The federal government has underestimated the cost of cleaning up contaminated sites under its jurisdiction by at least $2 billion, according to an estimate by the parliamentary budget officer.

There are more than 10,000 sites in the federal government's contaminated sites inventory that must be "remediated," which means they need to be assessed, cleaned up, or simply have the pollution contained and monitored.

Environment Canada administers the program that covers a network of sites that may pose a risk to human health or the environment. The greater the risk, the greater the urgency for action.

Peter Weltman, the acting assistant Parliamentary Budget Officer, said the report provides Parliament with the information needed to make decisions for "the betterment" of the environment.

The Liberals asked the budget office to conduct the study of the contaminated sites program to determine whether the total remediation costs — also referred to as liability — was accurately reflected in the Public Accounts.

According to the 2013 Public Accounts, the federal government has set aside almost $4.9 billion for its contaminated sites. However, the Parliamentary Budget Office report concludes that because there are so many sites that have yet to be assessed and cleaned up, the bill is at least $2.1 billion higher.

That means the government's total liability for contaminated sites is almost $7 billion — and climbing.

This warning comes two years after the commissioner of the environment and sustainable development studied the same problem and reached similar conclusions about the government underestimating the costs to clean up contaminated sites.

"We warned that the costs that the government had put forward were probably understated," says Scott Vaughan, the former environment commissioner and now the president of the International Institute for Sustainable Development.

In his report, Vaughan estimated that the government needed to increase the money it set aside to clean up the sites by $500 million, about a quarter of the additional cost the Parliamentary Budget Office now estimates in its report.

"We said get a handle on the risk and from that get a plan in place to tell Canadians and Parliament when are you going to assess them, and, most importantly, how you're going to fix those through mediation," he said.

Now, two years later, Vaughan says that the budget office report should force the government to take a "hard look at the numbers."

Environment Minister Leona Aglukkaq, whose department runs the Federal Contaminated Sites Action Plan, didn't respond directly to the predictions of higher clean up costs, but says her government is working hard to deal with the problem.

“Our government has made significant investments to clean up contaminated sites. To date, these investments have resulted in the remediation of more than 700 sites," she said in a statement. "Our actions have also reduced risks to human health and improved the environment.”

Pollutants could cause concern

Many of these sites are located in cities, prompting concerns about pollutants leaching into drinking water.

Other sites are historic, such as the Kingston Pentitentiary. The Correctional Service of Canada closed it last September, and began "decommissioning" the site in November.

Contaminated sites to be assessed

There are 1,248 active contaminated sites in Canada that are being assessed to determine the level of remediation to be done, according to Treasury Board numbers. The PBO estimates it will cost $2 billion more than previously stated to clean them up. (Google Maps/CBC)

An initial assessment of the federal land around KP has shown levels of metals and substances in the soil," wrote Correctional Service Melissa Hart in an emailed correspondence. "These are consistent with elements found in coal, which was used by KP to heat and run the institution in the 19th and 20th centuries."

Many of the contaminated sites are so-called legacy sites from 40 or 50 years ago. Vaughan said more than half of the sites are polluted by petroleum products where oil has spilled, or where batteries containing PCBs and other chemicals have leached into the soil. If these sites are near communities, especially in rural areas, there is a risk of the chemicals tainting the drinking water.

Even polluted sites in isolated areas in the North pose a risk to animals like polar bears or caribou that ingest the chemicals, which then get into the food chain.

The federal government was forced to assume responsibility for many of these sites because events such as bankruptcies meant companies could no longer afford the clean up costs. Such abandonment leaves the federal government with the legal obligation to record the cleanup bills on its books.

The Giant Mine in Yellowknife is a case in point. According to a briefing note CBC News obtained using the Access to Information Act, the mine's $900-million bill would increase if the follow-up measures to the environmental assessment were followed.

In December, two days before Christmas, Aboriginal Affairs quietly announced that that it would act on most of those recommendations.

"Not all pollution can be cleaned up," says Pierre Sadik, a lawyer with Ecojustice Canada. "In many instances, remediation, which is a very broad term, simply means putting a fence around the site, or putting plastic liners around the site, and then a process of ongoing monitoring for decades and perhaps even centuries down the road."

The Parliamentary Budget Office says it may study contaminated sites again if new information, or if it receives another request to conduct further analysis.