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Municipal infrastructure will need major investments to adapt to climate change: report

by Mark Sabourin
EcoLog, 3/6/2020 12:59:00 PM

A new report from the Federation of Canadian Municipalities (FCM) and the Insurance Bureau of Canada (IBC) warns that municipalities will need to invest $5.3 billion per year to avoid the worst impacts of climate change.

Governments have invested heavily in climate change mitigation, the new report, “Investing in Canada’s Future: The Cost of Climate Adaptation at the Local Level”, says. That’s worthy but, as the federal government’s 2019 “Canada’s Changing Climate Report” demonstrates, communities in Canada are already paying for the impacts of climate change.

Adaptation can lead to more immediate benefits, including employment, reduced energy costs, improved air and water quality, and improved liveability. One of the greatest benefits will be avoiding the high cost of the predicted climate change impacts.

The new report shows that for nine of the last 10 years (2010-2019), insurance payouts for catastrophic losses from natural disasters exceeded $1 billion per year. For the 26 years prior to 2009, insurable payouts averaged only $400 million per year.

Insurable losses are only a rough measure of the costs municipalities bear from climate-related events. The new report says that for capital losses, every dollar paid out by insurers three to four dollars will be paid by governments, households and businesses.

Another indicator is the rising cost of municipal insurance policies. After large losses in 2013, Canadian cities bore higher premiums, higher deductibles and liability limits.

To arrive at a credible estimate of the level of investment needed in municipal infrastructure to adapt to climate change, the FCM and the IBC drew upon national and international examples, and calculated investment as a percentage of GDP. They conclude that an average annual investment of 0.26% of GDP will be required, but that this investment will not be spread evenly across Canada. The east coast and the north will bear the highest average costs.

Climate change consequences with the highest cost burden as a percentage of GDP are flood, erosion and permafrost melt, and the greatest investment need will be in buildings, dikes and roads.

The new report adds that the 0.26% of GDP estimate is in line with spending by other major cities in the world, such as New York, London and Paris.



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