Moving quickly to strengthen Ontario’s roads, sewers, and public buildings against some of the major impacts of a changing climate could save more than $4 billion per year. That’s the headline conclusion of the province’s Financial Accountability Office, presented last week in the final report in its four-year journey to understand how hotter temperatures, more rain, and fewer yearly instances of freeze-thaw will raise the price of Ontario’s infrastructure.
The summary report dives deeper into the future potential costs of specific climate-change impacts on more than $700 billion worth of municipally and provincially owned infrastructure. It finds that climate change will raise the costs of maintaining public infrastructure. The good news: acting to adapt infrastructure — through such measures as changing the asphalt mix used for roads and proactively enhancing the stormwater system — will cost provinces and municipalities less than cleaning up after disasters.
Previous reports in the Costing Climate Change Impacts to Public Infrastructure series profiled municipal and provincial infrastructure and zoomed in on three different categories: transportation, buildings and facilities, and storm and wastewater infrastructure. This report pulls together the findings of those reports and adds projections of future financial risk.
As TVO Today’s John Michael McGrath noted in 2021, the FAO’s efforts are limited in scope. It looks only at three climate risks and three infrastructure areas, after all. Predicting exactly how climate change will affect a given locale — and what the impacts might cost — is notoriously complex, something the FAO acknowledges in the report, and the data to do forecasting on other damaging events, like higher-than-normal winds, simply doesn’t exist. But even these limited findings suggest that proactive action is the most cost-effective strategy.
The report’s authors stress that the costs of cleaning up after infrastructure damage — which, in their estimation, the province’s finances would be able to bear in all scenarios — are just a small piece of the picture when it comes to the potential impacts of infrastructure failure in Ontario. “When public infrastructure fails, it can impose costs on households and businesses,” Edward Crummey, FAO director of economics and fiscal analysis, told reporters at a press briefing.
That means the risk of infrastructure failure, and the potential benefits of adaptation, are much larger than this report’s numbers alone would suggest, says Ryan Ness, director of adaptation at the Canadian Climate Institute.
“On the surface, the numbers don’t seem too dramatic,” he says, adding that climate change is inevitably going to affect public infrastructure and that this project shows that investing in adaption would save “a substantial but still kind of modest amount of money in terms of provincial budgets in the long term.”
To his mind, what it really proves is that putting money toward infrastructure adaptation would be a “no regret” investment. “Worst case, it doesn’t cost us any more in the long term than it would to not adapt,” he says. “And it’s likely to return far more benefits than what are [captured] in this report.”
Other experts put it more bluntly. “If you think about the sh*tshow that was Canada this summer, between floods and wildfires and everything else, we're starting to see what happens if you don't have infrastructure,” says Jessica Green, a political-science professor at the University of Toronto and an expert on climate governance.
“Climate change is here. We know that Canada is warming at twice the average global rate,” Green says. “This isn't something that's going to happen in the future — it's something that's happening now. And what the report clearly shows is that we need to prepare because doing so is actually the cost-effective approach.”
The report also suggests that the level of government with the least capacity to raise revenue is facing the most risk. Seventy-one per cent of the infrastructure studied by the FAO is owned and managed by municipalities, meaning the smallest level of government faces the greatest budget liability. “We project that municipalities will incur about four times the climate-related infrastructure costs compared to the province,” Crummey said.
“Municipalities are really left holding the bag,” Green says. “This is where a lot of the hard work has to be done in terms of making infrastructure more resilient, and the funding is not forthcoming from the federal or provincial governments.”
Asked about the FAO report at Queen’s Park last Wednesday, Environment Minister Andrea Khanjin (Barrie–Innisfil) said that the sitting Progressive Conservative government is committed to working with municipalities on resilience through initiatives like the Build Back Better pilot project. “We’ve always worked in lockstep with our municipal partners,” she said.
Khanjin also said her government was investing in infrastructure through Green Bonds and working with Infrastructure Ontario.
Speaking last Wednesday, the leaders of Ontario’s three other sitting parties said the PCs weren’t doing enough. "This government wants to just kick the can down the road, pass on the responsibility to municipalities, and they’ve already shown they don’t take these issues seriously,” said NDP leader Marit Stiles (Davenport). “They cancelled flood protection. They’re paving over farmland.”
Green leader Mike Schreiner (Guelph), whose question to the FAO in 2019 sparked the series of reports, tells TVO Today that costing climate risk is “critically important. It informs the debate around why it’s so important from a fiscal standpoint to address the climate crisis.”
The FAO has presented its approach to other provinces and municipalities, and its methods have garnered interest outside of Canada. FAO analysts have also spoken at an OECD budget chiefs’ meeting and to a group of United States military leaders, Crummey said.
Tamer El-Diraby, a professor of engineering at the University of Toronto who studies sustainable construction, applauds the FAO for being so transparent about its approach — and the limitations of that approach. “I’m not aware of any other [published] similar study that took place in Canada,” he says. The fact that the FAO publicly released its studies, findings, and methodology is “quite progressive.”
The FAO’s series of reports is “amazingly important,” he adds. “It will contribute a great deal to informing decision-makers and, equally important, informing the public.”
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