Prof. Irene Peters, Ph.D. Dr. Anton Schweiger Dept. of Urban Planning & The REAP Group (Resource Efficiency in Architecture and Planning) HafenCity University, Hamburg
Demographic Challenges to German Water Infrastructure (and Who Pays for Them?)
Australian-German Workshop on „Transition Towards Sustainable and Integrated Solutions for Urban Water Resources and Infrastructure “ Melbourne, April 1 – 4, 2008 1
Outline Demographic change in Germany Consequences of demographic change for technical urban infrastructure Costs of adapting infrastructure to demographic change Who pays for the adaptation of infrastructure to demographic change?
2
Water Use in Germany, Projections (for West Germany) (litre per capita and day) residential plus small commercial establishments
Projections
Actual use
Source 3
Actual Water Use in Germany (for West and East Germany) Water Use in Germany (liter per capita and day), 1990 to 2006 (residential plus small commercial establishments)
Source 4
Litre per cap and day
Water Use of Households in East and West Germany
West & East West East
Source:
5
Water Use in OECD Countries, 1999 350 300 250 200 150
160 166 170 145 147 151 155 158 136 129 122
188
213
237
255 256 260
278
295
100 50
Litre per capita and day, estimate for 1999 (includes private households and small commercial establishments)
U S A
Ita l ie n S ch w ei z K an A ada us tra li N or en w eg en Ja pa n
B e D eu lgie ts n ch la nd D än em ar k S pa ni en E ng l Fr and an kr ei ch Fi nn la nd P Ö ole st er n re N ie i de ch rla nd Lu e xe m bu S rg ch w ed en
0
Source: OECD, IWSA, BGW (Note: This graph is very popular in the literature, numerous authors use it, with the reference „OECD 1999, IWSA 1999, BGW-Wasserstatistik 2001“; this author could not locate the original publication 6
Why did German water use decrease by so much? 1989 - 1990: Collapse of the Berlin Wall and German reunification
Reduced leakage in the pipe & sewer networks Increasing market penetration of modern, waterefficient appliances Water users‘ behaviour change Demographic change 7
Reduced leakage in the pipe & sewer networks Distribution losses in %
Source 8
Increasing efficiency of water-using appliances washing machine (litre / cycle)
(litre / cycle)
1980
125 - 175
45 - 55
1985
100 - 125
30 - 40
1990
75 - 125
20 - 30
2000
45-50
12 -14
Source: Krebs, 2005, p. 7
dishwasher
9
West and East German Länder (federal states)
http://www.maps-of-germany.co.uk/large-map-of-east-west-Germany.htm
10
Demographic trends in Germany (population and employment)
pronounced decline moderate decline divergent trends (declining population, growing employment) stagnation divergent trends (growing population, declining employment) moderate growth pronounced growth Source: BBR 2005
11
Thank you to Mr. Christoph Kaufmann, Regional Planner in the Regionaler Planungsverband Mecklenburgische Seenplatte, for lending his material in the following slides.
An Example from East Germany: The Mecklenburg Lake District (MSP) in the Land Mecklenburg-Vorpommern (M-V)
Mecklenburg-Vorpommern
13
Population densities in comparison average population densities (2004): - MSP Region: 53 inhabitants / km² - Land M-V: 74 inhabitants / km² - Germany: 231 inhabitants / km²
14
Jurisdictions within the MSP Region The Region is comprised of the jurisdictions • Town of Neubrandenburg • Landkreis (equiv. to county) Demmin • Landkreis Mecklenburg- Strelitz • Landkreis Müritz
15
Demographic Change in the MSP Region, 1990 to 2004 Bevölkerungsentw icklung in denthree Landkreisen Demmin, Mecklenburg-Strelitz, Population change in the „Kreise“ and the town Müritz und in der kreisf reien Stadt Neubrandenburg (1990-2004)
110 000 103.406
1990 to 2004:
Inhabitants (abs.)
89.284
88.277
90 000
86.864
84.559
80 000
68.451
70 000 73.609 68.210
Neubrandenburg
Demmin
Mecklenburg-Strelitz
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
60 000 1990
Einwohner (abs.)
Loss of 44.000 inhabitants (=-12%)
100 000
Müritz
16
Demographic Change in the MSP Region, Prognosis 2002 to 2020 Prognostizierte Bevölkerungsentw icklung in den Landkreisen Demmin,
Population change the three „Kreise“ and the town Mecklenburg-Strelitz, Müritzin und in der Stadt Neubrandenburg (2002-2020) 95.000
91.216
90.000
Prognosis for 2002 to 2020:
85.000 86.397
75.000 70.241
68.881
70.000 65.000
63.308
69.175
60.000
60.068
55.000 53.379
Demmin
Mecklenburg-Strelitz
Müritz
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
50.000 2002
Loss of 71.000 inhabitants (=-22%)
Einwohner (abs.)
80.000
Neubrandenburg
17
Demographic Change in the MSP Region, Prognosis 2002 to 2020
An Ageing Population: Age Group of > 65 years: Age Group of 20-30 years:
+ 23% - 69%
18
Number of Inahbitants
Demographic change in selected towns (Land Brandenburg)
Source: Difu 2006, p. 45; Landesumweltamt Brandenburg 2001
19
Change in aggregate water use in selected towns (Brandenburg)
Source: Difu 2006, p. 46
20
Some West German Examples
Towns participating in the „Urban Renewal West“ programme (a public support programme, see later)
21
Population Decline in „Urban Renewal West Towns“ Based on 2003 Data Index 1980 = 100
West Germany (from 2001 on w/o Berlin West
22
Decline in Social Security paying Employment in „Urban Renewal West Towns“, based on 2003 Data Index 1990 = 100
West Germany (from 2001 on w/o Berlin West
23
What happens when water use decreases (1)? Formation of H2SO4 and H2S in the wastewater causes corrosion in sewers
Operating cost increases, raising total cost. (Flushing pipes and sewers, Adding disinfectants & chemicals to remove sulfur)
24
Responses: Curing symptoms, tackling roots
Increased maintenance
„Inlining“ of water pipes and sewers
Targeted build-back of water and wastewater systems within publicly funded urban renewal programs 25
What happens when water use decreases (2)? Average cost increases (and with it, prices)
Water and Wastewater Services have a high share of fixed cost (~ 60 to 90%) With declining output, average cost rises. With average-cost pricing, prices rise. 26
Cost Structure of German Water Supply, 2004 in % Taxes, Fees, Charges
Interest
Services from others
Administration, Rent, etc.
Water purchases from others
Materials
Depreciation Personnel
Source: 27
Cost Structure of German Wastewater Management, 2005 in % Personnel
Energy, Materials
Solid Waste Wastewater Disposal Charge Maintenance
Other
Interest Depreciation
Source: 28
Misguided investments in East German water infrastructure? (1)
1990-94 Breakup of East Germany‘s 15 water & wastewater „utilities“ into 660 municipal works
Reason: Germany‘s constitution grants to municipalities autonomy in matters of local concern. Local water resources and their protection are generally viewed as such a concern.
Small enterprises, economically not viable, were created and equipped with treatment plants. Fees and prices rose.
Example Land Thüringen: 2,3 m inhabitants and some 180 „water associations“ (regional cooperations of municipal water utilities), i.e., some13.000 people served by one association. Estimates state that an association would have been economically viable with some 100.000 people served, i.e. Thüringen should have had about 20 water assocations. 29
Misguided investments in East German water infrastructure? (2)
The early 1990s saw substantial investment into East German water & wastewater infrastructure based on overly optimistic estimates for population and economic growth
West German „wastewater model“ was imitated: centralized systems with extensive main sewers instead of decentralized, more costeffective systems
Substantial overcapacities and high fixed cost due to facilities that still have high book value and have to be depreciated.
30
Cost of build-back and adaptation of different infrastructure systems in East German cities
Water Supply Wastewater District Heat
Build-Back & Adaptation
Electricity
Remaining Book Values
€ / m2 apartment floor space
Source: Difu 2006, p. 57
31
Financial consequences of water and wastewater build-back in shrinking cities
Even short-term technical measures (like flushing the pipe system) can be expensive (Frankfurt/Oder). „The cost of infrastructure adaptation in the existing building sector is at least twice that of the initial infrastructure investment“ (Tietz, H.-P. 2006, S. 170). Most East German water and wastewater utilities have undertaken substantial investments in the 1990s which are not yet depreciated. These utilities have to tackle revenue losses and have to serve financial obligations. The high fixed cost leads to a sharp increase in fees for water and wastewater services
32
Who is paying for this?
The customers of the water utilities, via user fees
The German taxpayer, via publicly subsidized programs
33
Pricing of water services in Germany Fees for water services are set by the municipality and regulated by state laws Requirements for municipal fees formulated in state laws:
Equivalency (the fee has to reflect a specific service) Cost recovery (costs incurred by the utility have to be recouped through fees) Operating assets (facilities, pipe and sewer network) have to be maintained in operating order Wastewater fees can be split into fees for residental waste and storm water
34
These figures, compiled by a consumer magazine, illustrate the range of fees for water and wastewater services in German cities
located in East Germany 35
litre per cap and day
Development of water use and prices in East and West Germany
water use, all of Germany water use, East Germay water use, West Germay water price, East Germay water price, West Germay
Source: BGW 2003
36
Public subsidies for investments in infrastructure renewal?
The German constitution provides for federal support of urban development and construction. Funding programmes target mainly
the strenghening of city centres,
measures to increase cohesion and equity
conversion of lots that lost their uses,
urban renewal (retrofitting the building stock) Most funding programmes consist of matching funds: 1/3 federal level, 1/3 Land and 1/3 municipality (Exception: „Urban Renewal East“, which implies a share of 50% of federal funding) 37
Public subsidy programmes (1) Federal German financial support for urban development (commitment in million €)
West Germany
East Germany 38
Public subsidy programmes (2) Federal German financial support for urban development (commitment in million €)
Renovation & Redevelopment (West) Instantaneous Support Programme Cultural Heritage Protection New housing development Continued development of large new housing areas „Social City“ (equity & social development
Renovation & Redevelopment (East) Pilot Projects Support in Planning Infrastructure for new housing development Urban Renewal East Urban Renewal West 39
Who should pay for infrastructure adaptation in shrinking cities?
There seems to be a consensus that infrastructure adaptation requirements constitute some kind of „stranded investment“ and are beyond the financial capacity of the water utilities (BBR 2006, S. 23) Existing subsidy programmes require a municipal contribution. Yet there is great competition of possible uses for municipal funds, e.g. cultural and social policy measures. Maybe Germany needs a subsidy programme funded entirely out of general tax revenues? 40
The cost of sprawl
Germany is experiencing suburbanization. New housing developments in the suburbs need technical infrastructure. The cost of technical infrastructure per dwelling unit primarily depends on density of dwellings. Empirical studies produced the rule of thumb: For new development, „half the density means double the cost of infrastructural development“ (Göderitz 1954; Siedentop et al. 2005). Infrastructure cost are incurred in several stages: initial construction, operation and maintenance, renewal. The infrastructure cost at each of these stages depends on housing density´. 41
(Infrastructural) Land development cost in relation to housing density Infrastructure development cost in €e per dwelling unit (net present value, 20 yrs, 5% discount rate)
Infrastructure development cost in relation to housing density
Density: Housing units per hectare net new housing land Source: Gutsche, 2008
42
The general public subsidizes (infrastructural) land development for new housing Infrastructural land development is paid by
the lot owners
the municipality (i.e., taxpayers)
the existing users of the infrastructure networks that are extended to the new land, via user fees
Depending on the type of infrastructure and the specific legal arrangements pertaining to it, this subsidy of infrastructure development by the general public amounts to 20% to 40% of its cost. „Cheap new land“ allowing modest-income households to build their own home is in fact subsidized by household with more modest incomes Source: Gutsche, 2008
43
Conclusions
We (society) should be aware of the different types and ranges of cost associated with infrastructural arrangements and developments. We (society) should know who and which activities cause these different types and ranges of cost. We (society) should make a deliberate, informed decision about who should pay the different costs, bearing in mind the requirements of equity and efficiency.
Regarding the water infrastructure cost in Germany, we are not at this point yet, but the topic has entered the agenda of research and politics.
44
Sources, 1/4
BBR (Bundesamt für Bauwesen und Raumordnung). 2005. Raumordnungsbericht 2005. BBR (Bundesamt für Bauwesen und Raumordnung).2006 a. Stadtumbau Ost. Anpassung der technischen Infrastruktur – Erkenntnisstand, Bewertung und offene Fragen. Werkstatt: Praxis Heft 41. Bonn 2006 BBR (Bundesamt für Bauwesen und Raumordnung). 2006 b. Siedlungsentwicklung und Infrastrukturfolgekosten – Bilanzierung und Strategienentwicklung. Endbericht. Bonn. Mai 2006. BDEW (Bundesverband der Energie- und Wasserwirtschaft e.V.), et al. 2008. Branchenbild der deutschen Wasserwirtschaft 2008. Bonn. BDEW (Bundesverband der Energie- und Wasserwirtschaft e.V.). 2007. Wasserfakten im Überblick. Stand Oktober 2007. BGW (Bundesverband der deutschen Gas- und Wasserwirtschaft). 2003 BMVBS (Bundesministerium für Verkehr, Bau und Stadtentwicklung) & BBR (Bundesamt für Bauwesen und Raumordnung). 2006 a. Stadtumbau Ost – Stand und Perspektiven. Berlin 2006. BMVBS (Bundesministeriums für Verkehr, Bau und Stadtentwicklung) & BBR (Bundesamt für Bauwesen und Raumordnung). 2006 b. Stadtumbau West. Berlin 2006. BMVBS (Bundesministeriums für Verkehr, Bau und Stadtentwicklung). 2007. Programme der Städtbauföderung. Merkblatt über die Finanzierung des Bundes. Berlin. Februar 2007. 45
Sources, 2/4
Difu (Deutsches Institut für Urbanistik), 2006. Stehen wir vor einem Systemwechsel in der Wasser- und Abwasserversorgung? Sektorale Randbedingungen und Optionen des stadttechnischen Transformationsprozesses. netWorksPapers Heft 22. Berlin, April 2006. Energieagentur Sachsen-Anhalt, 2002. Auswirkungen der strukturellen Veränderungen in den typischen großflächigen Plattenbau-Wohnquartieren in Sachsen-Anhalt auf die Geschäftsentwicklung der Stadtwerke bzgl. der Medienver- und – entsorgung. Magdeburg 2002 Fraunhofer ISI (Joachim Schleich, Thomas Hillenbrand). 2007. Determinants of Residential Water Demand in Germany. Working Paper Sustainability and Innovation Nr. S 3/2007. Görderitz, J. , 1954. Besiedelungsdichte, Bebauungsweisen und Erschließungskosten im Wohnungsbau. Wiesbaden 1954. 46
Sources, 3/4
Gutsche, Jens-Martin. 2008. Wer zahlt die Kosten der Zersiedlung? And „Kosten des Bauens auf der grünen Wiese, II (with Stefan Flaig). http://www.nabu.de. Accessed May 2008. Gutsche, Jens-Martin. 2006/2007. Die Kosten der Zersiedelung und ihre Mitfinanzierung durch die Allgemeinheit. In: Dietrich, H. et al. (Eds.). Jahrbuch für Bodenpolitik 2006/07. Berlin. Gutsche, Jens-Martin, Georg Schiller. 2005. Das Kostenparadoxon der Baulandbereitsellung. Wuppertal Bulletin 2/2005. S. 3-7. ISW Brandenburg (Institut für Stadtentwicklung und Wohnen des Landes Brandenburg) 2003. Arbeitshilfe zur Anpassung der technischen Infrastruktur im Stadtumbauprozess. Fachbeiträge zu Stadtentwicklung und Wohnen im Land Brandenburg. ISWSchriftenreihe 2-2003. Kaufmann, Christoph, 2006. „Diskursive Anpassungsplanung der Daseinsvorsorge im Kontext von Modellvorhaben der Raumordnung am Beispiel der Region Mecklenburgische Seenplatte“, Presentation to the ARL Working Group „Infrastructures“ on Dec 15, 2006, in Neubrandenburg, Germany.
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Sources, 4/4
Koziol, Matthias. Auswirkungen der räumlichen Strukturveränderungen. Stadtumbau und technische Infrastruktur. Workshop demografischer Wandel. DST und DIfU. BTU Cottbus. Koziol, Matthias / Walther, Jörg. Rahmenbedingungen für die Rücknahme von technischer Infrastruktur. Gutachten im Auftrag des BBR Cottbus. Bonn unveröffentlicht. Krebs, Peter, 2005. Grundlagen der Siedlungswasserwirtschaft. TU Dresden 2005. Ökotest. Nr. 3, 2008 Siedentop, Stefan. 2005. Siedlungsentwicklung und Infrastrukturfolgekosten – Was kann die Regionalplanung tun? Vortrag im Rahmen der 3. Sitzung der IV. Regionalen Planungsversammlung (RPV) Mittelthüringen. IÖR Dresden 2005
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