Budget 2025: What It Means for Environment / Water
Alberta Budget 2025 invests over $700M in water infrastructure, $646M in TIER clean tech, and $75M in flood/drought mitigation across ministries.
Environment Operating
$514M
+$106M (+26%)
TIER Spending (3yr)
$646M
Clean technology
Flood & Drought Mitigation (3yr)
$75M
Renewed program
Water Infrastructure (combined, 3yr)
$700M+
Multi-ministry
Sector Impact Summary
Environment and water management in Alberta is a cross-ministry endeavour, with investments spread across Environment and Protected Areas, Transportation and Economic Corridors, Municipal Affairs, and Energy and Minerals. Budget 2025 reflects a province grappling with the consequences of consecutive years of severe drought and the ever-present threat of catastrophic flooding.
The Ministry of Environment and Protected Areas operating expense rises $106 million (26%) to $514 million, though this headline increase is primarily driven by revised TIER (Technology Innovation and Emissions Reduction) revenue forecasts affecting expense allocation rather than new program spending. Total expense reaches $570 million in 2025-26.
The budget's most substantive environmental investments are in water infrastructure. Across all ministries, combined water-related capital spending exceeds $700 million over three years, including $75 million for renewed flood and drought mitigation, $257 million for Water for Life regional projects, $195 million for municipal water and wastewater programs, $164 million for water management infrastructure, $62 million for the Springbank Off-Stream Reservoir, and $50 million for the First Nations Water Tie-In Program.
TIER spending of $646 million over three years supports emissions reduction, clean technology development, and climate adaptation across nearly 600 regulated facilities covering 60% of Alberta's carbon emissions.
Key Budget Measures
TIER Fund Spending
The Technology Innovation and Emissions Reduction fund commits $646 million over three years to support emissions reduction and clean technology. TIER regulates nearly 600 industrial facilities covering 60% of Alberta's carbon emissions, incentivizing efficiency improvements and clean technology adoption. TIER spending is distributed across multiple ministries: $40 million in Energy and Minerals for carbon capture and storage, $11 million in Jobs, Economy and Trade for the Coal Workforce Transition Program, and $10 million in Technology and Innovation for the Clean Hydrogen Centre of Excellence.
The Emissions Reduction Alberta program has a total forecast of $267 million available from TIER by end of 2024-25, with another $173 million over three years directed to the Alberta Carbon Capture Incentive Program grants.
Renewed Flood and Drought Mitigation
A dedicated $75 million over three years ($25 million per year) funds renewed flood and drought mitigation programs within the Environment and Protected Areas capital budget. This responds to consecutive years of severe drought (2021, 2023, 2024) and major flood events that have exposed vulnerabilities in Alberta's water management systems.
Springbank Off-Stream Reservoir (SR1)
Construction continues on the Springbank Off-Stream Reservoir with $62 million in capital over two years ($42 million in 2025-26 and $20 million in 2026-27). SR1 is the cornerstone of Calgary's flood mitigation strategy following the devastating 2013 flood. This project, located west of Calgary, will provide dry reservoir capacity to divert and temporarily store floodwaters from the Elbow River.
Water Management Infrastructure
Through the Transportation and Economic Corridors capital budget, $164 million is allocated over three years for water management infrastructure. The Bow River Reservoir Project receives $12 million, supporting water storage capacity in southern Alberta.
Municipal Water and Wastewater Programs
Combined municipal water infrastructure investments include:
- Regional Water/Wastewater Projects (Water for Life): $257 million over three years
- Municipal Water and Wastewater Program: $195 million over three years
- First Nations Water Tie-In Program: $50 million over three years
- Capital Region Wastewater Treatment: $10 million in 2025-26
These investments expand and upgrade the water and wastewater infrastructure that serves Alberta's growing communities.
Aquatic Invasive Species Program
Annual funding of approximately $4 million supports the expanded Aquatic Invasive Species program, including additional watercraft inspection stations and two conservation K9 units. Zebra and quagga mussels pose an existential threat to Alberta's water infrastructure, and the inspection program is the front line of defence.
Surface Rights Compensation
Budget 2025 includes $25 million annually for surface rights compensation payments, reflecting the five-year average of payments under the Surface Rights Act that were previously not included in budgets. This brings transparency to a growing cost driven by increasing applications for recovery of unpaid compensation from energy development on private land.
Designated Industrial Zone Pilot Project
A $38 million capital allocation over three years for the Designated Industrial Zone pilot project concentrates industrial development in specific areas, reducing cumulative environmental impacts while streamlining regulatory processes.
Carbon Capture and Storage
Funding agreements for the Quest and Alberta Carbon Trunk Line CCS projects conclude in 2025. Together, these projects have captured and stored over 15.6 million tonnes of CO2 since 2015. While the agreements are ending, the CCS infrastructure remains operational, and the Alberta Carbon Capture Incentive Program ($173 million in grants over three years) continues to support new CCS development.
Funding Changes
| Category | 2024-25 Forecast | 2025-26 Estimate | Change |
|---|---|---|---|
| Environment Total Expense | $458M | $570M | +$113M (+24.7%) |
| Environment Operating | $408M | $514M | +$106M (+26%) |
Source: Fiscal Plan 2025-28, Expense, pp. 83-84.
The large operating increase is substantially driven by revised TIER revenue forecasts that change how revenue and expense flow through the ministry's books. This is an accounting reclassification effect more than new environmental program spending.
Capital Investment
Environment and water capital investment spans multiple ministries:
Environment and Protected Areas ($231 million over 3 years):
- Renewed Flood and Drought Mitigation: $75M
- Raven Creek Brood Trout Station: $48M
- Designated Industrial Zone Pilot: $38M
- Alberta Land Trust Grant Program: $15M
- Land Stewardship Fund: $15M
- Critical Environmental Monitoring and Science: $12M
- Alberta Water Storage Assessment Program: $5M
- Other (aquatic invasive species, watershed restoration, etc.): $23M
Transportation and Economic Corridors (water-related):
- Water Management Infrastructure: $164M
- Springbank Off-Stream Reservoir: $62M
- Bow River Reservoir Project: $12M
Transportation and Economic Corridors (municipal water):
- Regional Water/Wastewater (Water for Life): $257M
- Municipal Water and Wastewater Program: $195M
- First Nations Water Tie-In Program: $50M
- Capital Region Wastewater Treatment: $10M
Total water-related capital investment across all ministries exceeds $700 million over three years.
Source: Capital Plan Details by Ministry 2025-28.
Risks
Climate Change Intensifying Drought and Flood (High). Consecutive severe droughts in 2021, 2023, and 2024, combined with the risk of flooding events similar to 2013, demonstrate that Alberta faces increasing climate-related water management challenges. The $75 million flood and drought mitigation investment is significant but may be insufficient if the frequency and severity of events continue to escalate.
TIER Revenue Volatility (Medium). Environment and Protected Areas expense is significantly affected by TIER revenue forecast revisions, which depend on industrial compliance decisions and the carbon pricing framework. Changes in federal carbon pricing policy or industry behaviour could alter the revenue available for clean technology investments.
Surface Rights Compensation Escalation (Medium). The volume of applications for recovery of unpaid compensation under the Surface Rights Act has been increasing. The $25 million annual budget represents a five-year average, but actual costs could exceed this if the trend accelerates.
Aquatic Invasive Species Threat (Medium). Zebra and quagga mussels have been detected at inspection stations with increasing frequency. A successful infestation of Alberta's water bodies would cause billions in damage to water infrastructure, irrigation systems, and aquatic ecosystems. The expanded inspection program is reactive to a growing risk.
Groundwater Uncertainty (Medium). The Southern Alberta Groundwater Evaluation study is still underway. Results will have implications for long-term water security in the driest region of the province, where agriculture and growing communities compete for finite water resources.
Opportunities
Comprehensive Water Infrastructure Investment. The over $700 million in combined water capital investment represents one of the most significant water infrastructure commitments in Alberta's recent history. From the Springbank reservoir to Water for Life regional projects to First Nations water tie-ins, the investment addresses flood protection, drought resilience, municipal capacity, and Indigenous community needs.
Clean Technology Leadership via TIER. The $646 million in TIER spending positions Alberta as a leader in industry-led emissions reduction. With nearly 600 regulated facilities covering 60% of provincial emissions, the TIER framework drives industrial efficiency and clean technology adoption at a scale unmatched in Canada.
Water Security for Growth. The Alberta Water Storage Assessment Program and Bow River Reservoir Project address the fundamental question of whether Alberta has sufficient water resources to support its growing population, expanding agriculture, and industrial activity. These investments build long-term water security.
Industrial Efficiency and Competitiveness. TIER regulation incentivizes Alberta's industrial sector to reduce emissions intensity, which simultaneously lowers operating costs and improves competitiveness in a world moving toward carbon-conscious trade policies and supply chains.
Ecosystem Protection. The $15 million Alberta Land Trust Grant Program, $15 million Land Stewardship Fund, and $48 million Raven Creek Brood Trout Station represent investments in biodiversity conservation and ecosystem health that support both environmental and economic objectives.
What's Missing
Budget 2025 does not include a comprehensive provincial climate adaptation strategy with specific targets and timelines. There is no dedicated water conservation or demand management program despite increasing scarcity concerns. Methane reduction targets and programs beyond TIER are not specifically funded. Wetland restoration programs receive no highlighted allocation. There is no provincial strategy for managing the cumulative environmental impacts of data centre development and associated energy demand. The budget lacks specific funding for air quality monitoring in communities near industrial facilities, beyond the $2 million mobile air monitoring lab. Long-term post-Springbank flood mitigation planning for other flood-prone areas is not addressed.
Net Assessment
The environment and water sector receives a mixed assessment in Budget 2025. The combined water infrastructure investment exceeding $700 million across ministries is substantial and addresses Alberta's most pressing environmental challenge: water security in a climate of increasing drought and flood risk. The $646 million TIER commitment to clean technology is significant, maintaining Alberta's approach to industry-led emissions reduction.
However, the headline $106 million operating increase is more accounting than new programming. The TIER-driven expenditure changes reflect revenue reclassification rather than additional environmental protection capacity. The $75 million flood and drought mitigation program, while welcome, is modest relative to the multi-billion-dollar damages that severe drought or flooding can inflict.
The budget takes a pragmatic, infrastructure-focused approach to environmental management: build the water systems, regulate industrial emissions through TIER, and protect against invasive species. What it does not do is articulate a comprehensive climate adaptation strategy, invest in ecosystem restoration at scale, or address the growing tension between economic development and environmental sustainability. For a province that has experienced two of its worst wildfire seasons and three severe droughts in the past four years, the investment in environmental resilience is significant but arguably still proportionally small relative to the risk.