‘Tip of the iceberg’: New government report looks at costs of climate change

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On Monday, Natural Resources Canada released a new report that attempts to address a question that’s being asked with more and more frequency: what is the economic impact of climate change?

The 734-page report, which examines many issues related to Canada’s ability to adapt to climate change, stops short of quantifying costs, but does conclude that the costs of climate change are increasing, affect every industry and outweigh any potential benefits.

As the second report in an ongoing National Knowledge Assessment Process, it moves forward from a 2019 study that laid out the scientific foundation for climate change and moved the discussion to adaptation — something business groups are now advocating needs to be a focus of government policy.

“This is not new for insurers,” said Robin Edger, national director of climate change for The Insurance Bureau of Canada, an industry group. “Because insurers have seen climate change showing up in their models for some time now and we need to adapt now and make ourselves more resilient.”

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His organization, along with nine other insurers, the Business Council of Canada, Chamber of Commerce, along with other industry groups, Metis National Council, and several environmental non-profits launched a new coalition, called Climate Proof Now, to coincide with the release of the report.

The new coalition will advocate for better government policy to prepare for and adapt to climate change.

Edger said that for insurers, the annual costs of climate change in Canada — defined as severe weather events, such as floods, fires and the like — have risen from $400 million per year on average in the 1980s to many multiples of that today.

In 2020, severe weather caused $2.4 billion in damage in Canada, the fourth highest on record in nearly four decades, with notable damage coming in Alberta, including $526 million in damage from flooding in Fort McMurray last spring and $1.3 billion from hailstorms in Calgary last June.

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“Severe weather is such a danger that we’re advocating to the government that it should be a very high priority for government spending,” said Edger.

The movement by industry to support climate change adaptation policies comes as Western governments are unveiling ambitious spending plans aimed at reducing overall emissions and changing our energy landscape.

In Canada, the federal government has proposed an $8-billion net zero strategic innovation fund, which could be used to develop blue hydrogen resources in Alberta, electric vehicle manufacturing supply chains across the country and other ambitious goals.

But projects to increase Canada’s resiliency to climate change have not yet received the same degree of attention.

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The new report identifies gaps in the country’s preparedness for climate change, such as aging infrastructure in cities, or lack of resources to fight wildfires in the west.

It cites a 2019 study that suggests even a 0.04°C per year increase in average global temperature would reduce global economic output per capita by about 7.2 per cent below where it would otherwise be in 2100, with Canada facing an even steeper 13.1 per cent decline.

Over the past 40 years, the report cites a Public Safety Canada report from 2020 that found that damages from extreme weather events in this country has cost the economy roughly $31 billion.

While the report’s authors noted at a technical briefing that there could be some benefits of climate change, like increased tourism to the Arctic and longer tourism seasons generally, the costs are far greater.

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The report, which represents a multi-year effort with contributions by academics and others outside government, was released as Western Canada experienced a milestone severe weather event. On Sunday, Lytton, British Columbia, recorded temperatures of 46.1 degrees Celsius, the highest ever to occur in Canada.

Such weather events are essentially the focus of the report, which suggests that urgent action is necessary.

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“There is abundant research indicating that current efforts to adapt are insufficient in the face of rapidly accumulating social and economic losses from current and future climate change impacts,” the report states. “The research also demonstrates that the window for taking action to reduce increasingly severe impacts is rapidly closing.”

During a technical briefing by Natural Resources Canada on Monday, Ashlee Cunsolo, dean of Memorial University’s School of Arctic and Sub-Arctic Studies, who contributed to the report, said that monetary damages do not include indirect damages, such as disappearing ecosystems that result from climate change.

“They’re kind of the tip of the iceberg of all other costs,” said Cunsolo. “We really can’t provide solid numbers.”

Financial Post

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