Thank you, Honourable Chair.
Good afternoon and thank you, committee members, for the invitation today.
I coordinate work on disaster preparedness and climate change at the Insurance Bureau of Canada or IBC—your home, car and business insurers. As an industry, we are particularly interested in strengthening resilience among businesses and households in the face of the increasing impact of climate change in Canada.
Why is infrastructure important for climate resilience? Canada is warming at twice the rate of much of the rest of the world due to climate change. For insurers, this is a material financial threat. Canada’s insured losses due to severe weather have quadrupled, from $422 million annually before 2008 to $1.9 billion, on average, since. Our problem is your problem. In 2019, Lloyd’s of London left the Canadian commercial insurance market, due in part to these significant severe weather losses. Businesses like condominium boards and tourism operators couldn’t find affordable insurance after Lloyd’s left the market.
Climate resilience is defined as the ability of a community to absorb future stress from floods, windstorms or wildfires while continuing to function. Infrastructure such as stormwater system upgrades, flood diversion channels or natural features such as wetlands are key to introducing resilience.
The Government of Canada has taken some important steps to address this escalating climate risk. From funding resilience retrofits through the green and inclusive community buildings program, to partnering with us to develop a national high-risk flood insurance program, early work is under way.
Public Safety Canada is leading a national risk profile to assess which communities across Canada are most exposed to flood, wildfire and earthquake risk. Infrastructure Canada has launched a national infrastructure assessment, which considers how natural disasters such as floods and fires impact infrastructure. It also considers how to mitigate future climate risks through the deployment of defensive infrastructure, including where nature may play a role. In combination, these two efforts should provide the detail needed to prioritize future investments to lower Canadian risk.
Much more needs to be done. The investments announced are insufficient. In 2017, the government launched the $2-billion disaster mitigation and adaptation fund—DMAF—which was quickly overcommitted. Budget 2021 announced a $1.4-billion extension of that program over 11 years. That number is still inadequate to protect Canadian communities. To put that into context, we paid out more than $1.4 billion in losses from a 20-minute hailstorm in Calgary last June.
The Government of Canada is finally taking the future risks of climate change seriously. However, we are facing escalating climate risk right now. Climate adaptation deserves the same degree of all-hands-on-deck rigour to design the policies and programs that will actually protect Canadians today.
Here are our recommendations for your committee report.
First, Canada needs a national climate adaptation strategy that sets time-bound targets for protecting Canadians. For example, that strategy could target protecting 30% of high-risk Canadian homes and businesses from flooding by 2030. That strategy should centre on the national risk profile. The national infrastructure assessment should explicitly link to it and identify future programming, like an expanded DMAF and a resilient home retrofit program that addresses those goals for communities at risk.
Second, governments investments can’t do it all. Private capital is essential to building resilience, yet we spend a lot of time in this country debating how to price carbon and almost no time pricing climate risk. We lack the valuation framework and tools needed to price the resilience value of infrastructure and to convert this into revenue-generating financial instruments. Canada has now joined Australia and the U.K. in the Coalition for Climate Resilient Investment—CCRI—a public-private collaboration to develop the valuation frameworks needed to deploy private capital. Infrastructure Canada should be aggressively positioning this country to benefit from this work.
Finally, the Canada Infrastructure Bank should play a role in this policy development with CCRI. Currently, the CIB has not invested a dime on climate adaptation—and they won’t until resilience projects can earn revenue. They should engage in demonstration pilots that build systemic resilience in Canada.
In conclusion, we’re finally playing offence on climate change by aggressively lowering emissions. However, we also need to play defence to protect Canadians from the severe weather we are already experiencing. Targeted infrastructure investments from the public and private sectors must be foundational to our resilience game plan.
Thank you.