We are currently in a climate crisis. The world’s leading scientists have determined that greenhouse gases from human activity are causing the global climate to change and environmental changes are evident all the way to the local level.

More on this at: https://stateofthebay.ca/the-ripple-effects-of-climate-change/

While the environmental issues caused by a changing climate are of great concern, climate change also impacts us socially, and financially.

Insurance

As global temperatures increase, severe weather events around the world are increasing in frequency and intensity. After they occur, the media typically portrays the large infrastructure price tag associated with severe weather events, failing to report on the financial impact on the average citizen.

For the Muskoka region, for example, flooding is one of the greatest severe weather concerns. In 2019, the Huntsville region was seriously affected by extreme flooding. It is the region’s second “100 year flood” in just six years. Canadians have historically been unable to purchase home insurance for overland flooding (flooding that occurs from water flowing on top of the land and into homes through doors, windows, or other means of entry). While this is slowly beginning to change, this policy remains in its infancy, meaning that damages to your home caused by overland floods will likely come out of your pocket.

Even if you are fortunate enough to not be at risk of flooding, your home insurance payments are still likely to reflect, or are already reflecting, the impacts of climate change. Insurance brokers have noted that small annual increases typically match inflation, but many insurance companies in Ontario are adding an additional 5% to 10% on top of inflation to account for increases in annual insurance payouts. Up until about a decade ago, insurance companies in Canada were collectively paying out approximately $400 million a year due to severe weather. Over the last decade, however, total insurance payouts have averaged $1 billion a year, with a record year of $1.9 billion in 2018.

Tourism

The Georgian Bay and Muskoka regions rely heavily on seasonal tourism for economic input and climate change is going to have a considerable influence on recreational activities. From one perspective, climate change will increase revenues for businesses whose target market is directed towards the region’s summer-time influx because of a projected increase in warm weather days.

For example, it is estimated that by 2050, provincial parks will have an operating season that is 40 days longer per year based on doubled CO2 emissions and the associated average global temperature increase. By the end of the century, this number will continue to rise, and visitation numbers could grow between 19% and 82% depending on the park. Additionally, national parks visitation numbers are estimated to increase between 10% and 40%. Ultimately, more visitors mean more people making economic contributions to the park’s surrounding businesses.

But in order to support this added capacity on local business’ resources, additional jobs will eventually need to be created. These two factors thus initiate an expansion phase in the local economy’s business cycle. Job growth attracts new residents, who require housing to be developed, which demand the utilities, amenities, and services of an average Canadian lifestyle, and so on. Unplanned tourism growth and new attractions may have their own significant carbon footprint.

We should be wary of these economic benefits brought on by climate change. Development often involves the removal of the flora and fauna on land, and with them, the ecosystem services they provide. Air purification and carbon sequestering abilities of trees are but one example. Environmental economists such as Robert Costanza have attempted to put financial values on these ecosystem services. While there is debate as to the exact monetary value of ecosystem services, there is a consensus that by removing them, we lose their economic benefits, and their value should therefore be considered and accounted for before development begins.

Additionally, with much of tourism centered around the region’s natural beauty, removing part of the natural surroundings would also have an unknown negative impact on the tourism industry. Water quality impacts, such as more algal blooms, are likely to occur with rising temperatures which discourage the use of our lakes, while more insect pests, like ticks, may move north, potentially impacting tourism consumers.

It should be noted that while summer-time tourism will likely benefit, winter-time tourism will suffer from the shorter season. While the exact degree to which the tourism industry will benefit in the summer, and suffer in the winter is unknown, it is important to recognize the relationship exists and to begin planning for these scenarios using the best available science.

Health Care

Ontario health officials have identified extreme heat, storms and floods, and poor air quality as the climate change impacts posing the greatest risks to health. These environmental factors will induce more frequent cases of vector-borne diseases, and cardiovascular and respiratory issues, particularly for vulnerable groups such as the socioeconomically disadvantaged, children, and the elderly. These factors, in combination with an ageing Canadian population, means that more and more Canadians are going to be at risk of climate change related health problems, and will require health care services.

Climate change may seriously strain our health care services; however, a brief explanation of the health care system’s financial structure is useful. The costs of Canada’s health care system are often misunderstood because citizens are not directly billed after using medical services. The health care system receives its funding through Canadian taxation. Income tax, property tax, import duties, Canada Pension Plan premiums, and others are all government revenues that may be used to fund health care. In fact, in 2018 Canadian families, depending on family structure, had an average estimated public health care payment ranging between $4,650 and $12,935.

Will our medical services be able to support the added demand induced by climate change? If not, how many more nurses, doctors, surgeons, administrators, medical facilities, supplies, etc. will be needed to meet the increased demand? Where will the funding to support these additional resources come from? Will a larger proportion of the current tax structure be allocated to health care? Will health care raise the aggregate amount of taxes payable per household? There is a lot of uncertainty surrounding the answers to these questions, but they will ultimately rest in the public policy decisions made by elected governments. Climate change is more than an environmental crisis. Not only is it transforming the environment before our very eyes, it is slowly burning a hole in our wallets and affecting the health of our loved ones.

Climate Change: Impacts on our Economy and our Health

Insurance

Tourism

Health Care

Further Reading

Miigwech! Thank You to Our Sponsors!