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True North: Adapting Infrastructure to Climate Change in Northern Canada

5.0 Risk-Based Mechanisms for Climate Change Adaptation

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The NRTEE?s program on Climate Change Adaptation Policy selected three risk-based mechanisms to evaluate in light of their potential to enhance the management of climate risks to northern infrastructure and minimize related losses and hardships to communities, businesses, and the environment. The three mechanisms are (1) codes, standards, and related instruments (CSRIs); (2) insurance; and (3) disaster management. Based on research commissioned by the NRTEE, which relied heavily on stakeholder input, this chapter evaluates how the three mechanisms might be adjusted, strengthened or restructured to capitalize on their potential to drive the management of climate risks in Canada?s North. That is, whether and how these risk-based mechanisms could be vehicles for adaptation mainstreaming.

We selected these mechanisms for three reasons. The three are well established in Canada and we have considerable experience in employing them to manage risk. Significant scope exists for government intervention in shaping these mechanisms as solutions in meeting broader Canadian objectives, such as advancing adaptation to climate change. Although the nature of the three mechanisms differs, important inter-relationships and feedbacks exist among them.

For each mechanism, the chapter describes current characteristics, gaps, and challenges in their application in Canada?s North, particularly in the context of a changing climate. It then highlights interrelationships among the three mechanisms that are important in promoting adaptation. Our evaluation used the following framework to compare mechanisms and draw conclusions:

  • Extent of coverage
  • Clarity of roles and responsibilities
  • Flexibility and application
  • Role of climate-related information
  • Consideration of changing climate

5.1 Definitions

Codes, standards, and related instruments (CSRIs) such as guidelines and best practices play a critical role in society by helping to ?set the bar? in relation to the processes and materials that shape the quality of our physical infrastructure. Their primary objective has been to safeguard human safety and health throughout the full infrastructure lifecycle, constituting for society one of the most basic mechanisms for risk management. As a lever for governments, CSRIs can fall into ?command and control regulations.? That is, they are rules and restrictions specifying behaviours, courses of action, or performance requirements.

Insurance is a financial mechanism with the main purpose of supporting society?s management of risk through the pooling of risk. Insurance providers measure and put a price on risks, such as the risk of property damage to a specific building due to extreme weather. Households, businesses, and governments that purchase insurance effectively transfer agreed-upon risks to insurance providers.

Disaster management includes all activities and risk-reduction measures that improve and ensure capacity for effectively dealing with natural and human-caused hazards. Disaster management includes activities supporting prevention and mitigation (avoiding or proactively minimizing loss or suffering), preparedness, response, and recovery. A disaster is ?a social phenomenon resulting from the intersection of a hazard with a vulnerability that exceeds or overwhelms the ability to cope and may cause harm to the safety, health, welfare, property or environment of people.?[58] A related and relevant concept is emergency, defined as ?a present or imminent event that requires prompt coordination of actions concerning persons or property to protect the health, safety or welfare of people, or to limit damage to property or the environment.? Emergency management is a relevant concept, a function that is closer to the local level and nested within the national framework of disaster management. Both disaster and emergency management have a public good character, and governments themselves are responsible for funding or delivering related activities.

5.2 Codes , Standards , and Related Instruments

Extent of coverage: Codes and standards are the most common forms of CSRIs.[59] Generally, a code is broad in scope covering a wide range of issues, while a standard is narrow. Through adoption by federal, provincial, territorial, or municipal authorities, both codes and standards can receive the force of law. Some standards do not become legal requirements but practitioners use them as the recognized articulation of good practice. Legally adopting a code that references several standards gives those standards the force of law. For example, the National Building Code of Canada references more than 200 standards. Guidelines and best practices are less binding and less formal, involving techniques or methodologies proven successful through experience and research.

Use and coverage of CSRIs differ across infrastructure types. For example, provinces and territories have responsibility for adopting through legislation and applying the national building, fire, and plumbing codes developed by the Canadian Commission on Building and Fire Codes and supported and distributed by the National Research Council. Best practices and guidelines are more common for development in the transportation sector and the mining sector (e.g., mine tailings facilities).

Clarity of roles and responsibilities: Processes to develop and renew CSRIs differ markedly. The Standards Council of Canada (SCC), a federal crown corporation reporting to the federal Minister of Industry, coordinates and oversees the efforts of organizations that develop many of the codes and standards used in Canada under the National Standards System (NSS). Among other roles, the SCC accredits organizations that develop standards in Canada, such as the Canadian Standards Association. The SCC also manages Canada?s participation on international voluntary standards processes, such as the International Organization for Standardization (ISO). Provincial and territorial non-regulatory standards, international standards, model specifications, best practices, guidelines, national model codes, among others, fall outside the scope of the NSS. Both development and renewal of the content of a code or standard is normally a consensus-based process that relies on the voluntary contributions of standing committee, task group members, and the public.[60] In contrast, development and renewal processes for many guidelines may be largely under the control of one or two stakeholders with expertise on the related topic. Government departments may develop guidelines, typically in conjunction with external expert review.

Although critical to the ultimate performance of a code, standard, guideline or best practice, gaps in inspection and enforcement exist in Canada?s North. For example, ultimate responsibility for paying for verification, inspection, and enforcement is sometimes unclear. Legal frameworks for northern infrastructure do not always assign clear responsibilities for improper use of CSRIs either. In addition, the limited financial and human resources to undertake inspections and enforce CSRIs is emerging as a serious challenge for territorial, municipal and ? with land claims settlements ? Aboriginal jurisdictions. Recent years have seen a decline in the number of enforcement and technical support staff in northern jurisdictions. Furthermore, there are currently no national standards for training inspectors, and territorial governments may lack the resources to establish their own accreditation programs. With increasing exposure of infrastructure to the impacts of climate change, the risks intensify. Existing gaps in inspection, enforcement, and, ultimately, proper deployment of CSRIs is likely to erode capacities to adapt and meet sustainable regional development goals.

Flexibility and application: Although reviews and updates of codes and standards do take place, northerners are at a disadvantage in terms of participating in these national processes and in getting their concerns on the national agenda. Two main issues influence review schedules and priorities. The first is the time involved in reaching consensus among a group of stakeholders with differing perspectives and opinions concerning key objectives. The second is the demand for reviewing and updating a given instrument. Although in general terms the process for developing and updating standards and codes is consensus-based, the extent of representation of various interest groups in the development process ranges from superficial reviews to comprehensive consultations.

As revealed through the NRTEE program, northern infrastructure practitioners often feel marginalized from these processes. Several reasons are behind this. Territories often do not have the capacity in terms of staff or financial resources to participate fully in CSRI technical committees. Even provinces have a tendency to put the greatest effort in dealing with the regions within their jurisdictions where the codes will have the greatest impact ? usually in the populated south and industrial heartlands. National codes are meant to be national in scope, and northern factors do not seem to carry the same weight as southern ones in these committees. Given that many CSRIs are market-driven, backed by those with a stake in a certain technology or process, the resulting emphasis on southern issues in the CSRI process is both predictable and apparent.

Participation by northerners in these national-level processes is critical from a number of perspectives. First, risk tolerance and attitudes regarding uncertainty differ among stakeholders. This is a fundamental argument for ensuring balance in the makeup of the committees involved in the development of CSRIs and, in particular, for including northern interests and experts at the table. Second, for some northern issues, such as building in permafrost, a consolidated body of knowledge or set of best practices to reference does not yet exist, meaning that experienced practitioners are the best resources in this regard. Third, the usefulness of CSRIs is contingent on reliable and efficient enforcement and inspection. As discussed in the above section, many areas of Canada?s North have capacity issues in this regard, which need to be communicated at CSRI committee tables. For example, NRTEE research and consultation revealed that territorial codes and standards bodies are asking for climate and climate change data and information for updated codes and standards that reflect the realities of their changing climate.

A changing climate and the need to adjust CSRIs accordingly is likely to further widen the gap between the adequacy of national CSRIs in addressing northern circumstances and needs, potentially placing a great strain on the creativity, capacity, and decision-making ability of northern infrastructure practitioners. In the past decade or so, northern infrastructure practitioners have generally done an excellent job in managing climate-related risks to infrastructure. But, as the number of companies establishing and working on infrastructure in Canada?s North increases in the coming years, codification of the experiences of northern practitioners in CSRIs will become increasingly important. As an example, Canada currently lacks formal guidance on the application or maintenance of thermosyphons, a permafrost-related technology of wide application in parts of Canada?s North.

"Most of what I do is not governed by codes and standards. Most hinges on experience. There is very little that dictates what we must do in our practice. It was ten years ago that the first guideline came out. Though it is now dated, the framework is still useful."
? Participant, Meeting of the NRTEE program in Yellowknife (Northwest Territories), January 2008.

Role of climate-related information: Integration of climate information in the development of CSRIs and the design, construction, and management of infrastructure takes place largely through the establishment and application of ?climate design values.? These values include calculated return periods for extreme weather (such as intense rain, wind, snow, extreme cold, freezing rain) of varying intensities and durations, as well as through the consideration of long-term averages. Since the 1920s, Environment Canada (or its historical equivalent) has provided climate design values for codes and standards. Design values reflect historical conditions for a given geographical location.

Several trends of national relevance are affecting the quality and relevance of climate design variables as inputs into CSRIs. First, over the past 15 years or so the capacity of the federal government to produce the sorts of updated climate data and information required by CSRIs has declined. Canada?s North was particularly hard hit by cutbacks in monitoring capacity, with the number of monitoring stations dropping markedly between 1994 and 2008, in a region already affected by the sparseness of monitoring coverage in time and space and inconsistencies in data collection techniques. Second, federal capacity to review and revise climate design values diminished over this period as well. The first comprehensive review of design values across Canada will take place for the 2010 National Building Code of Canada (excluding snow loads). For some northern areas, this means that mean annual temperatures reported in the design values have been as much as 2C behind current averages. Third, efforts to enhance monitoring capacity in remote parts of Canada?s North using automated systems remain less consistent in measuring certain climate indicators in comparison with traditional methods. This could diminish the ability to understand the progression of climate change and the development of adequate climate design values in some regions.

The implications for Canada?s North concerning monitoring capacity and reduced federal involvement in developing and updating climate design values are many. These trends affect the timeliness and relevance of climate design values, since they are only as good as the quantity and quality of the data informing their calculation. Northern infrastructure practitioners are obliged either to use significantly outdated, and potentially limited, values cited in CSRIs, or to contract with an outside party to produce new design values separate from those referenced in CSRIs. At the same time, organizations responsible for developing and updating CSRIs typically show reluctance to use climate design values derived by any group except Environment Canada, which they perceive as an expert, reliable, neutral third party.

Data and information on permafrost conditions are also important to CSRIs and management of infrastructure in Canada?s North, yet gaps exist in this regard. Reliable sources of permafrost data are disparate across Canada?s North, the data gathered and information produced does not respond to the needs of infrastructure practitioners. Natural Resources Canada monitors and models permafrost conditions, but much of the activity focuses on ongoing or imminent megaprojects or studies of the changing climate itself, such as methane release from thawing of permafrost terrain. Northern infrastructure practitioners are seeking better information and guidance on building under changing permafrost conditions, particularly in areas of so-called warm permafrost that are highly affected by a warming climate.

Traditional knowledge presents a largely untapped source of climate-related information and input for decision making. Development of CSRIs has not tended to incorporate this source of data and information, yet northern residents are a critical and often unaccounted for source of information. Recent examples of activities to harness traditional knowledge of climate exist. In Nunavut, governments, academia, and communities are working together to complement historical weather records with recollections from Aboriginal residents. The inclusion of traditional knowledge can also help integrate unique cultural and social attributes of local populations, attributes that could have an influence of the application and eventual enforcement of a code or standard, as well as the performance of the infrastructure. Traditional knowledge can contribute to the characterization of the resilience of a population and to the identification of requisite measures for adapting to the impacts of climate change.

Northern infrastructure practitioners and others could benefit from increased access to existing data, analysis, and information pertaining to climate and other biophysical trends and indicators, and from regular updates in climate design values. Considerable information on changing climate conditions is held by a range of federal, provincial, territorial, and municipal government agencies. Some of these agencies, such as territorial water boards, collect raw data but lack the resources to conduct detailed analyses that would be helpful to infrastructure practitioners. Private sector corporations, including proponents of major resource and construction projects that have undertaken research as part of environmental assessment and regulatory permitting processes, also hold significant amounts of data and information. For example, mining companies and engineering consulting firms often collect their own data on ground temperature, permafrost conditions, snow, wind, and other indicators. However, data and information sharing is inconsistent and little, if any, coordination of collected data and information takes place across northern Canada. Standardized approaches to data management or a central repository or website are unavailable.

Consideration of changing climate: In Canada, awareness and understanding of the implications of a changing climate for infrastructure engineering practices and related institutions is growing, although levels of understanding and response vary (see Box 7). Awareness of the vulnerability of infrastructure to climate change tends to differ by community, largely in proportion to its size and resources. Evidence also suggests that segments of the engineering community have yet to be convinced of the potential seriousness of climate change.

BOX 7: According to the Canadian Standards Association knowledge and awareness levels of climate change adaptation issues differ among infrastructure practitioners

The Canadian Standards Association (CSA) manages about 400 standards directly associated with infrastructure, including oil and gas, pipelines, bridges, concrete, and other construction materials. Recently, the CSA reviewed its delivery of services and products in relation to climate change mitigation and adaptation needs, focusing on the professionals involved with infrastructure planning, design, and engineering. This work explored the current state of knowledge of climate change and the level of awareness by infrastructure engineers as it pertained to their day-to-day work. The study surveyed over 2,000 licensed infrastructure engineers, inquiring about their current level of awareness of technical issues related to climate change, their perspectives on needs and priorities to address climate change issues, and implications for university engineering curricula and professional development programs aimed at infrastructure engineers.

Among other results, the study found a gap between the recognition of the need to adapt routine practices and decisions to account for a changing climate and actual change in behaviour among infrastructure practitioners in this regard. Results underscored the importance of raising awareness and understanding of climate change and the techniques and mechanisms, such as codes and standards, available to address adaptation issues.

Source: Canadian Standards Association (2007).

With respect to CSRIs, formal recognition or integration of climate change impacts as a business risk does not appear to be happening at high levels. For example, the Standards Council of Canada itself has yet to incorporate climate change risk management into its strategic or corporate plans. The Council?s corporate plan for 2009?2010 mentions climate change, but only in the context of GHG mitigation.[61] Nor is a changing climate yet included as a factor in the National Model Codes. In other cases, policy documents, strategies, or guidelines state the importance of addressing climate change impacts, without providing direction on how to integrate climate change considerations into ongoing practices. For example, territorial mine closure and reclamation guidelines are prepared for Yukon by the Government of Yukon, and for the Northwest Territories by Indian and Northern Affairs Canada. Both sets of guidelines identify climate change as an issue to consider, but do not provide options on approaches for integrating climate change?related trends in the closure design of a project.

Factoring climate change into CSRIs presents a challenge for those involved in providing the scientific evidence base, taking the science and translating it into inputs to inform CSRIs, and using this information to make infrastructure-related decisions. Given the relatively rapid rate of climate change in Canada?s North, CSRIs influencing the planning, design, maintenance, and renewal of physical infrastructure clearly should be informed not only by historical and current climate and environmental trends and indicators, but by new sorts of forward-looking information as well. Increasingly meteorologists, geotechnical engineers, and others are contemplating how climate design values might begin to factor in what climate models and climate trends analyses are telling us: that design values based on long-term climate ?normals? may no longer hold.[62]

Consultations with northern infrastructure practitioners over the course of the NRTEE?s research confirmed both the need and the appetite for more guidance on the development of adaptive and forwardlooking climate design values, and for the incorporation of this guidance, or the values themselves, into the relevant CSRIs. At the same time, infrastructure practitioners and other users of climaterelated information for infrastructure design will need to recognize the limitations of basing decisions on climate conditions projected by models. Instead of a focus on optimizing design based on some estimation of future climate conditions, better strategies might be to consider adjustments to safety or other factors for elements where the scientific evidence and impacts conclusively support adaptive actions now, and to design infrastructure to be robust under a range of plausible change in climate conditions.

The potential for legal liability has been cited as a barrier to factoring climate change into CSRIs (see Box 8). Infrastructure practitioners may continue to see climate change?related risks as overly ambiguous and therefore difficult if not impossible to manage, exposing them to legal liability. Such parties would likely resist returning to the CSRI committee table and committing to a process that could potentially result in higher standards of due diligence and accountability. Although lessons from forensic studies could facilitate the new generation of ?climate-wise? CSRIs, parties may be reluctant to disclose specific infrastructure failures linked to changes in climate conditions. This is because disclosure of such cases does not come with the assurance of indemnification, opening up the potential for other parties to the failed project to sue.

BOX 8: The prospect of legal liability could promote or deter climate change adaptation of infrastructure

Climate change awareness is increasing insight about the prospect of legal liability related to adaptation. Failure to adapt to known and expected climate change realities may expose businesses, communities, and governments to legal actions by individuals or others for property damage and personal injury. Beyond financial compensations, the implications of this heightened exposure to legal liability include investor risk aversion, decreased confidence in governments, backlogs in infrastructure projects, and erosion of community adaptive capacity.

What we examined

We examined common law rules and statutes in Canada that could drive key decision makers to integrate climate risks in the planning, design, construction, operation, and management of infrastructure. Key decision makers include governments ? as owners and operators of infrastructure assets, providers of planning approvals, inspectors in infrastructure projects, and parties responsible for the health, safety, and environmental protection of their constituents. Also included are private owners and operators of infrastructure assets, and infrastructure practitioners who design and build infrastructure, such as architects, engineers, and contractors.

What we found

Legal liability for failure to adapt infrastructure to climate changes derives from the common law principles of negligence, nuisance, strict liability, and occupier?s liability legislation. For example, a government agency may be found negligent if it demonstrated awareness of a particular climate risk, such as the risk that melting permafrost will result in the failure of an above-ground water system and affect water quality, but did not address the risk. As for public nuisance, liability depends on how critical the infrastructure is to the public, whether methods exist to avoid the risk at a reasonable cost, and what the prevailing practices are in comparable situations.

Government exposure to liability is greater in operational decisions than in policy decisions. For example, a government can decide not to create a disaster management plan, and this would be regarded as a policy decision and unlikely to attract common law liability. However, once a government develops a disaster management plan covering climate risks to infrastructure, it owes a duty of care to anyone affected by the negligent implementation of such plan.

For infrastructure practitioners, reliance on existing codes, standards and related instruments (CSRIs) would likely prove an insufficient defence against negligence, particularly if it is known that CSRIs are inadequate under changing environmental conditions. In determining whether to design, build, and operate an infrastructure asset to a greater standard than the relevant CSRIs, decision makers would need to consider factors such as how prescriptive are the CSRIs, whether reliable information exists to support making adjustments, and whether others are already doing so. Infrastructure practitioners also need to be aware of potential changes in professional liability insurance as the impacts of climate change intensify.

What we conclude

Although Canada does not have legislation that specifically addresses obligations or responsibilities on climate change adaptation, it may well be no longer reasonable for infrastructure decision makers to seriously dispute the significance of climate risks, and ignorance or silence about the risks may not guarantee immunity to legal liability. The prospect of legal liability is likely to be a significant driver of climate change adaptation and of how we respond to the challenge.

Adapted from: Torys LLP (2008). Legal Liability as a Driver of and Barrier to Climate Change Adaptation in Infrastructure Projects. Report commissioned by the National Round Table on the Environment and the Economy.

"A code is meant to reflect what we should be doing. If you are building anything outside of Yellowknife or Whitehorse, you don?t really need to comply with any codes. You can do what you want. We have a good handle up here on what works and what doesn?t in the existing code. We need to make these calls ourselves, using largely professional judgment."
? Participant, Meeting of the NRTEE program in Yellowknife (Northwest Territories), January 2008.

5.3 Insurance

Extent of coverage: The NRTEE research focused on property and liability (also known as casualty) insurance.[63] Property insurance offers financial protection from damage to physical property, such as buildings and industrial facilities. Policies are typically on a twelve-month cycle of renewal, allowing for the incorporation of new information on risks upon renewal. Liability insurance protects individuals, businesses, or governments against civil suits for damage or harm alleged to have resulted by their actions or products to third parties or to third-party property. Coverage typically extends over many decades, providing less opportunity for ongoing adjustment as new information about risks and potential losses emerges. Property and liability insurance covers ?sudden and accidental losses,? as opposed to losses from gradual, slow-onset phenomena.

Insurance is not a property warrantee or a means of financing routine property maintenance. The intention is to return the insured to the financial state that existed immediately prior to the loss, without creating moral hazard or the expectation of economic gain. The focus on coverage of abrupt and inadvertent losses means that standard property and liability insurance policies do not cover losses due to ground subsidence, for example, because structures that sink or settle often do so incrementally. In this case, the expectation is that property owners will regularly assess and rebalance foundations. Property and liability insurance covers most climate-related risks to buildings and other physical infrastructure. This includes winter storms, wildland fire, lightning, and a number of other hazards. The risk of flood damage is covered for businesses but not homes. Damage due to shifting permafrost is generally not covered, but insurers have the option of offering coverage under special circumstances, like a pipeline or other structures designed to withstand this impact.

Insurance coverage is available across Yukon, Northwest Territories and Nunavut, with regional differences in market activity. As measured by total premiums over gross domestic product, market penetration of property and liability insurance in 2006 was 2.7 per cent in Yukon, 1.6 per cent in the Northwest Territories, and 1.1 per cent in Nunavut ? at or below the national average of 2.7 per cent.[64] The number of insurance companies active in the larger centres of Whitehorse and Yellowknife is 30 to 40 per cent greater than that found elsewhere in the territories, which is consistent with greater competition in urban centres across the country.

Despite higher insurance costs in Canada?s North, the majority of homeowners and businesses purchase property and liability insurance. Average insurance claims in Canada?s North are more than double the national average, although the proportion of those making the claims is lower. Higher costs reflect both higher operating costs of insurance companies and their assessment of risk. Most private corporations and homeowners purchase private insurance against most climate risks, whereas the purchase of insurance protection for public infrastructure is less common. Many tenants do not purchase insurance. Property and liability insurance is widely available for mines, pipelines, and other major projects in Canada?s North, where the use of sophisticated risk management programs determines the cost-effectiveness of insurance relative to alternatives that include self-insurance and preventative measures.

Clarity of roles and responsibilities: The insurance industry is part of the financial sector, governed by rules pertaining to licensing of insurance companies, independent brokers, and other industry professionals, and on market conduct. The federal Office of the Superintendent of Financial Institutions monitors the financial solvency of most insurance companies, including those licensed to operate in Canada?s North. Governments across Canada, including each of the territories, have established programs to supervise market conduct and ensure the financial capacity of insurance companies to pay claims. Insurance legislation and market conduct practices in the territories are similar to those in the provinces. Superintendents of Insurance are responsible for enforcing territorial insurance legislation and regulations, and monitoring consumer complaints, of which there have been few recurring ones.

The Insurance Bureau of Canada ? a national association representing the majority of Canada?s insurers ? identifies emerging issues and opportunities for the industry and advocates for policy changes benefiting the industry and its customers.

In part due to the extent of public ownership of buildings and other types of infrastructure in the region, the governments of all three territories also play a role in insurance provision. The Yukon government self-insures public buildings and other infrastructure, where funds are set aside each year and paid into a pool covering losses due to fire, theft, liability, and other hazards. Both Nunavut and the Northwest Territories use a form of private-public partnership to extend insurance coverage to municipalities. Coverage and mechanisms differ, but both approaches effectively transfer emerging knowledge about risk and loss control to local communities in Canada?s North.

Finally, in cases where private insurance coverage is not available to households and businesses, federal, provincial, and territorial governments act as ?insurers of last resort.? Federal, provincial, and territorial disaster/emergency management legislation in Canada seeks to clarify that public disaster relief will not be paid for damage due to natural disasters if private insurance coverage is in place or if affordable coverage is available. In effect, this establishes governments in Canada as the insurer of last resort, responsible for providing disaster relief when it is otherwise not available. In Canada, including Canada?s North, this has been most evident for flood damage to homes.

Flexibility and application: Insurance is in the business of aligning its pricing with the risks assumed, thus the incentives for adjusting their internal practices are powerful. This includes searching for new information on risks and potential outcomes related to those risks, monitoring the effectiveness of past risk reduction measures, and integrating the new information in insurance policies. In the case of damage from wildland fires, for example, insurers are presently seeking scientific evidence to validate practices offering greatest protection, and to quantify resulting changes in risk levels. Quantifying the extent of savings from communities that follow the FireSmart program ? a strategy of broad applicability in Canada ? will take time and research. Governments seeking greater involvement by the insurance industry could support greater research in this area.

Insurance companies are also highly motivated to help households and corporations reduce the actual losses experienced, as this directly increases insurers? profitability. Insurance companies have a tradition of promoting loss control, providing information, and other types of incentives to encourage customers to adjust their behaviour toward risk reduction. Insurance companies operating in Canada?s North monitor a number of local risks, and provide incentives or can waive additional charges if the property owners regularly replace their roof and properly maintain a wood burning stove, for example. In the case of underground storage tanks, insurance companies have refused to renew policies unless owners replaced them with above-ground tanks. In the United States, extensive wind damage in Florida and Oklahoma led insurance companies to lower the cost of insurance for property owners with buildings constructed to be resilient to severe wind damage. In drought-prone areas of California and Australia, insurance practices are changing due to huge losses from wildland fires. In Canada, the 2003 fires in Kelowna (British Columbia) resulted in insurers? involvement in public education. Finally, incentives are evident in coverage provided to large corporate operations, like mines, as part of their overall risk management practices.

In general, the interests of insurance companies in promoting loss control and risk reduction align with the interests of households and businesses in minimizing losses and suffering, but risk tolerance and political acceptability play a role here. Insurance costs tend to be a very small part of spending by households and businesses, and, in some cases, may not provide a strong enough incentive to alter risky behaviour. Assuming the cost of insurance appropriately reflects the risk of damage, property owners willing to assume greater risk of loss pay more for insurance coverage. Issues may arise when the cost of providing insurance increases due to rising risk levels and related premium hikes result in public outcry. Government decision makers may respond by providing subsidies, thus inadvertently promoting risky behaviour among their constituents.[65]

In Canada, private insurance competes with a number of federal government programs offering disaster relief free of charge to territorial, provincial, and municipal governments. This includes programs run by Indian and Northern Affairs Canada, Infrastructure Canada, and Public Safety Canada. For example, damage to municipal infrastructure caused by a flood, a wildland fire, or other climate-related natural disasters can be partially recovered from federal funding programs like the Disaster Financial Assistance Arrangements (DFAA), where the federal government reimburses a certain amount of losses. The purchase of private insurance reduces the recoveries eligible under the DFAA dollar for dollar.

Role of climate-related information: Data and information to estimate risks and expected losses are critical to the business of insurance, including climate-related information. In general, recent historic experience underpins cost estimates and assessments of potential risks facing each potential customer. Prices quoted by insurance companies often vary considerably, largely because of differences in information available to each company.

A changing climate presents some challenges to the industry?s pricing practices, especially where gaps in local weather data exist. Insurers have recently begun to develop climate risk models to anticipate high consequence but low probability risks, to support decision making by insurers and their clients. Insurance practitioners have raised concerns about the absence, or poor quality, of local weather data across Canada, particularly in northern Canada. Although better data and information would support efforts by the insurance industry to model its potential future losses, determine the appropriate price to charge, and other insurance terms and conditions, collaborative efforts to share information with other key communities of practitioners, such as the CSRI community, are lacking.

Finally, as underwriters of liability insurance for physical infrastructure and infrastructure practitioners, the insurance industry has a vested interest in ensuring that CSRIs communicate to infrastructure practitioners how best to take climate change into account.

Consideration of a changing climate: Insurance leaders and other experts consulted during the course of the NRTEE program indicate that a changing climate is unlikely to result in a material dislocation in property and liability insurance markets for owners of homes and buildings in northern Canada over the next five to ten years. Insurance costs associated with climate-related risks in northern Canada are very small in relation to non-climate related risks like urban fires, theft, and liability. In contrast to other areas in Canada, little empirical evidence exists for Canada?s North on trends in extreme weather events. As a result, the insurance industry anticipates that changes in northern climate risks will have little effect on the availability and affordability of insurance in Canada?s North in the near future.

However, our research highlighted some new, emerging implications of a changing climate related to insurance in Canada?s North:

  • Permafrost degradation could contribute to increased exposure to liabilities linked to pollution. In communities with above-ground water and sewer systems, permafrost melting could rupture the systems causing widespread contamination. Owners of the water and sewer systems may be held liable for damage, cleanup costs, and for failure to upgrade existing infrastructure. Energy pipelines built over permafrost terrain could be at risk of pipeline rupture and leakage, with resulting contamination of land and possibly watercourses, and high cleanup costs. Abandoned and orphaned mining operations in Yukon and Northwest Territories with containment structures (e.g., tailing dams) reliant on frozen permafrost might be at risk of breaching and releasing toxic tailings.

  • Consistent with international trends in corporate social responsibility, climate change disclosure is becoming more common. Companies that are affected by climate change but do not themselves contribute to it could be vulnerable to class action lawsuits if they do not make changes to avert negative impacts of climate change on their operations.

  • Use of new shipping lanes, including an open Northwest Passage, may raise issues of marine liability. For example, what would be the implications of a vessel carrying hazardous materials striking ice and releasing toxic materials? The cleanup of fuel alone in cold and distant waters would be both difficult and costly, while environmental and social impacts could be significant. And with increasing tourism activity, the risk of tour ships foundering may pose great challenges. Aside from potential liabilities, these include greater resources for rescue and evacuation efforts and the possibility of overwhelming the service capacity of small communities.

5.4 Disaster Management

Extent of coverage: Conventional definitions of ?disaster,? developed for insurance or other financial compensation needs, emphasize the catastrophic effects of single events. The relative number of people disrupted, the value of assets destroyed and the publicity an event garners in the media, all factor in to what is labelled as a disaster. By this definition, relatively few natural disasters have taken place in Canada?s North, and consequently the region?s experience with disaster management per se is limited (see Table 15). A widely distributed population with a relatively low density of high value assets reduces the probability of any one large natural event being considered a disaster or emergency in Canada?s North.

When it comes to Canada?s North and climate change, a new understanding of what constitutes disaster is required. Instead of catastrophic losses from weather events or other natural hazards, communities may be concerned with the slow processes of permafrost degradation and melting of sea ice and the potentially disastrous outcomes that may become apparent either suddenly or over time. For example, several communities in the Northwest Territories and Nunavut rely upon country foods to some degree, so that the shifting of or reductions in caribou herds, or the inability to access traditional hunting areas due to sea-ice loss are local disasters that result in both economic and cultural hardship. The disaster is real and apparent but not sudden and catastrophic.

Disaster management includes both structural and non-structural approaches to support risk reduction, involving the ?hardening? of structures in the former case and education, better land-use planning, and insurance in the latter. Infrastructure can play a critical role in disaster/emergency management. [66] Given our dependence on its services, and hence vulnerability to failures or reductions in service levels, infrastructure can also be the lynchpin in triggering disasters or emergencies in the first place.

Table 15: Incidents of weather-related disasters exposing local vulnerabilities
1925 Flood: Dawson, Yukon (YT). Severe flooding up to 1.5 m high caused by ice jamming on the Klondike River and subsequently on the Yukon River. None given
1963 Flood: Hay River, Northwest Territories (NT). Major flooding caused by ice jamming in Old Town and Indian Village required evacuation of the community of Hay River. $5,709,191
1974 Flood: Hay River, NT. Flooding caused by ice jamming required evacuation of West Channel residents. None given
1974 Storm: Southeast Yukon. Heavy rainfall over two days caused sections of highway and bridges along the Alaska Highway to be washed away. $4,884,345
1979 Flood: Dawson, YT. Severe flooding up to 2 m high caused by ice jamming on the Yukon River, affecting 80% of Dawson?s buildings. $4,303,928
1982 Flood: Hay River, NT. $969,327
1982 Flood: Aklavik, NT. Spring runoff and ice jams cause flooding and extensive damage. $239,296
1985 Flood: Hay River, NT. Record high flows of the Hay River and ice jams caused serious flooding, requiring the evacuation of West Channel residents. One injury was reported. None given
1988 Flood: Norman Wells, NT. Two severe flood events occurred in the Laird and Mackenzie River Basins. $7,800,000
1989 Flood: Liard River, NT. Flooding, caused by severe ice jams near Three Mile Island, damaged the community of Fort Liard, subsequently reaching and causing damages in Fort Simpson and Hay River. Personal, municipal and territorial property was damaged: over 50 homes were affected and 125 people were evacuated. $1,094,778
1990 Forest fires: Old Crow, YT. Forest fires resulted in community evacuation. $7,963,221
1991 Flood: Old Crow, YT. Ice jams caused the Porcupine River to overflow and flood the community, damaging over half its buildings including 32?40 homes, the church, the school, the nursing station, and the airport. Supplies, electrical systems and generators were also damaged. $613,294
1992 Flood: Hay River, NT. Approximately 100 residents were evacuated due to extensive flooding caused by ice jamming at the mouth of the Hay River. None given
1992 Flood: Yukon rivers (Upper Liard River basin, Teslin River basin, South Canol Area, Upper Lakes of the Yukon River basin, Stewart River and Bennett Lake). Above-average snowpack, rain, and warm temperatures caused record floods. Impacts included road washouts, damage to private property and reserves, as well as to water and sewer facilities. Upper Liard, Carmacks, Carcross and Teslin were the communities most affected. $252,643
1995 Forest fire: Sahtu region of NT. A forest fire, started by lightening, spread from Fort Norman to Norman Wells, Yellowknife, and Deline, damaging territorial, municipal, and private property and resulting in evacuations. $3,475,071
1998 Forest fire: Tibbet Lake, NT. A forest fire reaching 140,000 hectares in size forced evacuations out the Ingraham Trail area, closure of Ingraham Trail to all traffic, and destroyed private property. $12,044,118
1999 Forest fire: Burwash Landing, YT. A forest fire caused the evacuation of 69 residents and tourists, destroyed six houses and damaged other buildings, and shut down the Alaska highway between Beaver Creek and Haines Junction. $922,323
2003 Forest fire: Norman Wells, NT. A forest fire, started by lightening, caused Norman Wells to declare a state of emergency and evacuate about 100 residents by plane and boat. None given
2005 Flood: Fort Good Hope, NT. Rapid rise of Jackfish Creek and Rabbitskin River led to the evacuation of 10 families. None given

Source: Public Safety Canada, Canadian Disaster Database version 4.4 Note that the listing only reflects disasters captured in the national database.

Clarity of roles and responsibilities: The mandate and responsibility framework for disaster management in Canada is stronger in clarifying accountabilities and processes in response and recovery than in other phases of disaster management. However, further rollout of the 2008 Canada?s National Disaster Mitigation Strategy and dedicated federal investments in disaster mitigation infrastructure under Building Canada might change this.[67] In addition to providing compensation to provinces and territories for disaster response and recovery through Disaster Financial Assistance Arrangements, the federal government has significant disaster management responsibilities in its areas of jurisdiction. It often enters into partnership arrangements with other governments or organizations that are better placed to respond. Territorial governments are the most important focal points of accountability for emergency management in Canada?s North, as codified in the emergency management legislation in place in each. In addition, territorial governments have established a number of regulatory bodies, some with responsibilities that relate to emergency management.

Territorial legislation delegates responsibility for emergency management to municipalities, with varying support for municipal emergency planning. Nunavut?s updated emergency management legislation mandates its government organizations, municipal councils, and certain enterprises to identify risks as a part of their emergency management programs. In the Northwest Territories, the revised emergency planning template released in 2008 encourages hazard identification and the development of community risk assessments. The Yukon government requires all communities to develop sustainability strategies, which can include identification and assessment of risks.

The ongoing negotiation and implementation of land claim and Aboriginal self-government agreements across the territories is another important dimension of the responsibility and accountability frameworks for emergency management in Canada?s North. As stipulated in land claim agreements, Aboriginal governments are owners of significant proportions of land, and co-managers in land and resource management, environmental review and land-use planning, allocating responsibility for adequate emergency management in these areas.

A number of private sector entities in Canada?s North have important roles to play in emergency management. Industries, such as communications services, have a role in the protection of critical infrastructure and assurance of critical services. In addition to these industries, resource extraction industries are the single largest players with both assets and liabilities. Emergency management responsibilities arise in part from their business continuity planning and because of regulatory requirements, though the focus is on protecting their own assets and limiting liabilities.

As part of the NRTEE?s program, a study team undertook assessments of critical infrastructure with three communities in Canada?s North (Whitehorse, Yukon; Inuvik, Northwest Territories; and Gjoa Haven, Nunavut), which revealed potential weaknesses in current responsibility and accountability frameworks. There appear to be weaknesses in the management of risks of a systemic nature, resulting, for example, from interdependencies among infrastructure types and with the potential for cascading effects. The availability of redundancies in critical infrastructure, such as communications and power transmission networks, is a strategy to manage climate risks. From an emergency management perspective, it is unclear who would be responsible for determining appropriate levels of redundancy, and how this determination would take place. For example, what role would a private company like Northwestel ? the major provider of communications services in the territories ? play, as opposed to or in relation to government in assessing redundancy requirements? To whom would the cost of added redundancy accrue and how would this be determined? Would adding redundancies be considered a public good, requiring government investment and inter-jurisdictional collaboration?

Flexibility and application: In past decades, disaster management policy at the national level emphasized preparedness, response, and recovery over prevention and mitigation. Global recognition of a rising trend in losses from weather-related disasters has started to motivate a shift in emphasis, a recognition captured in the preamble to Canada?s National Disaster Mitigation Strategy (NDMS): "Nationally and internationally, the frequency of natural disasters is increasing. The cumulative effect of these disasters produces a significant personal, material and economic strain on individuals, communities and the fiscal capacity of all levels of governments."[68] Where once policy makers might have perceived investments in prevention and disaster mitigation as an opportunity cost, given the unknown payoffs in the short term, we are seeing an emphasis on the return on investment of preventative measures. Canada?s NDMS underscores this by referencing cost-benefit ratios of flood prevention measures in Australia, the United States, and the United Kingdom.

Justifiable from a number of perspectives, such as humanitarian, economic, social, environmental, and cultural, risk-based approaches to disaster management prioritize prevention and mitigation. In Canada, the absence of a national strategy on disaster mitigation has been a barrier to the advancement of this approach in the past. Given its stated focus on natural disasters, the NDMS, if adequately funded, could be an important step in proactively addressing climate change impacts across Canada. The strategy establishes the shared inter-jurisdictional goal ?to protect lives and maintain resilient, sustainable communities by fostering disaster risk reduction as a way of life,? and it identifies climate change adaptation as an area for future cooperation. The NDMS also establishes a federal-provincialterritorial centre of mitigation excellence to facilitate implementation of initiatives of shared interest.

Funding is often an incentive to change the status quo. For example, the NDMS includes financial incentives to advance its goals nationally, with the Building Canada fund as a vehicle to finance major disaster mitigation projects. This has a couple of implications for Canada?s North. The funding formula is on a per capita basis, meaning that the absolute allocation for low-density regions is small in comparison to high-density regions. Disaster mitigation is one among several types of eligible infrastructure; these types of projects are likely to be less attractive than hockey arenas and schools, for example. Ideally, though, governments would support the integration of climate change considerations for any type of infrastructure category. Evidence also suggests that the need to comply with detailed application procedures, maintain records over long periods of time, and comprehensive audit trails are a disincentive to northerners due to capacity constraints.

At a local level in Canada?s North, constraints in human and financial capacity may present barriers to emphasizing proactive risk reduction in emergency management (see Box 9). The degree to which emergency prevention/mitigation are included in local plans varies across the territories and among communities. In general, local governments have little to no impetus to prioritize emergency/disaster prevention and mitigation, and typically lack the resources needed to implement risk reduction strategies. As an example, about seven communities of 33 in the Northwest Territories have been able to put emergency management plans in place, despite the fact that an emergency planning template has been available for over seven years. In small remote communities, capacity building and training to enable the development and review of effective emergency management plans and ensure adequate preparedness is critical.

A final type of incentive or disincentive relates to liability. Government liability for addressing risks arises only once a risk has been identified and noted in policy as a risk to be managed through the operations of government. In other words, while governments will not generally be held liable for a decision to prioritize the management of one source of risk over another, once a certain risk has been identified and a commitment made to manage it, a failure to do so can have repercussions. This issue can be especially acute at the local level of government, where a significant portion of operationallybased choices are made, though in Canada?s North, territorial governments also play many significant roles in the delivery of local services. For example, the Government of Yukon provides project management services pertaining to infrastructure for unincorporated municipalities across the territory.[69]

BOX 9: Northern stakeholders have a range of views on capacity issues that could hinder climate change adaptation

During the course of the program on Climate Change Adaptation Policy, the NRTEE commissioned research on the role of government in adaptation, specifically in Canada?s North. As part of this work, the research team conducted telephone interviews with northern stakeholders in April 2007. The interview format consisted of open-ended questions covering different aspects of climate change adaptation. The following presents aggregate results of answers to the question,

"What are the most pressing capacity issues that you are or will be facing in relation to climate change adaptation?"

Results are not statistically representative of northern populations. They provide an indication of northerners? perceptions on the issue at the time of the interviews.

  • lack of technical capacity is a huge issue
  • we?ll need more money
  • traditional knowledge is being lost
  • traditional knowledge isn?t taken very seriously
  • we?ll need to invest in education to generate local expertise
  • if we lose traditional knowledge and don?t have formal education we will not fit anywhere and won?t be able to adapt

During the course of the NRTEE?s research, northern stakeholders confirmed the resistance of some local governments to formally identify or commit to management of certain risks. Discussions led to the identification of two types of related barriers. Some local governments are likely hesitant to confirm a potential risk to community assets, such as intensifying flood risks, because of the financial implications in managing that risk in the context of already stretched budgets. Fear of exposure to legal liability is also a barrier to formally recognizing a risk and taking action. In this case, local governments may not be confident in their capacity to successfully manage the identified risk. These findings suggest a likely need to realign incentives to encourage the management of climate risks by governments involved in operational decisions. Options could include adjusting statutes to mandate adaptive action and enabling private sector involvement in the provision of private services, where appropriate.

Role of climate-related information: At the community level, a first step in good practice in emergency management is to identify hazards and assess risks, which can form the basis for a community plan. A plan such as this can remain relevant for years, but the flexibility to integrate new information is key. In Canada?s North and elsewhere in Canada, an emergency management plan would likely include climate-related hazards, the threats that they pose, and an assessment of the risk of each threat manifesting itself as a specific emergency or disaster.[70] Thus, emergency management practitioners use a range of climate-related information products, which can include observations of environmental change, projections of changes in climate conditions, and information on climate change impacts. Information on the infrastructure stock and interdependencies among infrastructure systems is also critically important.

The NRTEE?s research revealed a number of concerns related to adequacy and accessibility of reliable climate-related data and information for emergency management. For example, stakeholders perceive factors such as the declining government commitment to observation and monitoring systems, the lack of information on permafrost change, and the limitations of climate change projections in terms of spatial and temporal resolution will have repercussions on emergency management planning. A challenge in this regard is the problematic nature of monitoring for extremes when the data collection system is geographically diffuse, poorly maintained, and limited in the weather parameters it is able to reliably assess. The sorts of extremes that can result in catastrophic failures of infrastructure systems sometimes occur within periods for which no monitoring is currently available. Similarly, current climate models have yet to be able to project extremes at the spatial scale that emergency and critical infrastructure managers would find most useful. Many also seemed to value the ability to generate the information locally and make it regionally accessible, likely requiring capacity building and training.

In Canada and internationally, discussions are starting to take place regarding the need for climaterelated decision support and the kinds of information that underlie it. This is partly in recognition of the barriers encountered or perceived by decision makers in climate-sensitive sectors, such as disaster management, land-use use planning, and natural resource management, in accessing relevant information for climate change adaptation and integrating this information in plans and decisions. A lack of site-specific information is a common barrier cited. Given the uncertainties in projecting future climate conditions, the level of detail that information users demand is unlikely to be achievable. Practitioners will need to adjust their analytical and decision-making frameworks to accommodate uncertainty.

Consideration of a changing climate: In the past few years, international recognition of the synergies and complementarities between climate change adaptation and (natural) disaster risk reduction has increased markedly, especially in the context of support for developing country efforts. The disaster risk reduction community and climate change adaptation community are starting to collaborate, with sharing of lessons learned as a first step.

In Canada?s North (and likely across Canada), limited interaction between the disaster/emergency management and the climate change adaptation communities presents an impediment to the integration of climate change considerations in disaster/emergency management. Sound emergency/disaster management holds the potential to provide some of the measures and practices that governments need to proactively manage climate risks, that is, to help ?mainstream? climate change adaptation. Although it is widely recognized that Canada?s North is particularly vulnerable to the impacts of climate change, little systematic analysis has taken place to assess the potential for emergencies or other disasters under a changing climate.

Northern infrastructure practitioners and governments recognize the need to conduct more comprehensive risk assessments in light of climate change, as revealed in NRTEE consultations. Although participants were able to articulate expected climate change?related risks to the performance of critical infrastructure serving their communities, some reflected a lack of awareness regarding the types of climate change?related information, tools for decision support, and approaches to assess critical infrastructure-related risks. Levels of awareness in this regard differed by community, largely varying in direct relation with the size and resources of the community.

This lack of awareness among northern practitioners and government representatives may well reflect a broader awareness challenge of how to integrate climate trends and climate change information with the assessment and management of infrastructure-related risks. The insurance industry could be a very strong partner due to its expertise in risk management and, increasingly, the modelling of climate-related risks. It also shares with disaster/emergency management practitioners the aim of reducing losses in life and property damages. However, little if any evidence exists in Yukon, the Northwest Territories, or Nunavut (or in most provinces, for that matter) of meaningful engagement between disaster/emergency management officials and the insurance industry. A formalized arrangement could help governments monitor changes in coverage by the private insurance industry, including the portion of property owners who purchase coverage, new coverages introduced by the industry, or coverages where insurers anticipate changes in pricing or availability. If a business case exists in this collaboration, the motivation of the private insurance industry is likely to be high.

5.5 Observations and Implications

The NRTEE?s research, analysis, and stakeholder consultations lead us to identify several core challenges to the successful management of climate risks to northern infrastructure that need to be addressed:

  • Limited feedback among science and data providers, infrastructure practitioners, and policy makers at several levels of decision making ? a barrier to problem identification and application of solutions.
  • Inadequate attention of national institutions, such as national codes and standards, to northern interests or conditions.
  • Gaps in the availability and accessibility of data and information that form the basis for infrastructure risk management and loss prevention, such as current and projected impacts of climate change, and data on the stock of and demand projections for infrastructure.
  • Uneven capacity across and within jurisdictions to assess climate risks to infrastructure, and to develop, deploy, and enforce standards and risk reduction measures.

Discussions below explore our observations for each of the three risk-based mechanisms. We also explore linkages across these mechanisms that could be better exploited.


Canada?s North is disadvantaged by national CSRI processes and products. Economic assumptions and interests driving the creation of new and the review of existing CSRIs mainly pertain to southern conditions and players. National CSRIs do not adequately account for their implications on building materials in northern climates, environmental conditions, and socio-economic realities (affecting, for example, maintenance and repair schedules). Many CSRIs do not adequately clarify how approaches, methods, and processes may require adjustment for application in Canada?s North. This leads to gaps in coverage of northern technologies and interests. Financial and human resource constraints are barriers to the participation of northern stakeholders in national CSRI processes.

Gaps in data and information to feed into CSRIs for Canada?s North already exist. Because of the relatively limited economic development that has taken place in Canada?s North to date and low population densities, the demand for more or better data and information was lacking. Climate change and an increasing geopolitical focus on the North are illuminating this weakness. Awareness and understanding of the importance of climate change adaptation among the Canadian engineering community is increasing; yet in terms of actual engineering design changes, work is still at an early stage. Information providers face the challenge of bringing CSRIs up to date to reflect current climate conditions, and develop processes that allow for more rapid CSRI evolution to account for future climate realities. At the same time, application of best practices and professional judgment may be inconsistent, and gaps in codification of these practices inhibit the transfer of lessons learned.

Reliance on less formalized CSRIs and experience grants northern infrastructure practitioners the flexibility to tailor their design, construction, and maintenance decisions to northern circumstances. Meaningfully tapping into traditional knowledge and northern communities, as sources of historical information and as actors in monitoring efforts, needs to be undertaken.

CSRIs have yet to play a role in driving the agenda on the management of climate risks, but this could change for a few reasons. To the extent that CSRIs are shown to be inadequate in a changing climate, their role in indemnifying infrastructure professionals from legal liability is diminished. Awareness of this issue could drive efforts to ensure CSRIs keep pace with changing risk profiles as the result of a changing climate. The insurance industry has a clear interest in this regard, potentially carving out a role in sharing risk management practices and decision-support tools in support of the integration of climate risks into routine practices.

Finally, Canada is not alone in its attempts to clarify the implications of a changing climate for infrastructure management, and CSRIs specifically. For example, the white paper on adaptation by the European Commission includes ?exploring the feasibility of incorporating climate impacts in construction standards, such as Eurocodes? as one of many priority actions.[71] The opportunity exists for Canadian CSRI development bodies to take a leadership role in advancing adaptation solutions internationally.


The insurance industry has a clear, long-term role to play in supporting climate risk management in Canada?s North. Insurance is a generally well-understood and effective means to both assess potential risk and assign appropriate costs to it, thereby creating incentives to adjust behaviour and practices. Insurers have data and information of significant relevance to the evaluation of medium- to long-term infrastructure risks related to a changing climate, including the costs such risks may represent from a ?public good? as well as private perspective. However, property insurance contracts are generally one year in length, and may therefore fail to convey the long-term signal needed to catalyze broader societal adjustments, such as a coordinated retreat from coastlines.

A general tendency exists to rely on the insurance industry as an efficient communicator of risk and, therefore, as a driver of ?rational? or risk-based, decision making. However, the quality of data and information available to insurers to price premiums commensurate to risks heavily influences its usefulness as a risk reduction mechanism. Because of the remote and sparsely populated character of Canada?s North, climate-related and physical risks to infrastructure and related services can be more difficult and costly to measure. This reality, coupled with the small size of the northern market relative to total underwriting in Canada, may prompt insurers to provide coverage that does not reflect the extent and magnitude of actual northern risks, including those related to climate change. Detailed exploration of how a changing climate and adjustments to insurance practices might influence the affordability, accessibility, and quality of coverage for households, businesses, and regional and local governments is key.

The potential for liability issues emphasizes the importance of engagement across communities of practice and private and public sectors. For example, research conducted for the NRTEE on the question of liability indicates most professional liability policies of today are likely to cover infrastructurerelated risks linked to permafrost degradation, but this has yet to be tested in a court of law. From the perspective of property insurance, permafrost risk is currently uninsurable.

In Canada, neither the public nor private sector have yet to seriously consider the prospect of alternative risk insurance models such as public-private partnerships, or even the desirability of mandatory insurance coverage, to ensure continued insurance capacity in a changing climate. Governments? oversight of the insurance industry is limited primarily to considerations of a solvency nature. At the same time, the industry has not been a vocal proponent of improvements in environmental monitoring, analysis, or information sharing in Canada?s North or elsewhere in Canada. Similarly, the industry has to date remained largely focused on its own models, rather than engaging with communities of practitioners whose risk-based decision making with respect to climate change will have a major bearing on the attainment both of insurance-sector and public-welfare objectives.

Disaster Management

In the context of social, economic, and climate changes taking place and projected for Canada?s North, the benefits of strengthening approaches to prevention and disaster mitigation in the region are clear. The rate of warming and change in other climate parameters, the exposure of physical infrastructure to such changes, the limited amount of redundancy in many northern infrastructure systems, and the generally remote nature of many northern communities, are among the reasons supporting proactive disaster risk reduction.

Enabling processes for disaster prevention and disaster mitigation extend to the national level and can help the integration of climate risks into disaster management. Ensuring regional and local capacity to carry this out is critical. In Canada?s North, where most communities take hours if not days to reach, disaster management planning must assume a greater degree of autonomy than would otherwise be the case in connected communities. However, many small and remote northern communities lack the necessary financial and human resources and access to relevant information for conducting the sort of hazard assessments and implementation of risk-reduction strategies recommended by disaster management practitioners. Levels of awareness of the types of information and approaches available or required to integrate climate considerations into disaster management also differ across communities.

Limited levels of redundancies in infrastructure systems present real constraints to effective disaster management, which climate change could worsen. A lack of redundancy in transportation, communication, and energy infrastructure in northern urban centres makes them less resilient to the potential effects of natural hazards than their southern counterparts. For example, a prolonged closure of the main land-based transportation artery into and out of either Yellowknife or Whitehorse, coupled with the simultaneous closure of the local airports, could be problematic for access to basic goods and services. So too could the closure of a distant transportation hub upon which a northern community might be largely dependent for staging the delivery of goods, such as Vancouver for Whitehorse. In the context of a changing climate and related changes in weather extremes, clarifying adequate levels, roles, and responsibilities of infrastructure redundancy for Canada?s North will likely become increasingly important.

Linkages among Risk-based Mechanisms

Each of these mechanisms has its own practitioner community and enabling framework. However, effective use of the three mechanisms can mutually reinforce adaptation and help foster a culture of climate risk reduction. A few examples highlight the inter-relationships.

Compliance with CSRIs is the basis for liability insurance (Figure 6). Therefore, insurers have an interest in supporting efforts to adjust CSRIs to account for a changing climate as it has the potential to improve insurers? pricing and profiling of risk. At the same time, insurers are developing analytical tools to improve their assessment of risk in the context of changing patterns of weather extremes. Insurers could share these tools and information with CSRI communities so they can integrate climate risks into the development of codes and standards. Insurers, in turn, would benefit from tracking infrastructure failure and damage connected to ineffective deployment or enforcement of CSRIs.

FIGURE 6: Linkages between CSRIs and insurance

Effective deployment and enforcement of CSRIs reduces the risk of infrastructure failure and related harm to people and property, in the event of a disaster or emergency (Figure 7). Like insurers, disaster management practitioners have an incentive to support adjustments in CSRIs to better reflect changing climate risk profiles. Information, such as infrastructure failures and damage due to weaknesses in CSRIs, is helpful for developing and testing community emergency management plans, which emphasizes the importance of greater disclosure among CSRI practitioners.

FIGURE 7: Linkages between CSRIs and disaster management

Disaster management plans with an emphasis on prevention can minimize infrastructure exposure to economic and social losses, requiring fewer insurance payouts and thus would likely be of great interest to insurers (Figure 8). An additional motive for collaboration between disaster management and insurance communities is in the use of insurance as a mechanism to promote adaptive behaviour, such as the example of FireSmart brought up earlier. Finally, insurers? expertise in risk assessment, including climate risk assessment and use of new approaches to account for changing climatic conditions, could help in the development of disaster/emergency management plans.

FIGURE 8: Linkages between disaster management and insurance

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58 Definitions related to disaster management come from Gartner Lee Limited (2008) ? a report commissioned by the NRTEE.

59 The section on CSRI draws from Steenhof and Mortimer (2008) ? a report commissioned by the NRTEE.

60 For an example of a standards development process that the Canadian Standards Association follows, see http://construction. csa.ca/dev_process.asp.

61 See the Standards Council of Canada?s Summary of Corporate Plan 2009-2010 to 2013-2014 at http://www.scc.ca/Asset/iu_files/ SCC_CorpPlan_E_Summary.qxd_Layout_1.pdf.

62 Climate ?normals? summarize the observed climate conditions of a particular location over a particular time period. Environment Canada estimates climate normals based on a 30-year horizon, a period considered long enough to even out year-to-year variability (Lemmen et al. 2008).

63 Although our focus is on property and liability insurance, a range of alternative risk transfer mechanisms exist. In traditional insurance markets, the buyer of coverage pays the insurer a premium in exchange for indemnity against a certain category of risk or for a particular loss. In contrast, alternative risk transfer mechanisms rely on capital market instruments such as derivatives, futures, options, swaps, financial reinsurance, finite risk reinsurance, sidecars, or catastrophe bonds. International climate change discussions are currently examining the potential role for alternative risk transfer mechanisms, such as weather-indexed insurance, in protecting people and livelihoods in developing countries from climate risk. See http://www.climate-insurance.org/upload/Climate_Society_Final.pdf.

64 This section mainly draws from Kovacs et al. (2008) ? a study commissioned by the NRTEE.

65 See the April 19, 2009 story by Lehmann in E&E Reporter, Insurance: State regulators repeatedly clash on national plan for catastrophes.

66 Examples include redundancy in the energy grid and provision of backup power (prevention / mitigation); transportation routes that enable rapid delivery of emergency supplies (preparedness); ports from which to initiate oil spill clean-ups (response); emergency shelter for housing during recovery (recovery).

67 See Appendix 7.4 for financial commitments pertaining to Building Canada.

68 http://www.publicsafety.gc.ca/prg/em/ndms/strategy-eng.aspx Accessed April 30, 2009.

69 http://www.community.gov.yk.ca/landdevelopment/index.html Accessed April 30, 2009.

70 Increasingly, provincial and territorial emergency management legislations require the identification of hazards and subsequent risks. In response to this trend, the federal government (Environment Canada) is developing climate hazards risk information for use by other levels of government. The Canadian Atmospheric Hazards Network website (www.hazards.ca) include data on climate and weather hazards, past events, their trends and will include, within the next year or two, guidance on potential hazards under future climate change.

71 European Commission (2009).