Droughts, floods, and storms could result in a total loss of $139 billion to Canadian gross domestic product (GDP) between 2022 and 2050, which would add up to an average annual GDP loss of 0.2 percent.
A new study by professional services company GHD titled Aquanomics: The economics of water risk and future resilience reveals that Canada’s manufacturing and distribution sector could suffer total losses of $64 billion by 2050 – equating to an average annual output loss of 0.3 percent. Fast-moving consumer goods and retail face $26 billion in losses; banking and insurance, $21 billion; and energy & utilities $14bn.
The agriculture sector, on the other hand – the most water-intensive industry – faces projected losses of $4 billion by 2050 – this equates to average output losses of 0.1 percent each year.
This study represents the first time the economic impact of water risk has been calculated at a GDP and sector level. The research combines insurance data with econometric modelling to demonstrate the wider economic impact of increased future water risk. It focuses on seven key countries across GHD’s footprint – Australia, Canada, China, the Philippines, the UAE, the UK and the U.S. (Country data provided below)
Canada’s large land mass, combined with low population density, contributes to water risk having less of an impact than many of the other countries in the study, but there are still risks. Flooding alone is expected to cost the Canadian economy over CA$40bn in the years leading up to 2050, making up almost half of the country’s estimated total direct losses.
The study presents the potential impact on five critical economic sectors: agriculture; banking and insurance; energy and utilities; fast-moving consumer goods (FMCG) and retail; and manufacturing and distribution.
Canada may not be a water-stressed country, but it is a country of extremes, and these extremes are getting more pronounced,” said Don Holland, Canada water market leader at GHD.
“With the Canadian government estimating that the country is warming at double the rate of the rest of the world, a growing number of municipalities have declared climate emergencies and are implementing policies to boost resiliency. It is up to the water industry to help clients implement a risk-based management approach to provide the resiliency communities require to grow and thrive during these uncertain times. In addition to providing the required resiliency, this also provides us with an opportunity to improve our communities and environment.”
The flooding in British Columbia in late 2021 caused more than $675 million in insured losses alone, while estimates for the rebuild of damaged infrastructure are around$9 billion. Estimates of lost economic output ranged from $250 million to $400 million.