Feds release 'flimsy' first report on climate risks

The federal government expects the cost of disaster relief funding to balloon to a billion dollars or more each year as the climate crisis advances, according to a new risk-management report. 

The document, examining steps by the federal public service to manage the financial risks and possible rewards tied to climate change, was released by Minister of Finance Dominic LeBlanc on Monday. 

Over the past decade, the federal government spent an average $793 million annually to help provinces and farms, businesses, industries and communities overcome natural disasters, according to the inaugural Federal Climate-Related Risk Management report. 

However, as extreme weather and catastrophes aggravated by climate change — like the 2021 flooding in B.C. or Hurricane Fiona in Atlantic Canada the following year — occur more frequently, funding transfers to provinces through the Disaster Financial Assistance Arrangement (DFAA) are expected to spike, the report noted. 

The Department of Finance surveyed 52 federal department heads in 2024 to get a sense of the climate financial risks each agency’s assets, programs, and staff faced and the actions to manage them. 

Fisheries and Oceans Canada, the Department of Indigenous Services, Environment and Climate Change Canada, Transport Canada, and Agriculture and Agri-Food Canada were just some of the agencies that cited increasing cost pressures moving forward. 

Indigenous Services Canada stressed threats to essential community infrastructure like health centres due to fires and floods and worsening infrastructure as climate uncertainty advances. 

Replacing and maintaining federal non-financial assets like buildings, equipment, ships, vehicles, or infrastructure like dams or bridges, is expected to become more costly sooner than anticipated, noted the Treasury Board of Canada. 

If Canada’s greenhouse gas emissions continue at current rates, maintenance and replacement schedules will accelerate by 12 and 20 years, respectively, posing higher costs for the federal government. 

Several agencies highlighted rising demands on federal services, like emergency response and disaster recovery programs, policing and military responses to disasters and the Canadian Coast Guard’s search and rescue operations. 

Climate report fails to spell out costs, risks, and fiscal plan 

The anticipated cost increase for disaster funding was one of very few items in the report that specified a climate-related financial risk faced by the government, said Sarah Miller, research lead for sustainable finance at the Canadian Climate Institute. 

The report doesn’t analyze any overall costs or magnitude of risk the public service is facing from climate change, she said. It also doesn’t spell out any future action or input for the federal budget process, Miller said. 

Instead, the document reads like a shopping list of some threats faced by various departments and the actions currently underway, rather than effective appraisal to drive effective decision-making and policy moving forwards, she said. 

“It does highlight some good things that the federal government is doing,” Miller said. 

“The problem is this report really doesn't help in terms of shedding light on how much is happening, how big the risks are, and how much more needs to happen.” 

Not only is the report missing a look at wider cost estimates or projections associated with climate change, but also the role they play in the federal government’s fiscal planning, Miller said, pointing to Australia and the United Kingdom, which she said are doing much more to integrate projected climate impacts and costs into national budget planning.

For example, the UK’s Office for Budget Responsibility, the country’s fiscal watchdog agency, has the additional responsibility of examining costs of climate change measures and projected impacts on the sustainability of public finance. 

“I think to be a responsible manager of the economy, you need to be looking at the impacts of climate change that are already baked in [the budget] and that are likely to occur given emissions trajectories,” Miller said. 

“If you don’t, you end up just debating the costs of various measures to reduce emissions or to address physical risks, but you aren't acknowledging the costs of inaction or letting a problem go unchecked.” 

The new climate-related risk management report was required under Canada’s 2021 Net Zero Accountability Act, a law that sets out measures and milestones for the federal government to meet its target of net-zero emissions by 2050. 

Individual federal agencies analyzed financial risks related to physical climate changes, like rising temperatures, sea level, and precipitation patterns and took account of the rise in the frequency and severity of climate disasters, such as wildfires, hurricanes and floods. 

However, the risks and opportunities that might result with a shift to a net-zero economy were also examined, the report noted. 

The report also revealed what government agencies are doing to reduce climate risks. 

The federal government’s strategy to reduce emissions from its buildings and vehicles was highlighted as a key measure to curb financial climate risks in federal operations.

Federal departments are also using tools and models to conduct climate risk assessments and vulnerability ratings to prioritize upgrades to infrastructure like harbours, bridges and buildings, the report said. 

A number of government investments are ensuring the public service is more climate resilient.

The Canadian Space Agency earth observation satellite program recently got a little over $1 billion in funding in 2023 to monitor the country’s land and oceans, tracking everything from weather, arctic ice, sea temperatures, wildlife and wildfires to inform the federal government’s response to climate. 

Canada has also issued Green Bonds, to generate capital to accelerate the transition to a net-zero economy and to meet climate and environmental goals, the report noted. 

Rochelle Baker / Local Journalism Initiative / Canada’s National Observer