Canada’s housing shortage is sparking a race to build homes, but the speed at which projects are moving may place some planned structures at risk of damage by flood and fire, a new report from the Canadian Climate Institute (CCI) says.
Citing the Canada Mortgage and Housing Corporation, the report says meeting housing affordability targets calls for 5.8 million new homes to be built by 2030. CCI’s report applies original modelling to determine costs of future floods and fires for homes built by that year, noting wildfire models were developed by Co-operators, flood modelling was done via Fathom Global, and Sustainability Solutions Group analyzed future housing risk.
“Governments aim to accelerate housing construction through funding programs, regulatory reforms, and incentives for municipalities to meet aggressive targets,” the report says. But the institute’s analysis determines existing policies could mean “hundreds of thousands of these new homes could be built in areas that are highly exposed to climate related hazards — particularly floods and wildfires.”
Specifically, CCI says findings indicate that by 2030, more than 540,000 homes could be built in flood hazard areas and more than 220,000 in locations exposed to high wildfire hazards.
Related: How to help clients mitigate wildfire damage
The report’s loss estimates say British Columbia is likely to face this highest exposure ($2.2 billion in added annual costs if a worst-case scenario materialized), followed by Manitoba ($360 million), Alberta ($220 million) and Quebec ($214 million). “Yukon could see increases in average damages as high as $1,200 for each new home from flooding alone, well beyond the national average,” it adds.
Interestingly, the majority of projected new costs are keyed to a small number of homes CCI’s report says may be built in hazardous zones. Moving 3% of those planned homes to safer ground could save close to 80% of projected losses by 2030.
“Solving Canada’s housing crisis requires not just building more homes but ensuring they’re affordable in the long term. This includes building new homes in safe locations that are resilient to increasingly severe floods and wildfires,” says Lisa Raitt, CIBC’s vice chair of global investment banking, in comments on the report. Raitt is also co-chair of the Task Force for Housing and Climate.
Lessons from LA
While it can be difficult to predict where wildfires may erupt, Glenn McGillivray, managing director of the Institute for Catastrophic Loss Reduction, notes the recent urban fires in Los Angeles provide lessons for those seeking technical solutions to reducing risk.
“This is a technical challenge, and we can do this. We have to get structural building specialists involved in this, so we [can] get on with what we know works,” he tells Canadian Underwriter, adding Canada needs a wildland-urban interface building code to ensure rebuilds meet fire threats.
On the insurance side, a commentary on the LA fires from ratings agency AM Best says the growing frequency of wildfires and their related losses means more California homeowners are having to turn to insurers of last resort.
“Many voluntary market insurers in the state reassessed geographic diversification in their homeowners’ portfolios and limited their appetite for providing coverage in affected areas, sending policyholders to look elsewhere for coverage,” the commentary says. “As a result, surplus lines insurers have become more prevalent in California’s homeowners’ insurance market.”
Related: Inside the claims industry’s response to Canada’s costliest summer
To address the risks in Canada, CCI’s report recommends governments take steps to reduce risks of disasters spurred by extreme weather. These include:
- Steering housing and infrastructure investment toward low hazard areas by federal, provincial, and territorial governments;
- Strengthening land use policy by provincial and territorial governments to direct new construction to safer ground;
- Reforming of disaster assistance programs to deter risky development, including making new homes built in high-hazard zones ineligible for publicly funded disaster compensation, by federal, provincial and territorial governments;
- Creation and maintenance of publicly available maps showing hazardous areas, as well as mandating disclosure of this information during real estate transactions, by all levels of government; and
- The federal government should empower and support Indigenous communities to build climate-resilient homes in safer areas within their territories.
“Building more homes in unsafe places would be an incredibly costly mistake,” says CCI president Rick Smith. “Fortunately, there are ways to build millions of much-needed homes that avoid these future costs.”
Feature image by iStock/VladTeodor
