Cost to fix New Zealand’s water infrastructure heading into the billions
The Government continues to work on its Three Waters campaign. Last week the Government released a new report showing the cost of works to upgrade Wastewater Treatment Plants that discharge to freshwater to meet the objectives set out in the National Policy Statement for Freshwater Management (Freshwater NPS). The Report shows the rapidly accumulating costs of fixing New Zealand’s broken water infrastructure.
The works to improve wastewater infrastructure that discharges to freshwater will cost between $1.4 and $2.2 billion across New Zealand. Crucially, these costs are on top of other water infrastructure costs, for example drinking water upgrades and upgrades to wastewater infrastructure that discharge to the sea (Watercare is currently looking at options to fund its $1.2 billion central interceptor project).
The report, which is part of the Government’s Three Waters review, was finalised and released on Wednesday 24 October 2018.
The key findings of the report are:
- The total capital cost to upgrade all wastewater treatment plants (which discharge into freshwater) is estimated at between $1.4 and $2.1 billion. This cost relates solely to upgrading the plants that discharge into freshwater lakes and rivers in order to comply with Attribute B in the Freshwater NPS. Attribute B relates to levels of e.coli, nitrates and ammonia.
- The estimated cost of upgrading all wastewater treatment plants which discharge into freshwater is four times the estimated cost of upgrading the drinking water system. In comparison, the estimated cost of fixing the drinking water system is $500 million.
- The three regions in need of the largest upgrade (in terms of cost) are Manawatu-Wanganui, Waikato and Wellington.
- If the cost of the necessary upgrades is met by the households contributing to each plant, this will disproportionally affect smaller communities. The average cost of upgrading wastewater treatment plants is approximately $1138 per household over 25 years (with an interest rate of 6% per annum) and $3576 per household in communities of five hundred or fewer people. 82% of the wastewater treatment plants discharging to freshwater that require upgrading are servicing these latter communities.
- While it will cost between $160-240 million to improve facilities that have a large impact on freshwater quality, this is the tip of the iceberg. The bulk of costs lie in improving facilities that have a moderate impact on freshwater quality ($630 to $950 million) and facilities with a small impact on freshwater quality ($160-$240 million). Therefore the total work stream is as one that will be costly throughout the full term of facilities upgrades.
There are also a number of acknowledged limitations in the study that suggest the costs could be much higher. For example, the report:
- does not consider the costs associated with servicing the growing population and are estimated based on the status of the plants in 2018.
- focuses only on wastewater treatment plants that discharge into freshwater environments (47% of the 321 publically owned wastewater treatment plants) not the cost of upgrading infrastructure for discharges to beaches and coastal environments.
- notes that it applied assumed consenting costs but the test cases in Cambridge, Ngatea and Wellsford show that it can be costly and time consuming to obtain consent.
As we indicated in relation to drinking water, returning to a state of safely maintained water infrastructure will not be a quick fix and will involve many years of work. The data in this report provides further information on the extent and cost of work required to upgrade New Zealand’s drinking water, wastewater and stormwater services.
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