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Business Commentary How spending $20-billion will help fix Canada’s flood problem

A car sits submerged in floodwater on May 1, 2019, in Ste-Marthe-sur-la-Lac, Que.

Ryan Remiorz/The Canadian Press

Quebec Premier François Legault has caught flak for saying he’s tired of wasting money serially compensating people in flood-prone areas.

Heartless perhaps, but Mr. Legault is right.

Paying people to rebuild after a flood, only to give more when the same homes are under water again just two years later, makes no sense.

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That is the unfortunate situation we’re in as floods afflict thousands of homeowners along the Ottawa River, low-lying areas around Montreal and in New Brunswick. Properties are flooding again after what was billed as a once-in-a-century flood in 2017.

And federal, provincial and municipal officials are starting to take notice. Quebec, for example, has warned that it will cap lifetime flood compensation at $100,000. After that, homeowners would get as much as $200,000 – but only if they move away for good.

The option of paying homeowners to abandon their properties has to be “part of the conversation as we go forward,” Public Safety Minister Ralph Goodale said this week.

“The floods that were to be once every hundred years are now every two or three years,” he told reporters in Ottawa.

Payouts from the federal program that compensates homeowners for losses, the Disaster Financial Assistance Arrangements, are expected to reach almost $1-billion a year over the next five years, the bulk of that due to flooding. The program has paid out more in compensation in the past six years than in the previous four decades.

Weather patterns are changing, making some areas much more prone to flooding while making others drier. Craig Stewart, vice-president of federal affairs for the Insurance Bureau of Canada, points out that climate scientists have been warning for years that global warming will bring more rain, snow and intense storms to Eastern Canada and more droughts and wildfires to Western Canada.

“This isn’t a fluke,” Mr. Stewart said. “This was predicted.”

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A joint government and industry task force is slated to release a list of recommendations for mitigating the financial risks of floods this month. Among the key options will be creating a “strategic retreat” plan for the most at-risk homeowners, converting abandoned residential areas into controlled flood plains and identifying ways to provide affordable flood insurance to others, said Mr. Stewart, who chairs the task force.

The report relies heavily on the lessons learned by countries such as Britain, the United States and the Netherlands.

The task force won’t be ready to put a price on its recommendations until early next year. Nonetheless, Mr. Stewart acknowledged that governments will face a “short-term surge” in costs to buy homes – beyond what it’s spending currently on compensation for flood victims.

Perhaps as many as 100,000 flood-prone homes, or less than 1 per cent of the housing stock, could be targeted for buyouts, he said. That won’t come cheap. Mr. Legault’s suggestion to cap payouts at $200,000 – an amount most homeowners would probably see as too little – would cost $20-billion if it were rolled out across the country.

Until now, the search for answers has been happening behind closed doors, largely immune from bickering and partisan politics.

“We don’t agree on much in this country, but there has been terrific co-operation on this,” Mr. Stewart said.

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The work ahead could be much more contentious. There is, of course, a looming federal election.

Doing it right will also be expensive, and much of the money will flow to people in Ontario, Quebec and New Brunswick. That is not likely to sit well in places such as Alberta, where feelings are already running high about the sharing of federal spoils.

Any move to force people out of their homes would get ugly. And Canadians living on higher ground will no doubt squawk if they wind up paying higher premiums on their home insurance so that those living near waterways can afford to buy flood insurance.

There is a risk that it becomes a blame game – that governments haven’t spent enough on flood mitigation, that municipalities encouraged development in flood-risk areas and that people built where they shouldn’t have.

And yet paying a lot of people to abandon their homes is absolutely the right thing to do.

It is the unfortunate price to pay for mitigating growing climate-related financial risks, getting people out of harm’s way and preserving the retirement savings of thousands of vulnerable Canadians.

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