How much will Alberta wildfires cost? Canada must spend more on handling extreme weather

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Charles Brindamour is chief executive of Intact Financial Corp. Blair Feltmate heads the Intact Centre on Climate Adaptation at the University of Waterloo.

The world must transition to net zero. Canada is playing its part as a global citizen to slow climate change, with the spring 2023 budget directing $21-billion in tax credits to drive investment in low-carbon technology. That part of Canada’s climate policy is solid.

Where financial commitment to climate change is less firm, and more urgent, however, is in adapting to extreme weather. Think flooding, wildfire, extreme heat and a longer list of perils wreaking growing havoc on people and the economy.

As the current Alberta wildfires unfold, it is worth remembering that the last episode, in 2016, cost nearly $9-billion. This ongoing devastation in Alberta, which comes as parts of neighbouring British Columbia also burn, should reinforce the need for our government to commit more funds to combatting such extreme-weather events.

In the spring budget, funding directed to help Canadians and businesses adapt to climate change totalled about $25-million per year. Most of this funding was directed to establishing affordable flood insurance for residents in high-risk areas, and to modernizing federal disaster transfers to provinces in the aftermath of flooding. For wildfire and extreme heat, the budget was largely silent, which was surprising with widespread wildfire, and 619 heat-related deaths in British Columbia alone in 2021.

Funding in the budget built upon $1.6-billion announced in 2022 to mobilize adaptation practices outlined in the National Adaptation Strategy (NAS). The NAS was an important commitment for which the government deserves credit. While funding for the NAS – which Public Safety Minister Bill Blair described as a “down-payment” – moves Canada in the right direction, a large climate adaptation funding gap remains.

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Disparity on investment in climate resilience across perils exists not only within Canada, but also in comparison to Canada’s largest trading partner, the United States. The U.S. Inflation Reduction Act last year provided about US$30-billion for climate adaptation, directed to agricultural practices, forest fire protection and the fortification of coastlines. Additionally, President Joe Biden’s 2023 budget provided another US$18-billion for climate resilience and adaptation programs.

Based on the above figures, federal per capita investment in adaptation in the U.S. is roughly three to four times that of Canada. As lopsided as this may sound, there is another wrinkle. Canada is warming at three times the rate of the U.S., which is creating more intense, and costly, weather across provinces and territories.

As extreme weather continues to expose vulnerabilities in supply chains, electricity grids, transportation corridors, communications networks and seemingly endless infrastructure interdependencies, there is little doubt that Canada’s GDP will be disproportionately affected relative to the more resilient U.S. economy.

So where should Canada invest to catch up and start to close its adaptation gap?

To begin, funding for the Greener Homes Initiative, administered by Natural Resources Canada, should be increased by $1-billion, spread over five years starting in 2023. Currently, the program focuses on providing grants to improve the energy efficiency of homes – new funding should be directed to adaptation, to provide home flood protection and energy efficiency in one-stop shopping.

The Disaster Mitigation Adaptation Fund is an Infrastructure Canada program that supports public infrastructure projects designed to mitigate current and future climate-related risks and disasters such as floods, wildfires and droughts. DMAF funding should be raised to $10-billion distributed over five years beginning in 2023.

The above financial commitments may seem sizable, but they are investments to protect Canada’s economy. There is a misconception that investing in adaptation is expensive. Studies by the Global Commission on Adaptation (of which Canada is a founding member), World Resources Institute, Insurance Bureau of Canada and Intact Centre on Climate Adaptation, all find that $1 invested in adaptation yields, conservatively, $3 to $8 in avoided losses per decade.

It is urgent that both the federal government, and the private sector, invest to limit the growing costs of extreme weather. The spring 2023 “greenhouse gas mitigation budget” should be complemented with a fall “climate adaptation economic statement.” Closing the adaptation gap will position Canada to protect people and the economy as weather continues to get more challenging driven by irreversible climate change.