking in 14, an amount the Oil and Gas Commission projects to increase until 19.3,4 From Data to Innovation What is Groundwater? Groundwater is found between particles of soil and in cracks and openings in underground rocks. Although groundwater exists almost everywhere, the quantity of water in the ground varies with the soil and rock conditions as well as the local weather. Areas where the amount of underground water is suitable to tapping with a well are called aquifers. Groundwater circulates as part of the hydrological cycle. When it rains, some rainwater infiltrates the ground and becomes groundwater. Over time, groundwater evaporates, flows to connect with surface water such as lakes and rivers, or is pumped out of the ground for human use. Groundwater is often discussed in contrast to surface water, also key to the hydrological cycle, which is the water found above ground in lakes, rivers and streams. In Canada, very little data is recorded on groundwater supply, or its depletion, creating significant uncertainty for those who rely upon these water sources for their livelihood. To ensure the availability of groundwater to Canadian citizens and industries in the future, federal, provincial and territorial governments need to address the lack of data on groundwater supply (i.e., total quantity available by region across aquifers) and demand (e.g., number of wells, usage rates). With robust data, Canadian governments will be able to develop groundwater public policy that considers predictable supply of water to citizens and industry. 5 Dry Groundwater Wells in Canada From 1999 to 03, the Canadian prairies experienced a drought similar in intensity to the famous Dust Bowl droughts of the 1930s. Many wells ran dry. Without them, farmers were forced to abandon their land and tens of thousands of jobs were lost. The cost to the Canadian economy was $5.8 billion. In fact, six of the ten costliest natural disasters in Canadian history have been droughts. 24 5

25 CASE STUDY: Data Drives Innovation Acid Rain6 The acidification of lakes and rivers due to industrial production in North America emerged as an environmental and public health issue in the 1960s and 70s. This posed a particular problem in Eastern Canada as the Canadian Shield was identified as very sensitive to acidification. The cause of acid rain, however, was due to pollution by heavy industry on both sides of the border. In 1991, both countries signed the Canada US Air Quality Agreement to address transboundary air pollution in an effort to reduce acid rain. The agreement committed both countries to setting a cap on emissions, as well as increasing the monitoring and tracking of air pollution and progress towards reductions. The agreement has proven to be a success - Canada has reduced its emissions by 58% since 1990 and the United States achieved a 79% reduction. The reduction was due in part to innovations in industry. 6 For example, in response to regulation and monitoring, new coal energy technology drastically reduced sulphur dioxide emissions. New companies and opportunities emerged once governments were able to measure and regulate emissions. In Canada, the Canadian National Air Pollution Surveillance program coordinates collection of air quality data from provincial, territorial and regional air quality monitoring networks across the country. As well, electric power generating facilities are required to have continuous emission monitoring systems (CEMS) technology and to report their air pollution emissions annually as part of the National Pollutant Release Inventory. The aggressive expansion of data collection and scientific monitoring under the Agreement has been crucial to both countries making progress under the Air Quality Agreement. 25 Our Groundwater Our Future

26 Current State of Groundwater Policy in Canada Groundwater policy varies across provinces and territories but pockets of excellence have emerged as regulatory policies and practices are updated. However, large gaps remain; effective decision-making requires adequate evidence, and Canada lags behind other countries in its collection and monitoring of groundwater data.2 The lack of robust data on groundwater resources currently limits the ability of Canadian governments to answer simple questions, such as how much groundwater can be sustainably extracted? Despite best efforts to date, at the macro level, Canadian governments have a limited understanding of the quantity of groundwater consumed annually, and the rate at which groundwater is being replenished. Concern over groundwater policy (or the lack thereof) is not new. The Canadian Geoscience Council (now the Canadian Federation of Earth Sciences) (1993), the Council of Canadian Academies (09) and the Canadian Municipal Water Consortium (14) have all called for greater collaboration among levels of government, highlighting the lack of reliable data as an obstacle to modern water policy and enforcement.2,7,8 The Canadian Framework for Collaboration on Groundwater (03) recommended a national groundwater monitoring network. Thirteen years later the ability to collect data and monitor groundwater resources remains limited.9 From Data to Innovation To address the question of groundwater supply, the Groundwater Geoscience Program has begun mapping 30 of Canada s largest aquifers.10 The mapping of these vital aquifers will provide important insight into Canada s ability to meet its future ground water needs. However, underground mapping is a time consuming and costly endeavour, and it is anticipated that this project will not be completed until 25. In terms of groundwater demand, there is a patchwork of policies in place across the provinces and territories, with each jurisdiction requiring different levels of reporting from groundwater users. Canada has no unified system across the country that allows for a comprehensive understanding of demand. A State Runs Dry - California s 11 Groundwater Depletion A 15 study released by the California Department of Water Resources showed that land in California s central valley agricultural region sank more than a foot in just eight months as residents and farmers pumped more and more groundwater amid a record drought. Groundwater levels reached record lows, up to 100 feet lower than previous records. NASA completed the study by comparing satellite images of the Earth s surface over time. The collapsing aquifers beneath the surface have permanently reduced water capacity, limiting potential for future replenishment. 26 7

27 Jurisdictional Challenges and Complications The collection and coordination of data on groundwater supply and demand is inconsistent. Jurisdictional complexity and the geographic distribution of groundwater frustrate efforts to collect and share data effectively. inventorying of data; the protection of fish habitat; the control of potential pollutants; and by requiring environmental assessments on projects of, or funded by, the federal government.2 As a natural resource, groundwater is generally considered the purview of provincial and territorial governments, per the Canadian constitution. To varying degrees, each province and territory maps its groundwater resources, reviews and grants permits for use, and monitors the viability of watersheds. Issuing permits for groundwater usage includes regulating well drilling and operation, typically with provisions on pumping rates, quantity, duration, and purpose of use.2 The issue of multi-jurisdictional responsibility for groundwater has resulted in fragmented regulatory frameworks for groundwater. Challenges arise because water is crucial in multiple domains, from industry to environment to drinking water. Jurisdictional overlaps abound. For example, the granting of a groundwater license (provincial and territorial jurisdiction) may negatively impact fish habitats (a federal responsibility).2 There is, however, also a federal role. The federal government holds jurisdiction over federal lands and international boundary waters, including any groundwater found on First Nations reserves or aquifers shared by the United States. Federal water laws have an impact on ground water by enabling the collection and Fragmented Water Policy 12 British Columbia Today in British Columbia, groundwater use by the energy sector does not fall under the Ministry of Environment, but is managed by the BC Oil and Gas Commission, and is therefore subject to different standards than other industries. Varying standards across users for the same resource hinders the ability of the provincial government to develop effective policy, and sets the stage for potential conflict over water allocation. 8 Adding to the complexity is the role of municipalities. While provinces and territories are primarily responsible for groundwater regulations, the impact of these regulations usually falls on local governments. Municipalities own water utilities and make land-use decisions that can impact an entire watershed.8 Unified Groundwater Policy Saskatchewan s Water 13 Security Agency In 12, the Government of Saskatchewan created the Water Security Agency, a Crown corporation mandated to protect and manage the quality and sustainability of all water in Saskatchewan. The Agency oversees the monitoring of the Province s dams, surface and groundwater, and wastewater services and is responsible for the allocation and forecasting of water use. The Agency monitors more than 70 wells and reports on aquifers in the province. It also works closely with the Prairie Provinces Water Board, which ensures equitable sharing of water resources between Prairie provinces and protects surface and groundwater quality and quantities. 27 Our Groundwater Our Future

28 Groundwater Data Initiatives Groundwater licensing, monitoring and related data publication varies by province and territory. While Ontario has clear requirements for industry and residents with respect to access to groundwater and reporting its use, British Province Columbia has historically had little to no requirements for reporting usage.12 Publication of these data including critical pieces of information such as allocation rates and usage is limited at best. License required for accessing groundwater? Requirements for license holders to do ongoing monitoring? Groundwater data published online? Requirements for long-term groundwater planning for municipalities? Alberta14 Yes, but not domestic use No, but can be conditional Well drilling only Non-binding targets British Columbia15 Yes, but not domestic use. Starting 16 No Well drilling only No, but encouraged in Regional Growth Strategies Nova Scotia16 Yes if over 23,000 L/day No, but can be conditional Well drilling only No Ontario17 Yes, but not domestic use Yes. Daily use Well drilling only. Usage data available upon request Municipalities required to complete a Master Servicing Plan Saskatchewan18 Yes, but not domestic use Yes Well drilling, and community use No TABLE 1 Sample of groundwater policy across Canadian provinces, 15 There are significant differences in data collection requirements across jurisdictions. Provinces and territories vary in the data they require to be reported for ongoing use. The permitting proc esses who needs a license, duration of the license, the criteria for granting a license also vary. As a result, current data are fragmented and inconsistent between governments, representing a lost opportunity to properly manage a valuable natural resource. Efforts to compile data across provinces and territories have been incomplete. Environment Canada s Municipal Water and Wastewater Survey (MWWS) collected data on groundwater extraction but had a response From Data to Innovation rate below 50% due to the survey s voluntary nature.2 Despite being the best source for municipal groundwater usage, the MWWS was cancelled in 12.2,

29 Enabling Opportunities for Innovation Public, timely and accurate groundwater data will foster both private and public sector innovation. With better data, policy makers and private sector innovators would spend less time trying to understand the problem how much is being used and how quickly is it being replenished? - and more time making informed decisions to solve it. Whether it is growing demand from industry for groundwater, or the threats posed by climate change, now is the time to be thinking long-term about Canada s groundwater and using accurate information to support decision-making. By committing to comprehensively tracking and publishing groundwater data, provincial and territorial governments will be better equipped to set informed, sustainable targets for water consumption, collaborate with local governments in making policy decisions, foster innovative ways to better understand Canada s water resources and reduce end-user consumption. Public Sector Innovation: Unlocked by Groundwater Data Integrating data into city planning: Municipalities could incorporate groundwater usage and availability forecasts into community planning decisions, such as land use.8 10 For example, the decision to pursue waterintensive industries or recreational development (e.g., golf courses) in a community would be informed by the local aquifer s capacity to sustain the increased demand without excessive depletion. Managing water scarcity risk: Provincial and territorial governments could assess the potential impact of industrial growth on existing groundwater license holders. The forecasted demand, combined with the duration of existing groundwater licenses, would provide valuable insight into the potential water scarcity risks across communities in Canada, and help avoid conflicts between municipalities and industries that are increasingly consuming groundwater.2 Water resiliency at a federal level: If provincial and territorial governments begin to consistently collect and make groundwater data public, the federal government would be in a stronger position to manage the groundwater that is under its own jurisdiction. Comprehensive provincial and territorial groundwater data could lead to the creation of a national database, one that combines provincial and territorial data with data collected by the federal government, to foster an informed understanding of where groundwater is under stress in Canada and what federal policies are required to address this.2,19 29 Our Groundwater Our Future

30 A National Leader Oak Ridges Moraine Formed in 01, the Oak Ridges Moraine Hydrogeology Program (ORM Program) in Southern Ontario is a national leader in groundwater data collection, interpretation and sharing. Among the strengths of the ORM Program is that it allows for knowledge-based decisions regarding groundwater use within its catchment. The City of Toronto, the regions of York, Peel and Durham and nine local conservation authorities collectively fund and benefit from the ORM Program. They use it to inform land use policy and decision-making and increase the efficiency of regional groundwater understanding, thereby improving water security. The ORM Program started with provincially collected groundwater data from the Ontario Ministry of Environment and Climate Change s Water Well Information System (WWIS). Over the first decade of operation the ORM Program added temporal, geological and some usage data to the system. Municipal, provincial, federal and private sector data were collected to enhance the growing groundwater database. Critically, records are digitized, geologically referenced and available online. Private Sector Innovation: Opportunities for Business to Leverage Groundwater Data Water distribution in Canada is uneven, with large demands on groundwater being better tolerated in some regions than others. For industries with water-intensive operations, such as nuclear energy, oil and gas, manufacturing, farming or mining, it is critical to be close to a stable water source. Companies can use groundwater data - or through the use of less restrictive requirements, government can encourage industry - to set up operations in water abundant areas blessed with quicker replenishment rates. From Data to Innovation The low cost of water in Canada stifles the financial incentive for conservation or innovation in the development and use of efficient water technologies. Appropriate pricing through groundwater licensing - informed by accurate data on supply and demand - can encourage industrial and public users of water to find solutions that minimize costs and consumption. There have already been improvements in some areas. In the oil and gas business restrictive water policies and pricing have fostered innovation, leading to increased water recycling during extraction. As another example, companies making water infrastructure investments can use technology to better detect leaks in pipes or weak points in infrastructure, thereby avoiding costly repairs and business disruptions through data-driven maintenance and repair scheduling. Governments can also use data to set pricing to match the real cost of infrastructure planning and maintenance.8 Data Drives Innovation 21 WaterSmart Program WaterSmart Software uses water data to provide real time analytics for commercial water infrastructure, helping municipalities and utilities run more efficient systems and plan for future infrastructure upgrades, as well as providing end user consumption data through smart meter technology. Through the simple detection of a leaky pipe or a major burst, WaterSmart gives municipalities the ability to better plan maintenance and prevent major repairs, avoiding costs and public disruptions. Consumers are given data about their individual usage and average neighbourhood usage in an attempt to encourage conservation and reduced consumption. Municipalities can also take this technology a step further by offering incentives through price reductions for meeting usage targets

31 Recommendations To avoid mismanaging groundwater supplies into crisis, Canada must improve its approach to groundwater management. The goal is the creation of modern regulatory frameworks in each province and territory that can effectively oversee the changing supply and demand for groundwater. The comprehensive collection and publication of groundwater data can then be used to inform the planning, management and conservation of Canada s groundwater resources. The accessibility of groundwater data is key: making it public fosters opportunities for policy and private sector innovation that no government can predict. Based on the experience of other jurisdictions dealing with groundwater shortages and a review of existing provincial and territorial policies, there are clear measures the provinces and territories can take to collect and manage groundwater data in a comprehensive, timely and responsible manner. These steps must be matched by a commitment to make these data publicly available and easily accessible. 1. Consolidate water management policies: All water users should be regulated by a single provincial or territorial body (ministry or agency). Such a body would reduce the overlap that currently exists where ministries and sectors have vested, yet competing, interests. A single ministry or other such body, such as Saskatchewan s Water Security Agency, can provide regulatory clarity for groundwater users while properly overseeing the resource. 2. Aquifer mapping and monitoring: Once created, provincial and territorial groundwater management bodies should be required to map vital aquifers and regularly publish public reports on groundwater levels. Municipalities do not have the human or financial resources to undertake comprehensive monitoring or measurement of aquifers License holders required to collect usage data: All industries or municipalities that have licenses for groundwater use should, at a minimum, be required to meter and report their groundwater usage annually. Licenses should, where necessary, include a requirement for more frequent usage monitoring and reporting, particularly in cases where aquifer mapping shows that groundwater sources are particularly vulnerable to depletion. 4. Groundwater database: Each province and territory should maintain a public database that provides comprehensive information on well drilling, license allocations, groundwater usage and water table levels. Data should be published at least annually and in a publicly accessible format to facilitate comparison with historical observations. Data should be accompanied by an explanation of what constitutes a sustainable groundwater level. The provinces and territories should use standardized and comparable data formats to facilitate collab oration and understanding, especially for trans-boundary aquifers. 5. Flexibility and resiliency in groundwater licensing: In lieu of universal fees and 30-year terms for licenses - currently the standard duration of a license in many provinces and territories - the creation of a fee schedule and varying duration of licenses should be established. This would enable better management of aquifers, proper recovery of costs and allow regulators to re-assess groundwater sustainability more regularly. 31 Our Groundwater Our Future

32 Conclusion Water resource management is challenging and costly for all levels of government, but even more challenging are the social, environmental and monetary costs associated with mismanagement. Experts at University of California Davis estimate that the 15 California drought will cost their economy $2.7 billion USD in agricultural losses alone.22 Canada is not in a state of emergency, but water shortages are more common than most realize and water demand is growing. It is time for a collaborative approach to data collection, informing policy and enabling innovative solutions to an ever-more pressing issue. From Data to Innovation A decision to take proactive measures to better regulate, license, conserve and protect groundwater resources will help to ensure that Canadians will have access to sufficient water to meet their personal and economic needs. The collection and analysis of data on groundwater quantities and usage will enable better planning and management by governments and communities. The resulting knowledge will also open the door for future public and private innovation. The technology and tools to manage ground water in the 21st century exist we just need the will to adopt and implement them

33 References 1. Brandes, O. M., Ferguson, K., M Gonigle, M., & Sandborn, C. (05). At a Watersx hed: Ecological Governance and Sustainable Water Management in Canada. POLIS Project at the University of Victoria. Retrieved from: sites/default/files/report4_full_1.pdf 2. Council of Canadian Academies. (09). The Sustainable Management of Groundwater in Canada. Retrieved from: ca/uploads/eng/assessments%and% publications%and%news%releases/ groundwater/( )%gw%report.pdf 3. BC Oil & Gas Commission. (14). Water Use for Oil and Gas Activity 14 Annual Report. Retrieved from: 4. BC Oil & Gas Commission. (n.d.). LNG Forecast Scenario. Retrieved from: node/11277/download 5. Parched Prairies: Latest drought a sign of things to come? (09, July 10). CBC News. Retrieved from: parched-prairies-latest-drought-a-sign-ofthings-to-come International Joint Commission (14), Canada - United States Air Quality Agreement Progress Report 14. Retrieved from: default.asp?lang=en&n=d560ea Canadian Geosciences Council. (1993). Groundwater Issues and Research in Canada. Retrieved from: cfes/_archive_jan7_11/papersandreports/ gwish.html 8. Canadian Municipal Water Consortium. (14). 14 Canadian Municipal Water Priorities Report. Canadian Water Network. Retrieved from: Municipal/Canadian-Municipal-Water-Consortium- Priorities-Reports-14-Online-Version.pdf 9. Natural Resources Canada. (03). Canadian Framework for Collaboration on Groundwater. Government of Canada. Retrieved from: pubs/214/2146/gid_2146.pdf 10. Natural Resources Canada. (13). Evaluation of the Groundwater Geoscience Program. Government of Canada. Retrieved from: evaluation/reports/13/ Farr, T. G., Jones, C., Liu, Z. (15). Progress Report: Subsidence in the Central Valley, California. California Department of Water Resources. Retrieved from: REPORT.pdf 12. Parfitt, B. (13). Counting Every Drop: The Case for Water Use Reporting in BC. POLIS Project on Ecological Governance and Canadian Centre for Policy Alternative (BC Office). Retrieved from: Water Security Agency (15). Water Security Agency Plan for Government of Saskatchewan. Retrieved from: About-WSA/Annual-Reports/Annual-Plans/ 14. Alberta Environment and Parks, Government of Alberta Water Protection and Sustainability. (15). Personal interview. 15. British Columbia Ministry of Environment, Government of British Columbia. (15). Personal interview. 16. Nova Scotia Environment, Government of Nova Scotia Water Policy Branch. (15). Personal interview. 17. Communications Branch, Ministry of Environment and Climate Change, Government of Ontario. (15). Personal interview. 18. Water Security Agency, Government of Saskatchewan Sustainability and Applied Science Division. (15). Personal interview. 19. Ellison, T. D. (12). A Lament for MUD. Water Canada Magazine. Retrieved from: York, Peel, Durham, Toronto and The Conservation Authorities Moraine Coalition. (n.d.). Hydrogeologic Analysis Database. Retrieved from: hydrogeologic-analysis/database 21. WaterSmart Software. Retrieved from: solutions-overview/ 22. Howitt, R., MacEwan, D., Medellin-Azuara, J., Lund, J., & Sumner, D. (15). Economic Analysis of the 15 Drought for California Agriculture. UC Davis Center for Watershed Sciences. Retrieved from: Final_Drought%Report_081815_Full_Report_ WithAppendices.pdf 14 Our Groundwater Our Future 33

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