New report: Climate change may cost Canadians $40 billion per year

Intro

A new report by TD bank reveals Canada’s economy is at risk of losing a billions of dollars because of climate change. Natural disasters will cost Canada between $21 to $43 billion per year by 2050 according to the financial institution’s economic analysis. “The reality is that the frequency of weather events has increased,” said lead author and TD economist Craig Alexander. The TD report highlights the importance of disaster mitigation, noting that every dollar invested in climate change prevention can help save $9 to $38 dollars in future costs.  The findings in the TD report also show that traditional economic measures like GDP are failing to accurately measure the escalation of extreme weather costs, which could discourage preventative investment measures. “Governments have very finite fiscal resources and there’s a lot of demands on the public purse, and if the high frequency economic and financial data doesn’t show the full costs associated with natural disasters,” said Alexander, “that could lead policy-makers to underinvest relative to perhaps what’s needed to mitigate the cost.”

This document comes to light soon after the Intergovernmental Panel on Climate Change found that governments are underprepared for the wrath of climate change. Another government report has also surfaced, revealing that tar sands are indeed Canada’s largest producer of climate-change causing greenhouse gases, surpassing transportation industry emission rates.

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MT @gwcarpenter TD report: for every $1 we spend to mitigate #climatechange we save $9-38 in avoided costs http://on.thestar.com/1jG1KrR

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Story to share: Canadian economy will lose billions to climate change: report (Toronto Star)

Key Points

  • Business as usual will cost Canada’s economy tens of billions of dollars because of climate change impacts. This recent report by TD bank shows natural disasters will cost Canada between $21 to $43 billion per year by 2050.
  • Acknowledging the threat of climate change and investing in disaster mitigation is a sound financial move for countries that stand to lose billions. The TD report highlights the importance of disaster mitigation, noting that every dollar invested in climate change prevention can save $9 to $38 dollars in future costs.
  • The world’s leading experts on climate science and prominent Canadian financial institutions both seem to see acting on climate change as a huge economic opportunity. According to the most recent reports from the Intergovernmental Panel on Climate Change, worldwide consumption grows by 1.6 to 3 per cent per year, the most ambitious mitigation measures would reduce this growth by only around 0.06 percentage points a year. This estimate does not take into account economic co-benefits of taking action and avoiding future damage, meaning that mitigation will cost virtually nothing, while bringing about a host of advantages.

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Top Quotes:

  • “As a consequence, not only do you need more infrastructure spending to replace the aging infrastructure and to meet the needs of a growing population, but you also need infrastructure that helps mitigate the consequences of severe weather.” – Craig Alexander, Lead author of report and TD Bank Group’s chief economist.
  • “The savings may be farther down the road than the next electoral cycle. And even if you do the infrastructure and avoid the damage from the severe weather, you’re going to have a tough time going to your constituents and telling them how much money you saved.” – Craig Alexander, Lead author of report and TD Bank Group’s chief economist.
  • “Storms that used to occur every forty years are now occurring every six years. And because of the composition of Canadian economy and society, we’re ending up with more damaging events.” – Craig Alexander, Lead author of report and TD Bank Group’s chief economist. 

Report Highlights (TD Economics)

  • Over the past three decades, there has been an increase in natural catastrophes and their associ- ated damages, both at home and abroad. There’s more to this spike than weather conditions, as socioeconomic factors have also played a significant role.

  • Natural catastrophes have major impacts on people, property, and prosperity all across Canada. The economic and financial impacts of natural catastrophes tend to be masked by the way that economic indicators, such as GDP, are calculated.

  • The long term financial impact of natural catastrophes is estimated to cost Canadians $5 billion per year in 2020, and $21-$43 billion by 2050.

  • With no sign that things are going to be getting any better, it’s prudent for businesses and policy- makers to start thinking of the long-term implications of inaction, and place a larger emphasis on natural catastrophes when making investment decisions.

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