Evidence of meeting #20 for Environment and Sustainable Development in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was homes.
A recording is available from Parliament.
Bloc
Patrick Bonin Bloc Repentigny, QC
Can any of the other witnesses provide figures to help us gauge how the $2 billion in Canada's national adaptation strategy stacks up in relation to Canada's adaptation needs?
Founder and Executive Director, Institute for Catastrophic Loss Reduction
I would add only that I have not seen a figure, and we have not produced one at this point in time.
The evidence we would share with the members is that we find that each dollar spent on adaptation avoids five to 10 dollars of losses in the future, and the amount of money being spent is not sufficient. The losses are unacceptable, and further investment than what is in place right now would be a really wise investment by the government.
Head, Intact Centre on Climate Adaptation, University of Waterloo
I have one more point to add.
From 2015 to 2024, the federal government invested either directly, or by way of tax subsidies, $160 billion into mitigating greenhouse gas emissions. Over the same period of time, the federal government invested $6.7 billion into adaptation.
With respect to the climate file, the ratio of spending in this country on mitigation versus adaptation is 24 to one. Almost everything is going to mitigating greenhouse gas emissions, and virtually nothing is for adaptation. I don't know what the right ratio is, but it should not be the lopsided 24 to one, that's for sure.
Patrick Bonin Bloc Repentigny, QC
We are currently on track for a global temperature rise of 2.5°C. For Canada, temperatures will increase by 5°C. How much will it cost to deal with the effects of temperatures rising by 2.5°C or more versus how much it would cost to adhere to the Paris agreement and limit global warming to 1.5°C? Is there a big difference?
Director of Partnerships, Institute for Catastrophic Loss Reduction
As I mentioned earlier, damage costs have been increasing by 9.4% a year. My colleague studied the societal costs of extreme weather events and estimated that what Canada will have to assume in reconstruction costs equates to 3% of annual construction spending. That means that reconstruction would absorb two weeks of construction spending annually. If the trend holds and we remain on the same trajectory being observed in the U.S., give or take a few years, we could reach a point where costs rise dramatically.
Bloc
Patrick Bonin Bloc Repentigny, QC
Can you tell us how the cost differs by scenario? How much would it cost to limit warming to 1.5°C globally and 3°C in Canada versus a warming of 2.5°C globally and even more in Canada? Are we talking an exponential difference?
Director of Partnerships, Institute for Catastrophic Loss Reduction
It would certainly be exponential. The higher the temperature rise, the greater the risks, which means costs go up. Eventually, the effort to mitigate societal costs will absorb more than two weeks of spending a year; it will be three, four or five weeks, with increasing disruptions to businesses. It's hard to give you an exact figure.
Bloc
Patrick Bonin Bloc Repentigny, QC
Are you aware of any scenarios, literature or analyses illustrating those differences, even if just to give an idea of the magnitude?
Founder and Executive Director, Institute for Catastrophic Loss Reduction
What I can add is that I represented Canada as a volunteer with the Intergovernmental Panel on Climate Change for 20 years, trying to answer these science questions. We found it very hard. They're excellent questions. They're important questions, but they're hard to answer.
The part that we answered with more rigour is that emissions cause warming. We've quantified that. Emissions cause more precipitation. Emissions also cause other storms. That's just hard to quantify.
Liberal
The Chair Liberal Angelo Iacono
Thank you to the witness for those answers.
We will now move to the Conservatives.
Mr. Leslie, you have the floor for five minutes.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Thank you, Mr. Chair.
I'd like to start with you, Mr. Kovacs. You mentioned the 10% gap in coverage that we're looking to fill. Obviously, we're looking at some sort of a government-supported, insurance-backed system here. How do we avoid creating a system whereby private insurers keep profits in good years but push losses onto taxpayers in bad years?
Founder and Executive Director, Institute for Catastrophic Loss Reduction
I'll invite Susan to come in as well, as an insurer, as opposed to an academic giving an opinion on this.
We're in a situation where about 10% of Canadians are not presently covered by flood insurance, because they have high or extreme risk and are largely viewed as uninsurable because of the very high risk. Until we bring the risk down, there is going to be a long-standing issue of the private industry perhaps saying this is uninsurable, that the risk is beyond their ability to offer a price that would be acceptable.
If we can bring the risk down.... We are offering flood insurance to people with low risk. I mean, that's not been an issue. The private sector is very active with the 90% of us who are in areas that are not at high risk. One of the critical parts is whether as a society we can identify the specific locations where risk is unacceptable to insurance and to society, and then do something about it.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
I come from Manitoba. We have a lot of water-related issues. We have them in our own property there, personally. A lot of this seems to be land use and development, particularly, in our case, in Saskatchewan. There are a lot of big impacts upriver, so to speak. There's population growth and development in high-risk zones. In terms of the costing, obviously, there's the ever-increasing price of upgrading things.
You mentioned some costing with the DFAA program and some changes. Could you help me understand those changes and whether those enhancements allow for resiliency to be built back in better, as you kind of alluded to? If you need a bigger culvert, you need to spend more money the next time around. Could you run through what those changes are, how they've been helpful thus far and where you can see them going?
Founder and Executive Director, Institute for Catastrophic Loss Reduction
We are fans. We think the change made on April 1 in DFAA was a very positive move by the Government of Canada. We're looking for the provinces and others to pick it up and really act upon the changes.
I can give an example of one of the changes. DFAA is offered under five streams. Stream number five says that once the Government of Canada accepts a provincial cost and reimburses a provincial cost, as it has for many years and as it continues to happen, there is an additional funding made available to the province, in this case 20% funding, that is used for risk reduction. This is new and very generous: The Government of Canada says if you need $1 billion to put things back, we will give you $1 billion plus 20% to put things back, and with risk reduction. This is a very helpful change.
There's also the tone of DFAA. The spirit since 1970 with the program, as the provinces picked up the program in most cases, was, “Can we put people back?” The tone of the new program, and the clear message, is, “Can we put people back with reduced risk?” The message or the purpose of what the Government of Canada is trying to make Canadians do is, in my opinion, a very helpful and improved tone. They want to put people back after a big loss with reduced risk.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Thank you.
We've talked a bit about the adaptation of the $2.1-billion program. I'm curious to hear your assessment of how it has been prioritized thus far in terms of spending. If you were the government, how would you prioritize that batch of money or any future batch? What would you put the money toward in terms of the best use for adaptation purposes?
Founder and Executive Director, Institute for Catastrophic Loss Reduction
I love volunteering answers. I can go first, but I'm sure Susan and Blair and Sophie can touch on this as well.
The fact that all the losses continue to show that it's going up and up is not enough. We need more money put in for risk reduction. We know where the risks are the highest. It's very easy. We can identify it. Here's where the wildfires are, and here's where the floods are. We would target the areas with the highest risk. There's a scientific basis for saying that more money should go here than there, because the risk is higher.
Head, Intact Centre on Climate Adaptation, University of Waterloo
We know the actions to be taken to make a house and/or a community less exposed to wildfire. We know exactly what needs to be done to make houses and communities less vulnerable to flooding. We can use berms, diversion channels, holding ponds, cisterns, bioswales and permeable surfacing to direct water to safe locations and keep people and property out of harm's way. What we need to do is mobilize known solutions to known problems, and we need to do it rapidly.
Just to be clear, people need to understand that climate change is irreversible, period. Climate change is here to stay. We're not going backwards. All we can do is slow it down. If we think extreme weather is extreme now, just hold on. It's going to get a lot worse going forward.
Conservative
The Vice-Chair Conservative Ellis Ross
Thank you very much for that.
We now turn to Ms. Miedema for five minutes.
Liberal
Shannon Miedema Liberal Halifax, NS
Thank you very much to all the witnesses for coming. I'm really excited for day one of this study. It's a study that I proposed. I've been involved in this issue for many years, since my time working for the City of Halifax on climate change.
In 2023 we had a wildfire in Tantallon that destroyed many, many houses in a suburban area near the wildland-urban interface. We had a hurricane, and we had a flash flood that took four lives just outside the boundary of the HRM. Thinking back to that Tantallon wildfire, we were scrambling, obviously, because Halifax and Nova Scotia weren't used to this situation. We were trying to figure out how the insurance sector played in something like the rebuild after a wildfire, when insurance has typically been “like for like”, in the exact same place.
This is maybe a question for Ms. Penwarden and others. Is the insurance sector thinking about flexibility in its coverage, so that we can build back better and reduce risk on a go-forward basis?
Managing Director, Personal Lines, Aviva Canada
Most insurance companies now have some sort of build back better allowance within their insurance products.
It's interesting that last year, for example, with all of the floods and events we had, we wrote to all of our individual claimants to urge them to take advantage of the extra funds available and, as I mentioned, the municipal incentives to help them build back better. We didn't get a lot of take-up, which is interesting. It goes back to the education and the need to make what's available more visible and encouraging people to do that.
On that subject in general, we want to work on that. When it comes to building back in the same location, typically we don't require the same location, physically, anymore. We will obviously move the customer or the claimant to a location that's more appropriate. That's part of the claims settlement process.
Founder and Executive Director, Institute for Catastrophic Loss Reduction
A small part I would add is that—and this hasn't been touched on—most insurance companies, in the last few years, have brought in something. Many municipalities are doing something. This is not yet coordinated. The federal government, through DFAA, has brought in something, but we're all doing it, and it's not yet together.
Liberal
Shannon Miedema Liberal Halifax, NS
It sounds like a story we've heard before, across many issues. Thanks for that.
Ms. Penwarden, on the other side of it, are there any benefits for your clients if they were to implement any type of resilience measures for flooding, wildfire, etc.? Would they get a decrease in their insurance premiums? Is that typical of the insurance sector in Canada?
Managing Director, Personal Lines, Aviva Canada
Certainly they would, if they let us know that they've taken specific resilience measures. We will change their premium based on the measures they have taken and shared with us. Yes, we will do that in terms of premium.
We also factor that into our cost models, if you like a wider way of looking at risk. We look at individual property levels and whether community-level resilience changes have been made. Those come into our pricing as a general possibility. I know other insurance companies are looking at the same types of incentives. Each does its own version of it, but there are definitely incentives for individual Canadians to take those actions.
Liberal
Shannon Miedema Liberal Halifax, NS
What does the math look like on that? Would there be a calculated return on investment for the homeowner? Let's say, for the measure cost, if it's $5,000 or $10,000, would the premium ultimately pay that down over a certain number of years? Do you have numbers on that?
Managing Director, Personal Lines, Aviva Canada
I don't have specific numbers on that, but if you think about the fact that we're insuring many Canadians across many different geographies, it would be hard.... We share risk as it is. It's a pool of risk, if you like, and everybody helps to contribute to everybody's insurance coverage. It's a little less than a one-to-one relationship, but there's definitely some reduction in cost for an individual Canadian who takes those actions.