Climate Change & Its Costs for Canada

The costs associated with climate change are soaring in Canada, yet according to reports, we don’t know nearly enough about what the climate crisis will cost Canada. What is currently known is troubling enough, and should be inspiring more action from leaders, industry, and individuals.

Figure 1 – The Canadian Climate Crisis

Climate Change Mitigation & Adaptation

Climate Change Mitigation: The efforts made to reduce or prevent GHG emissions. This can mean utilization of new technologies and renewable energies, making older equipment more energy efficient, or by altering management practices or consumer behaviours. Overall, it means taking strategic actions towards the reduction of a community’s vulnerability to the impacts of climate change.

Climate Change Adaptation: Adjustments made in ecological, social or economic systems in response to actual or expected climate changes & their effects and/or impacts. It refers to changes in processes, practices & structures to moderate potential damages, or to benefit from opportunities associated with climate change. In simple terms, countries and communities need to develop adaptation solution and implement action to respond to the impacts of climate change that are already happening, as well as prepare for future impacts.

Climate change and its associated impacts have already begun impacting Canada’s lands, economy, biodiversity, and citizens. The continued increases in the size and frequency of extreme weather events, (i.e., wildfires, and flooding), underscore the need for Canadians to adapt and build resilience to climate change.

Figure 2 – Adaptation & Mitigation

According to the Government of Canada, there are a number of areas and levels in which Canada must take action to respond to climate change, including:

  • Household
  • Indigenous Communities
  • Youth
  • Wildfire
  • Early Warnings
  • Extreme Weather
  • Agriculture
  • Cross-Sectoral
  • Healthy Ecosystems & Natural Environment

Costs of Climate Change

A new report by the Canadian Institute for Climate Choices warns that the costs of climate change for Canada are severe, and accumulating. The Institute recommends substantial increases in adaptation investment and enhanced climate risk transparency to build community and infrastructure resilience, limiting damages.

For this report, the Institute pored over decades worth of data on the costs of weather-related disasters, from both government relief and insurance industry payouts. Its findings make it abundantly clear that destructive weather events have already become more frequent, and more costly. The Institute’s comprehensive analysis of historical trends found that weather-related disasters (i.e., floods, storms, wildfires) are getting more frequent, more extreme, and more expensive. Since 2010, the costs of weather-related disasters and events have amounted to approximately 5-6% of Canada’s annual GDP growth, up from an average of 1% in previous decades.

However, the report Tip of the Iceberg: Navigating the Known and Unknown Costs of Climate Change for Canada, also illustrates how much there is still unknown about climate change-related costs. It suggests that only a fraction of climate-related costs can be accurately quantified today and that the unknown costs could far exceed those that are already understood.

“Canada has largely left the potential of climate change adaptation untapped. Not only are we more exposed to risk than necessary, we’re also missing out on significant returns that come from investing in resilience. We have the opportunity to proactively reduce some of our most critical climate-related risks—from urban flooding, to crop-killing droughts, to deadly heatwaves. Analysis shows that investing in well-designed climate adaptation measures before disasters strike can provide impressive returns by preventing damages and avoiding social and economic disruption.”

Dave Sawyer, Principal Economist and lead report author, Canadian Institute for Climate Choices 

What is Canada Doing?

Determining the Costs of Climate Change

In September 2019, the Federation of Canadian Municipalities (FCM) and the Insurance Bureau of Canada (IBC) collaborated on a report titled Investing in Canada’s Future: The Cost of Climate Adaptation, in an attempt to establish more accurate ways to measure the costs of climate change, and how it will impact the economy. The data in this report demonstrates the urgent need for new investments in local climate adaptation.

Invest in climate change

The FCM and the IBC commissioned Green Analytics to establish an appropriate estimate of the investments in municipal infrastructure and local adaptation measures required to reduce climate impacts in Canada. While climate adaptation in the nation has progressed over the past decade in research, public engagement, and in their actions in impact reduction – with all levels of government having developed climate change adaptation strategies, and investments in specific adaptation measures.

Municipalities are the owners and operators of 60% of the public infrastructure in the country and are on the frontlines of both the impacts of climate change and the solutions to protecting Canadians. However, addressing climate change by retrofitting existing infrastructure or implementing new adaptation measures, can act as an additional burden n the limited financial capabilities of municipalities. Municipalities cannot bear to shoulder the cost of adapting to climate change on their own. It is a shared responsibility amongst all levels of government and will require a long-term commitment to action from each. The 2019 study was the first attempt to estimate the long-term need for investment in change adaptation measures at the local level.

The analysis carried out determined an average annual investment in municipal infrastructure and local adaptation measures of $5.3B is needed to successfully adapt to climate change. On the national scale, this represents an annual expenditure of 0.26% of the GDP, and the total cost of actions that must be taken by municipalities. These investments would be typically cost-shared between each level of the government.

Report Results

Greatest Level of Investment in Adaptation Required: Flood, erosion & permafrost melt are associated with the highest cost to GDP ratios at 1.25, 0.12 & 0.37.

Greatest Level of Investment in Adaptation Required (Infrastructure): From an infrastructure perspective, buildings, dikes & roads require the highest investment. They are associated with the highest ratios at 2.01, 1.18 & 0.47.

Greatest Level of Investment in Adaptation Required (Regional): From a regional perspective, Canada’s east at 3.20 & north at 0.37 have higher ratios. The 4 highest ratios in the database are coastal communities situated in eastern Canada.

Historical Investments: An annual average investment equivalent to 0.26% of Canada’s GDP aligns with historical investments made by leaders outside of Canada.

International Spending on Adaptation: An international assessment concluded that countries should be spending between 0.60-1.25% of their GDPs on adaptation measures to minimize the worst impacts of climate change across various sectors of the economy – including municipally-owned infrastructure.

This research was the first attempt to quantify what Canadian governments must be spending on local climate change and disaster mitigation and adaptation.

Municipalities for Climate Innovation Program

The FCM has also established a climate innovation program allowing municipalities to address the impacts of climate change and reduce its many impacts, within their communities in order to allow residents a higher quality of life. The program’s funding, resources and training is available to help municipalities develop a response to climate change that will protect their residents, environment, and economy. Participants will be able to take steps such as assessing flood risks, reducing GHG emissions from waste collection trucks, encouraging residents to use less polluting forms of transport, and creating environmentally sound policies. Overall, the program is meant to last for 5 years, and has $75M in funding to support more than 600 municipalities, as they update their infrastructures and address climate change.

Key Facts

The Adaptation Platform

Canada’s Climate Change Adaptation Platform

In 2012, Canada established its own climate change Adaptation Platform – a national forum that brings together key groups in Canada to collaborate on climate change adaptation priorities. Members include representatives from federal, provincial, and territorial governments, industry, communities, academics, Indigenous, professional, and not-for-profit organizations. The Platform aims to establish and enable an environment for adaptation, where decision-makers in both regions and industries are properly equipped with the tools and information required to adapt successfully to our changing climate.

The Adaptation Platform includes a Plenary (the governance body), a series of subject-specific Working Groups, and a Secretariat. Plenary is the coordinating forum for the Adaptation Platform, is chaired by Natural Resources Canada (NRCan), and consists of senior-level representatives who meet bi-annually to:

  1. Help define priority areas for Working Group efforts;
  2. Align interests & resources; and
  3. Identify emerging opportunities for members to contribute information, knowledge, expertise & resources

The Working Groups bring together experts on specific issues or sectors. Participants are meant to collaborate to define and then work towards the achievement of, their climate change adaptation objectives. Members of the group may contribute by providing funding, expertise, and/or information from their respective organizations. Working Groups primarily meet via teleconference, carrying out most of their work by utilizing online workspace and methods.

Activities carried out under the Platform are carried out by the member organizations and through calls for proposals. Funding is determined based on priority, and the mandate of the funder, which could include any of the Platform member organizations.

Facilitating Regional Adaptation Planning, Decision-Making & Action

The Regional Adaptation Collaboratives (RACs) initiative is a federal cost-sharing program designed to help Canadians reduce risks, and maximize the opportunities arising due to climate change. The RAC initiative builds on the previous Regional Adaptation Collaborative Climate Change Program (2007 – 2011), which worked to address targeted climate change vulnerabilities through a number of projects to advance decision-making in the areas of extreme weather, risk management, water management, and community development planning.

Working with regional organizations in 6 regions across Canada (see Figure ), the initiative helps communities prepare for and adapt to the local impacts arising due to our changing climate, such as decreasing fresh water supplies; increasing droughts, floods and coastal erosion; and changing forestry, fisheries and agricultural resources.

6 Regions of Canada

Overall the RAC’s goal is to “catalyze coordinated and sustained adaptation planning, decision-making and action, across Canada’s diverse regions, and facilitate the collaboration of diverse stakeholders at the regional level with local governments and organizations.” By making these adaptation-focused decisions now, the country has the opportunity to be proactive, ensuring the economy, all communities and natural resource sectors, are prepared for climate change effects now and into the future.

Forestry Mitigation

Mitigating climate change requires action on a number of fronts, in all sectors to be successful. At present, forests and the forestry sector have made major contributions to the effort. Both actions focused on forests, and actions focused on forest use and forest products, can contribute to mitigation.

Snowy Forest

Forests can be significant GHG sources, and significant carbon sinks as a result of natural processes like fires, invasive species infestations, and tree growth; and human activities, such as development, deforestation, or harvesting.

Carbon Sink: A forest is considered to be a carbon sink if it absorbs more carbon from the atmosphere than it releases.

Carbon Source: A forest is considered to be a carbon source if it releases more carbon than it absorbs. Forest carbon is released when trees burn or decay after dying.

In order to utilize forests to aid in the mitigation of climate change on a global scale, it’s critical to find ways to manage them to reduce their potential to be carbon sources and promote their potential to be sinks instead. For example, limiting deforestation is one way to decrease the potential of forests as carbon sources, and enhancing growth in existing forests can increase the potential for a carbon sink instead.

Wood CO2ts less campaign facts

GHG emission reduction can also include practices like making more use of products with long lifespans, like lumber, which can keep carbon out of the atmosphere and store it in buildings. Additionally, developing new, more sustainable forest products, and making changes to overall forest product processing can help in GHG emission reduction. According to NRCan, wood-based construction products are generally considered to be more environmentally sound materials in comparison to steel, aluminum, concrete and other alternatives. Wood products extend the time during which the carbon from trees is kept out of the atmosphere post-harvest, continuing to store until the product’s end of life.

Wood Product Versatility

As well, in recent years, researchers have developed tools for measures such as carbon accounting, including the Carbon Budget Model of the Canadian Forest Sector (CBM-CFS3); a tool to examine the impact of alternative measures. The CBM-CFS3 models how different forest management activities can affect the carbon balance, which can help forest managers to assess the carbon implications of their practices and consider alternative processes that may have a lesser impact. The model was developed by Canadian Forest Service researchers in conjunction with the Canadian Model Forest Network and is widely used in both Canada and abroad.


Overall, Canada has been making a number of efforts to quantify and address the costs associated with climate change; however, as the report by the Canadian Institute for Climate Choices stated, the nation is only able to accurately quantify today and the unknown costs could far exceed those that are already understood. This knowledge suggests the investments made into the industry, with dollar amounts calculated and suggested by the FCM and IBC, are both extremely necessary, and likely still not enough. In order to be successful in Canada’s national and local climate change adaptation and mitigation, priorities must be re-focused on every level, and changes must be made.

Additionally, an area of focus for the government should be education. By ensuring the education of youth, and the training (or re-training) of trades workers and professionals, Canada has a better chance of seeing significant improvements. Education and training are integral to any societal shift, especially one as widespread and deep-rooted as Canada’s, in its consumerist and capitalist behaviours.

The impacts of climate change have already begun to present themselves in Canada, and over time they are only expected to worsen. It is time for Canadians, regardless of ethnicity, gender, intelligence, social standing, or wealth, to come together and make the necessary changes to survive what is still to come.

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