As communities across Western Canada prepare for the upcoming season of wildfires, flooding and extreme weather, last year’s record-setting extremes are a reminder that climate change is no longer a distant threat but something that increasingly shapes both public spending and personal plans.
2024 was the hottest year on record globally, capping the hottest decade ever experienced. In Canada, it was the most expensive year on record in terms of costs from climate-fuelled extreme weather events and the damages they caused.
Last year, insured losses in Canada from extreme weather exceeded $8 billion, by far the highest according to the Insurance Bureau of Canada. Four events drove the bulk of these costs: the Jasper wildfire and floods in the Toronto region in July, followed by flooding in southwestern Québec and a hailstorm in Calgary in August.
The scale of these losses represent a dramatic shift. In the early 2000s, severe weather in Canada caused an average of $701 million in insured losses annually. This number now routinely exceeds $2 billion dollars annually, and accounts only for insured losses, typically only about a third of the total losses from catastrophic weather events. Government-funded clean-up and relief costs have skyrocketed by roughly 400 per cent between the 2000s and the 2010s. At the same time, Canadians affected by extreme weather are increasingly turning to crowdfunding campaigns to cover their basic needs.
Take the Jasper wildfire, for example. It caused over $1.2 billion in insured losses, while Alberta’s Disaster Recovery Program covered another $150 million. An additional $112 million was allocated for interim housing and federal rent relief added $15 million more. Meanwhile, fundraising efforts raised nearly $5 million to help community members without insurance or denied emergency aid. The economic ripple effects were also severe: the municipality lost $2.2 million in annual property tax revenue, and Jasper’s tourism industry lost an estimated $4.5 million per day during the peak summer season. With governments, businesses, and residents forced to divert resources towards rebuilding, the local economy will suffer in the long-term—through lost productivity and stalled growth. And beyond the dollars and cents, the lasting human and social toll of this disaster is incalculable.
Even Canadians who haven’t directly experienced a climate-related disaster first hand, will feel the costs. Insurance premiums will increase for almost everyone, and some households in high risk regions will no longer be able to get insurance or a mortgage—even if they haven’t yet been affected. Climate change is also increasing our grocery bills, and could add 1.2 per cent to global inflation annually.
The Canadian Climate Institute estimates that climate impacts now cost Canada’s economy $25 billion per year, about half of Canada’s projected GDP growth. More than half of Canadian businesses report their profits have been affected by extreme weather events made more likely by climate change.
Proactive policy is the best way to lower costs. Every dollar spent on key adaptation measures saves up to $15 in direct and indirect costs. Adaptation can reduce the costs of climate change by up to 50 per cent, and combined with rapid greenhouse gas emissions reductions, could slash them by 75 per cent.
Some of the most effective adaptation measures require little upfront investment but deliver massive returns. Strengthened land use policies, for instance, can ensure the new housing Canada desperately needs is built in areas safe from floods and wildfires. New research from the Canadian Climate Institute demonstrates that redirecting just 3 per cent of the homes targeted for construction by 2030 away from high-flood hazard areas could reduce flood damage costs by nearly 80 per cent—saving billions of dollars in avoided damages with virtually no added cost.
2024 was the most expensive year for climate disasters that Canada has yet to experience, and trends suggest that climate-related impacts will only accelerate. But by prioritizing preparedness and resilience today, governments can limit the burden of future disasters. Being unprepared is a luxury we can't afford.
Zach Carriere is the Adaptation Research Associate with the Canadian Climate Institute.
