Thank you very much, Mr. Chair, for the invitation to speak today.
My name is Ryan Ness. I'm the director of adaptation at the Canadian Climate Institute, Canada's independent climate policy research organization. Our job is to generate research and advice for decision-makers to use in making informed policy decisions and to drive action that's proportional to Canada's climate change challenges.
We've examined the potential impacts and costs of climate change on Canada's infrastructure, as well as the benefits of infrastructure adaptation, as part of our “Costs of Climate Change” for Canada research series, the largest study to date of the potential economic implications of climate change for this country. Today I'll highlight some key findings and recommendations that are relevant to the work of this committee.
The first key finding is that the cost to Canada from climate change in damage and destruction to infrastructure, which is already vulnerable from decades of underinvestment, could be massive. Climate change-driven damage to roads and electricity systems from hotter summers alone could cost another $2.5 billion to $4 billion annually by 2050. As well, flood damage to homes and buildings could triple, from over $1 billion now to over $5 billion per year by 2050.
This damage costs everybody—not just those directly affected, but everyone—by disrupting economic growth. We estimate that by 2025, just the additional impacts of climate change since 2015 will cost the Canadian economy $25 billion in GDP and reduce average household incomes by $800.
The impacts of climate change on infrastructure will have major non-economic costs as well, fundamentally changing ways of life in some parts of Canada, such as in the north, where many communities are built on thawing permafrost and rely on increasingly unviable winter roads. These communities can become unlivable in just one or two decades.
The second key finding is that proactive investment in infrastructure adaptation is by far the most cost-effective way to protect the infrastructure services that people, businesses and the economy depend on.
When repaving roads, for example, using materials selected to withstand the climate two or three decades into the future can reduce climate change costs by over 90%. Protecting or moving neighbourhoods and buildings in high-risk areas could reduce the costs of coastal flooding by up to a billion dollars every year by the end of the century. We find that, as a whole, each dollar invested in adaptation can return $5 in avoided damage to directly affected households, businesses and governments, as well as an additional $10 in avoided disruption to the Canadian economy.
A third key finding is that a lack of information and guidance is holding back progress in Canada on infrastructure adaptation and resilience. For example, approximately half a million buildings at risk of flooding in Canada are not identified on any government-produced flood maps, and mapping of wildfire risks is virtually non-existent.
In the absence of this information, few infrastructure owners or investors are able to assess and manage existing climate risks, let alone future risks that would be associated with climate change. Many codes and standards that dictate how infrastructure in Canada is built still don't account for climate change, and others that are in the process of being updated are many years away from being implemented. Also, financial regulation is currently doing very little to ensure that infrastructure owners and investors are pricing climate risk into infrastructure investment decisions.
We have recommendations that emerge from these findings and are relevant to the work of this committee.
First, the Government of Canada should play a leadership role in ensuring that all government spending and regulatory decisions around infrastructure explicitly take into account climate risks and adaptation benefits.
Federal government actions, such as expanding financial support for municipal infrastructure adaptation under the disaster mitigation and adaptation fund and the green municipal fund, as well as research on codes and standards, are important, but they are not delivering results at the scale and pace that are required. The federal government should lead long-term, coordinated, accelerated approaches to make better use of the collective resources and powers of all orders of government to ensure that new infrastructure is built to be resilient and that existing infrastructure is made resilient.
Second, the Government of Canada should do more to lead and coordinate the development and publication of accurate information about climate-related infrastructure risks across the country. Investments to this end announced in the national infrastructure strategy and in budget 2023 around flood mapping are a positive step, but they provide only a small fraction of the funding that will be required to develop complete coast-to-coast-to-coast climate risk information and mapping.
Third and last, governments and regulators should be requiring climate change risks to be made transparent in infrastructure transactions, whether it be homeowners putting houses up for sale or municipalities issuing bonds. The Government of Canada and the regulatory bodies it oversees can again lead here by demonstrating for other governments and regulators how policy and tools can be developed to ensure owners, lenders, investors and other financial system actors are analyzing, disclosing and managing climate risks associated with infrastructure investment and driving capital towards less risky infrastructure decisions.
Thank you, Mr. Chair, for this opportunity.