Designed properly, infrastructure programming can help achieve our climate adaptation targets. Here's how.
Actuaries contracted by Public Safety Canada estimate that Canada’s losses for residential flooding will amount to $2.9 billion per year, on average, for the next decade, and will grow from there. They found that only 10% of homes account for 90% of those losses, so when designing a new disaster mitigation and adaptation fund, doesn’t it make sense to focus funding on defending those at highest risk? We know where they are. If 1.5 million properties account for 90% of the risk, shouldn’t we target funding to at least protect the 300,000 of them at the highest level of risk?
Budget 2023 announced the creation of Canada’s national flood insurance program, a massive step forward for which Minister Blair and his officials at Public Safety Canada must be congratulated. When designing that program, we should learn from the American experience. They have created a linkage between the investments a community makes in flood mitigation and the premiums that residents pay for that flood insurance. This way there is a positive incentive for communities to reduce risk, and their efforts are recognized.
With that background, here are our four recommendations for your infrastructure study.
First, we strongly reinforce FCM’s recommendation that the fall economic statement should allocate $2 billion in surge funding for infrastructure that increases disaster mitigation, followed by $1 billion per year thereafter for 10 years.
Second, the Canada Infrastructure Bank should be allocated a further $2 billion for disaster mitigation and challenged to find a further $4 billion in matching private capital. The challenge is too great for the public sector to meet alone. The financial sector has an investment role to play.
Third, infrastructure funding should be prioritized to reach a near-term adaptation target to defend the 300,000 homes at highest risk of flooding by 2028.
Fourth, following the lead of the U.S., premiums for Canada’s new national flood insurance program should be designed to reflect the infrastructure investments made by communities that reduce their flood risk.
Thank you.