HILL / THOMPSON: Calgarians should understand true financial cost of water debacle

Tegan Hill and Austin Thompson are analysts at the Fraser Institute.Calgary’s Bearspaw South Feeder Main (BSFM) — a pipe carrying roughly 60% of the city’s drinking water — has failed twice in less than two years. Residents are still dealing with disruptions from the most recent break in late December 2025. Meanwhile, Mayor Farkas has promised to “spare no expense” to replace the faulty feeder main. Calgarians should pay close attention to that promise, since they’ll pay the bill.Keeping the water system working is one of the city’s most essential responsibilities. But a recent city-commissioned independent panel report on the first BSFM failure (in June 2024) suggests the city allowed known risks to go unaddressed for years. That governance failure has been, and will be, costly. Arguably, some of the most significant costs have been the disruptions to daily life in Calgary — including boil water advisories, water restrictions, and traffic jams around repair sites. Many Calgarians have also voluntarily made noble sacrifices to conserve water in light of dire official warnings that levels could dip below what’s needed for firefighting. These disruptions and sacrifices cost Calgarians, even if they don’t come with a dollar sign. Of course, the financial costs are also adding up. It cost $38.2 million to patch the BSFM when it burst back in June 2024. The cost of ongoing repairs to BSFM after the second break (in December 2025) is not yet known. But these patches will likely be relatively “cheap” compared to the cost of replacing the pipe. .According to the panel report, because of the current crisis, “the priority [for the BSFM replacement] must be on safety as well as innovation and not as much on cost in order to achieve an aggressive timeline.” Simply put, some cost-effective options to replace the BSFM are no longer realistic given the ongoing threat to Calgary’s water supply.At the same time, long-deferred investments in alternative water feeder routes, which would improve the capacity and resiliency of Calgary’s water supply, are now being built — requiring significant capital spending. The city’s 2026 budget includes about $1.1 billion in capital spending for Calgary’s water utility, in addition to the utility’s annual operating budget of roughly $380 million. The budget was approved in early December before the most recent BSFM failure, so some costs will only show up later. These budgeted amounts are not city tax dollars, already collected, being allocated to the water utility. Calgary’s water utility is required to be fully “self-funded,” so these figures reflect what the utility must raise through its revenue sources: water charges on users (i.e., Calgary-area residents and businesses) and fees on new development (“off-site levies”). The utility could borrow funds or draw on reserves to cover costs in the near term, but ultimately these must be paid back from the same sources — water bills and off-site levies.Calgarians are already feeling the pinch. The 2026 budget plans to increase the drinking water rate on Calgarians’ water bills by 6.2% in 2026 — the same amount they rose by in 2025. This year, Calgarians will pay $119.21 per month for a typical residential water bill (covering treated water, wastewater, and stormwater)..Offsite levies for water are also climbing. The charge for water distribution imposed on greenfield developments has increased by more than 80% since 2021. This isn’t just a concern for developers; by raising the cost of new construction, higher offsite levies ultimately show up in higher home prices and rents, and in higher costs for commercial space.When the BSFM first failed in June 2024, Calgary city councilor Andre Chabot argued that the federal or provincial government ought to chip in to pay for a fix. That support never came. Provincial or federal money could, in theory, substitute for water rate and offsite levy increases. But the hard truth is such support would be inappropriate. Using provincial or federal money to rescue the city from its own poor stewardship of the water utility would weaken accountability and reduce incentives for responsible management, inspections, and maintenance. Moreover, federal and provincial funding ultimately still comes from taxpayers — if such bailouts became the norm, Calgary taxpayers could eventually find themselves subsidizing similar failures in other cities. Transfers between levels of government are convenient for the politicians on the receiving end, but for taxpayers, there’s no free lunch. Calgary’s water system is designed to be paid for by its users. That includes the cost of emergency repairs. Calgarians should therefore keep a watchful eye to ensure that the “spare no expense” approach promised by the mayor delivers real value. And they should demand changes to reduce the risk of costly water mishaps going forward — or they will continue to pay the price.Tegan Hill and Austin Thompson are analysts at the Fraser Institute.