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Building Canadian Community Resilience

Expanding capacity for adaptation infrastructure investment

Don Iveson — Executive Advisor, Climate Investing and Community Resilience

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Climate change is the key challenge of our times.

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We know the economic impacts of climate change are on the rise in Canada…

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The economic cost to governments and homeowners is 3-4x insured losses.

Risk is growing exponentially, and insurance alone will not solve it; we needstrategic investment in prevention and disaster risk reduction.

*

* Preliminary results

Sources: Insurance Bureau of Canada; CatIQ; adjusted to 2020 dollars

As our climate changes, communities are facing increasing risk from acute hazards, such as extreme weather events, and chronic hazards, such as sea level rise and shifting hydrological patterns. Damage and loss from such phenomena have been increasing over time: insured losses from catastrophic events in Canada in 2021 totalled $2.1 billion—and on average the total economic losses are three times higher than insured losses. The cost of rebuilding after the late 2021 floods in British Columbia alone are estimated at $9 billion.

It has been estimated that adapting to climate change will require investment of CAD$5.3 billion per year in Canada, and US$140-300 billion worldwide per year by 2030, increasing to US$280-500 billion per year by 2050. While these sums may appear large, they are but a fraction of the predicted cost of damage and loss from accelerating climate change.

http://www.ibc.ca/ns/resources/media-centre/media-releases/severe-weather-in-2021-caused-2-1-billion-in-insured-damage

https://aon.mediaroom.com/2022-01-25-Aon-343-Billion-in-Global-Weather-,-Catastrophe-Related-Economic-Losses-Reported-in-2021,-Up-From-297-Billion-in-2020

https://www.theglobeandmail.com/canada/british-columbia/article-cost-of-rebuilding-bc-after-november-storms-nears-9-billion/

https://fcm.ca/en/resources/investing-in-canadas-future

https://unfccc.int/sites/default/files/resource/AC_25%20Years%20of%20Adaptation%20Under%20the%20UNFCCC_2019.pdf

e.g., https://www.thecroforum.org/wp-content/uploads/2019/01/CROF-ERI-2019-The-heat-is-on-Position-paper-1.pdf

Data are insured losses + loss adjustment expenses. Doesn’t include non-insured / economic losses.

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Canada has an Adaptation Funding Gap.

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$5.3b per year

$1.4b in 2021

Multi-Billion $ Gap

This gap in Canada's defenses represents a huge imperative to get creative to build resilience.

($3.4b over next 10yrs)

Estimated investment need (per FCM, municipal portfolio alone)

Current federal DMAF funding (will likely grow)

Source: Smart Prosperity: Adapting Canada's Workforce

In municipal flood management alone, this could mean over 60,000 jobs by 2030.

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Photo credit: The Canadian Press/Jeff McIntosh

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Photo credit: The Star

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Photo credit: City of Fredericton

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Photo credit: Heavy Equipment Guide

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Photo Credit: Government of Alberta

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Photo credit: City of Surrey

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Photo credit: JPark99 (talk)

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Adaptation has a Strong Business Case

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Investing $1 in prevention measures results in…

$40

related to the (prevented!) 1997 Winnipeg flood alone

Source: Government of Manitoba

$6

from disaster mitigation investments

Source: Federation of Canadian Municipalities

$4

from investments in improved resilience

Source: Global Commission on Adaptation

$5

from governments’ climate resilience investments

Source: The Economist

$13-15

direct & indirect economic benefits

Source: Environment and Climate Change Canada

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Our mission: �Financial security for Canadians and Canadian communities.

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We are a social purpose-driven co-operative with deep roots in Canadian communities

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Sample of our members:

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Catalyzing resilience infrastructure

We're working with:

UN Office for Disaster Risk Reduction (UNDRR)
Int'l Co-op Mutual Insurers Federation (ICMIF)
Canadian Climate Institute
Institute for Sustainable Finance (ISF)
Federation of Canadian Municipalities (FCM)
ICLEI Local Governments for Sustainability
Climate Proof Canada
Partners for Action (Waterloo)
Institute for Catastrophic Loss Reduction (ICLR)

CEO Rob Wessling has made resilience a top strategic priority for Co-operators & $60B+ investment arm Addenda Capital

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There is no smooth transition to a net zero future without enhancing resilience as we go.

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Examples of Potential Resilient Infrastructure Projects

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River, Rain & Coastal Flood Defense

Temporary and permanent flood barriers
Engineered or restored wetlands
Drainage network upgrades and storage measures
'Low-impact development'

Wildfire Risk Mitigations

Wildland Urban Interface buffers, establishment and maintenance
Building exterior upgrades to reduce fire (e.g. metal roofs)

Wind, Hail & Severe Storm Measures

Hardening of structures and systems against severe convective storms (e.g., replacing asphalt roofing)

Heat and Drought Proofing

Integrating cooling in energy retrofit (e.g. heat pumps)
Tree planting, green roofs and nature solutions
Watershed-scale drought solutions for agriculture

Asset Upgrades for Known Climate Risk

Addressing climate risks to other categories of infrastructure while they are under construction or renovation (per PIEVC, for example)

Building, refurbishing, enhancing gray infrastructure—or protecting, restoring and maintaining green infrastructure—that provides protection from flooding; enhancement of storm and wastewater management systems

e.g. on flood: floodwalls, berms/dykes/levees, dams and reservoirs, channel modifications, pumping stations, early warning systems; restoration of wetlands, riparian forests, sand dunes, salt marshes, coral reefs, and mangroves, or installation of green roofs

e.g. on water mgt: increasing the capacity of municipal wastewater systems to accommodate greater flows, construction/maintenance of water collection and drainage infrastructure, storm/sanitary sewer separation, enhancing stormwater harvesting systems

Establishment and ongoing operation/maintenance of systems that project against wildfire

e.g., leasing water bombers to governments, building buffer zones at the wildland-urban interface

Hardening of infrastructure against severe convective storms

e.g., replacing asphalt roofs and vinyl siding on buildings

Building, enhancing or maintaining infrastructure that protects people from extreme heat and drought (both directly and indirectly, such as through food production)

e.g., planting or maintaining urban forests, installing green roofs, building community cooling centers, improving efficiency of private ag irrigation systems

All infrastructure (new and existing), from buildings to seaports to EV charging stations, will require enhancements from the status quo (redesigning, retrofitting and upgrading) to ensure resilience in the face of increasing physical climate risk; this category focuses on the incremental capital cost of making these enhancements

e.g., installing permeable pavement, elevating buildings, installing floodgates

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Illustrated �Model for Flood Protection

Investor

Capital

Infrastructure

investment

Infrastructure Investor

Interest and/or performance

payments

Municipality

Co-benefits & cost avoidances

River berm & wetland

Local Beneficiaries

(households, community, industry)

Insurers

Enhanced

Resilience of public and private assets

Flood insurance cost relief (partially offsets new infrastructure cost)

Performance Certification + Reduced Claims

Other value payments or attribution

(if applicable)

Utility fees, area levies, special taxes, etc

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AFTER berm

& wetland:

Reality check base case:

Role of insurers in materializing benefits: practical limits to resilience cashflows

Theft,

general liability, etc:

Fire

coverage:

Flood

coverage:

BEFORE berm

& wetland:

Premium

reduction

Residual

water risk

Fire losses up from year prior

Most Canadians don't have ANY overland

flood coverage...

...so rising losses are covered by Disaster Financial Assistance Program payouts from the "insurer of last resort" — the federal government — and therefore taxpayers.

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Pilot projects on our radar

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We need creative, multi-stakeholder �partnerships.

We're committed to driving more adaptation investment to improve resilience across Canada, and we're looking for active partners. Find me at Don_Iveson@Cooperators.ca

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Highlights from National Adaptation Strategy (NAS) – released Nov. 24^th, 2022

Several clear signs of our advocacy having effect:

Foundational Objective in ‘Tools & Resources’ category: “Sustained, sufficient, and equitable public and private funding is in place to support adaptation to climate change”
‘Roles & Responsibilities’ section calls on private sector to contribute to building resilience: “Increase the number of private-public partnerships to fund innovative projects”
Per our specific ask, FCM’s Green Municipal Fund received $530m and an expanded mandate for “local, community-level projects that enhance climate resilience”

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Selected targets that should grow demand for resilience infrastructure:

Prevention and disaster risk reduction activities: By 2025, 50% of Canadians have taken measures to respond to climate change risks facing their household
Enhancing capacity and coordination: All communities in zones of high risk develop and implement a wildfire community protection plan by 2050, with 15% by 2028
Protecting people from health risks: By 2040, deaths due to extreme heatwaves have been eliminated
Infrastructure decision-making: By 2030, 80% of public and municipal organizations have factored climate change adaptation into their decision-making processes
Resilient infrastructure funding: Starting in 2024, resilience to climate change impacts is factored into all new federal infrastructure funding programs