Extreme Weather

What impact could climate change have on economic losses from ice storms west of Toronto and extreme wind in Halifax?

Researchers provided detailed numbers for these and other extreme weather events, in a study released this past December.

Canada’s property and casualty insurance industry has been at the forefront of connecting the corporate world to researchers who have been working on solutions to help society adapt to climate change.

The industry is responding in several other ways, including supporting research to help Canadians adapt to the increase in severe weather events stemming from climate change.

Six years ago, the p&c insurance industry was among the first to identify adaptation to climate change as a key public policy issue. Insurers could not ignore the devastating toll that weather-related losses were having on consumers and the alarming increase in claims payouts.

A study commissioned by Insurance Bureau of Canada – Economic Impacts of the Weather Effects of Climate Change – includes estimates of some of the future costs to two Canadian cities. One is Halifax and the other is Mississauga, Ontario, which borders Toronto to the west.

The study provides estimated costs of specific types of severe weather events associated with climate change.

As climate experts have been warning, the incidence of severe weather events has been increasing due to the impacts of climate change, including the worldwide rise in temperatures. For the insurance industry, the evidence is in the numbers.

In Canada, the annual insured losses as a result of large severe weather events have gone from an average of $400 million a year in the 1980s to hovering around $1 billion a year this decade. In 2013, they hit $3.2 billion as a result of the Alberta floods and Toronto rainstorms.

Since 2010, insured damages from extreme weather events in Canada have cost almost $8 billion, which is only a portion of the total economic costs to the country.

These alarming numbers pushed IBC, on behalf of its member companies, to delve deeper. With support from Natural Resources Canada through Canada’s Adaptation Platform, IBC commissioned Green Analytics Corporation and the Ontario Centre for Climate Impacts and Adaptation Resources to conduct the study to learn more about what the future might hold for Canadian communities regarding weather extremes.

The purpose of the study was to help build the case for adaptation by contributing to the body of research on the potential impacts of climate change. It begins to quantify what would happen if adaptation does not keep pace with the changing climate. The findings of the study highlight the need to increase infrastructure investments now to reduce costs down the road.

IBC chose to work with Halifax and Mississauga because officials with both cities had already demonstrated knowledge and a strong interest in dealing with climate change. Both cities have done work toward preparing for more severe weather conditions.

In Halifax, a port city, officials are acutely aware of the sea level rise that is occurring in the harbour, and the need to prepare for more extreme weather conditions. Halifax was an early-adopter of greenhouse gas emission tracking and reduction targets, and has been active in climate adaptation and resilience building. Mississauga, Canada’s sixth largest city, is an active partner with neighbouring municipalities in addressing the risks and future impacts of climate change. For instance, it is implementing a stormwater charge to better maintain and expand its stormwater infrastructure.

IBC’s study is a partial analysis, looking at two severe weather events per city. For Halifax, the researchers studied extreme winds and storm surge flooding; for Mississauga, they considered ice storms and stormwater flooding.

For each weather event, researchers calculated what the economic costs to the city could be as a result of these weather events five years out (in 2020) and 25 years out (in 2040). They also considered the effect of more severe climate change, and ran the numbers for 2020 and 2040 three times – first using the cities’ current climate conditions, and then assuming a moderate and high acceleration in the rate of climate change.

Below are some of the results.

HALIFAX BY 2040

• The annualized loss expectancy from extreme wind events could be about $18 million. A moderate increase in the rate of climate change could increase this figure to $20 million.

• One extreme wind event (calculated as a 1-in-25-year event) could cost an estimated $123 million to $126 million.

MISSISSAUGA BY 2040

• The annualized loss expectancy from ice storms could be about $9 million. A moderate increase in the rate of climate change could increase this figure to about $12 million per year.

• One severe ice storm (calculated as a 1-in-25-year event) could cost an estimated $23 million to $38 million.

What researchers learned from the study was mostly common sense. For example, one could expect that if a city experiences a moderate increase in the rate of climate change, the annualized loss expectancy of an event would also increase. But the study demonstrates with hard numbers and firm data that changes in the climate will produce definitive effects on local economies.

Canadian municipalities are working hard to adapt to climate change. City officials are well-aware that adapting means improving infrastructure to make it more resilient to the heavier rains, stronger winds and higher temperatures the country is facing.

Municipal leaders say they need cooperation and funding from provincial and federal governments to prepare. They cannot go it alone. Municipalities need provincial and federal support to provide the much-needed funding to fix their sewer and stormwater systems.

To make their case for infrastructure dollars, municipalities need research and up-to-date data about how the increase in severe weather is affecting them. The information provided in the study is the kind of data that city officials say they need to build their case for adapting now.

Like any preventive measure, it is difficult to quantify the value in doing so – but this study begins that important discussion.

Of course, insurers have a vested interest in helping cities adapt. Improvements that cities make will reduce the number of claims that insurers will face in the years going forward to 2040.

Over the past few months, as insurance professionals follow news out of the Paris climate conference, it has been easy to feel overwhelmed by the sheer enormity of the problem.

The problem of climate change is big and incredibly complex. But it is only through pragmatic and incremental efforts that decision-makers will acquire the knowledge and data necessary to support the changes they need to make.