The Fraser Institute is calling for more buying and selling of Canadian water, a change that could ensure exploration companies pay an appropriate fee for the resource.
Some parts of the Prairies, where there are seasonal water shortages, already have water markets.
Joel Wood, the senior research economist at the Fraser Institute’s Centre for Environmental Studies and Centre for Risk and Regulation, said users are given a licence for a certain amount of water, which they can sell or trade to someone who needs it more.
Wood said the New Brunswick government could adopt a similar system for the shale gas industry, if it develops in the province.
"There definitely needs to be some sort of mechanism to ensure that everyone is paying for water and a water market is one way to insure that everyone is paying their fair price," Wood said.
'If they had to pay for the water they use at a market price, I think the price of doing the fracking would increase significantly.' — Allen Curry, University of New Brunswick
Several companies are in the process of using the contentious mining method known as hydraulic fracturing, or hydro-fracking, or are conducting testing to see if there is enough shale gas in the province to make an industry viable.
Companies require the use of high volumes of water in the hydraulic fracturing process.
Allen Curry, the director of the Canadian Rivers Institute at the University of New Brunswick, said he agrees that if there is going to be hydro-fracking, the provincial government should consider charging an appropriate fee for water.
"If they had to pay for the water they use at a market price, I think the price of doing the fracking would increase significantly," Curry said.
"So that could be something we may have to employ."
But Curry said southern Alberta, where there is a water market, is unique because of the extreme scarcity of water and ownership rights dating back to early settlers.
He said it would take a lot of work to get that accepted across the country as a standard way of doing business.
The Fraser Institute’s report suggests national water pricing and allocation markets would encourage the development of infrastructure to move the larger supply of water in Canada's north to areas in need in the south.
Curry said he doesn't think people have an appetite for building dams across major waterways in the north and redirecting it to the south.
High quality water
The Fraser Institute’s report also indicated New Brunswick has some of the best quality water in the country.
Of the 57 sites examined, the report said 35 are classified as "good" and 15 are deemed "excellent."
"Overall, the evidence suggests that water quality in New Brunswick is overwhelmingly good and has improved over time leading to a healthier aquatic ecosystem," the report said.
The study also said better sewage treatment, fertilizer use and industrial improvements have led to lower levels of nutrients, bacteria and metals in several rivers.
Despite the report’s positive outlook, Curry said the water quality is actually getting worse in several New Brunswick lakes.
"Lac Unique would probably be the one that's most predominant in the northwest. Last year, that lake turned almost completely green due to the blue-green algae outbreak," he said.
"It's starting to warm up now this summer, so we expect that more of these reports will start to hit the news shortly."
The report also notes about a 20-per-cent drop in fresh water levels in the Maritimes from 1971 to 2004.
The decline in the Saint-John drainage region was 21.5 per cent and the drop in the Maritime Coastal drainage region was 19.6 per cent.