The Federation of Canadian Municipalities will release a list of specific recommendations in Vancouver on Tuesday.
Traffic congestion alone is costing the country $10 billion a year in lost productivity, according to a group called the Municipal Infrastructure Forum, which includes the federation, the Canadian Chamber of Commerce and the City of Toronto.
"We need to invest in improving our infrastructure because infrastructure that was built in the 50s, 60s and 70s is now at the end of its useful life," said Robert Tremblay, of the Insurance Bureau of Canada, which was also part of the forum.
The groups surveyed hundreds of municipalities across the country, and released the first-ever national report card on the state of municipal infrastructure earlier this month.
They found that one in four city wastewater treatment plants needs major upgrades to meet new federal regulations, and one in four roads is transporting far more goods and people than it was designed to handle.
At the same time, extreme weather events like flooding, ice storms and freezing rain appear to be on the rise, putting more pressure on municipal systems.
"The climate has changed," Tremblay said Monday. "An event that used to happen every 100 years, where we knew there would be failure, now tends to happen every 20 years and maybe less depending on where you are. Events that used to happen every 50 years are now happening every five or six years."
The insurance industry in Canada is now paying out more than $1 billion a year in sewer back-up claims alone, he said.
"It highlights the fact that we need to invest in the resiliency of our communities," Tremblay said.
Federal funding commitments worth $2 billion a year under the Building Canada Plan are set to end in 2014 and the Conservative government is working on a new plan. The cities are urging Ottawa to make local infrastructure a budget priority, even in these lean times.
It would cost $20 billion to upgrade and replace outdated water systems alone, said the forum report.
"It's a big issue but it's one that can be tackled one investment at a time," Tremblay said.
Darwin Durnie, president of the Canadian Public Works Association, said the cost of replacing infrastructure is "astronomical," but stable, long-term funding will allow repairs and maintenance that are more cost-effective than replacement.
Ideally, the federal government would be able to make a 20-year spending commitment, he said.
"The mass and the energy and the momentum is going into a long-term strategy, rather than everybody doing duck and cover and waiting for the latest announcement to scramble and put something together," Durnie said Monday.
A third of municipalities surveyed had water systems that ranked poor to fair, he said. Repairs and proper management are more cost-effective than waiting until systems fail and have to be replaced.
"That starts to tee up some alarms, because infrastructure fails exponentially. That is, it's going along not too badly and then all of a sudden before you now it, it's falling apart and in some areas that can be catastrophic."