Floods, droughts and major storms that wash out highways, damage buildings and affect power grids could cost Canada’s economy $139 billion over the next 30 years, a new climate-based analysis predicts.
The report, titled Aquanomics, was published Monday by GHD, a global engineering and architecture services firm.
In an interview with CBC News, the firm’s Canadian water lead Don Holland said that the value of water and the costs associated with it are underacknowledged.
“I think we all know it’s important,” Holland said. “We need it to thrive and survive, but it could be also one of those things [that can] wipe communities out.”
He added that the impact on the Canadian economy is $139 billion spread out over five different market segments.
“I’ve heard this numerous times: We experience climate change through the lens of water,” Holland said. “Either we have too much water or not enough. But really, when we talk about climate change, we experience it through water.”
GHD’s Canadian water lead Don Holland said there are lots of reports that count up insured losses and physical damage after major events like last fall’s atmospheric river in British Columbia. Drought is often seen as only a real risk to agriculture, but extreme drought have more dire consequences. (Charlotte Wasylik)
He pointed to the 2021 B.C. floods, which for a time cut off rail and highway links between the country’s biggest port in Vancouver and the rest of Canada. The disruption stressed supply chains already hampered by COVID-19, raising prices, slowing production in factories that couldn’t get parts and leaving some grocery store shelves empty.
The report predicts manufacturing and distribution will take the biggest hit from water-related climate disasters between now and 2050 — an estimated $64 billion in losses, or about 0.2 per cent of the total manufacturing economy a year.
While droughts can restrict industrial production, floods and storms cause direct damage to buildings and machinery, or take out power supplies, forcing factories into silence.
The derecho wind storm that ripped across southern and eastern Ontario in May damaged the power grid in Ottawa so badly, parts of the city were without electricity for more than two weeks.
Roy Brouwer, the executive director of the Water Institute and a professor of economics at University of Waterloo, said that the report was a call to action. He added that he does not work with the economic model that GHD used in their methodology and was unfamiliar with it.
Much of the Canadian industry is dependent on water. Reduced availalability will have “significant impacts,” he said.
“It’s very important to understand that there are both direct and indirect economic impacts,” he said. “It’s often these indirect impacts that we lose track of.”
Retail, banking, energy, agriculture among most affected sectors
Drought is often seen as only a real risk to agriculture, but extreme drought can be much wider-reaching. In Europe, near-record lows on the Rhine River might halt marine traffic along Europe’s most important shipping lane, which links major ports in Belgium and the Netherlands to Germany and Switzerland.
Last week in China, a massive heat wave prompted the government to force some factories to close to ration power as low river levels cut power output at hydroelectric dams.
Governments in California, Nevada, Utah and other parts of the western United States are enforcing water rationing in the midst of what some call the worst drought in more than a millennium.
Lake Mead, the biggest reservoir in the United States, is down to one-quarter of its capacity, with macabre results: at least five bodies have been located as the water receded, some of them believed to have drowned or been killed and left in the lake decades ago.
Retail and fast-moving consumer goods — heavily reliant on water-related infrastructure, and extremely exposed in the event of damage to supply routes — will be the second-most affected economic sector, with losses estimated to be around $26 billion between 2022 and 2050.
Water risk in the banking and insurance sector follow with $21 billion in estimated losses, primarily because of disruptions to productivity and economic activity, as well as bigger insurance payouts.
Energy and utilities will face an estimated $14 billion in losses, either through direct damage to power grids and production plants, or reductions in power output at hydro dams and nuclear plants because of low water levels.
Agriculture is the fifth sector analyzed, which in Canada is estimated to lose about $4 billion over the next 28 years, also threatening food security.
“The most important message coming out of the of the study is that it’s important to realize that that the economy is a system in itself, and so you can you can have an impact on a particular sector, but these sectors work together,” said Brouwer.
“They together create a system and economic system … what happens in one sector doesn’t usually stay in one sector.”
Effects of water disasters on global economies
The report also looked at the economic effects of water disasters in seven other countries, including Australia, China and the United States.
GHD says costly and massive infrastructure projects to protect against storms and floods are no longer the answer to make the economy more resilient, because time is of the essence.
A road is surrounded by floodwaters in the Sumas Prairie flood zone in Abbotsford, British Columbia on Nov. 22, 2021. (Ben Nelms/CBC)
Smaller projects that can be done quickly, often utilizing nature itself, are likely the best choice, the report says.
Brouwer said that the report doesn’t appear to account for adaptative and mitigative measures that are already in effect around the world.
The average temperature on Earth is already more than 1 C above pre-industrial times and the climate has already changed, leading to more frequent and more severe storms and floods and wider and longer droughts.
The cost of those events is high.
The Emergency Event Database compiled by the Belgium-based Center for Research on the Epidemiology of Disasters said economic losses in 2021 from drought, floods and storms worldwide totalled $291 billion, compared with an average of $153 billion between 2001 and 2020.
GHD’s report says taking advantage of data systems and sensors to help predict problems before they arise can make a big difference.
For example, Holland said using sensors to look for signs of an impending water main break in a city can prevent massive losses of water, reduce damage and ensure the pipes reach their maximum lifespan.
Holland said for him, the report’s biggest message is “the magnitude of what we’re facing if we don’t get more resilient, if we don’t make our communities more resilient.”
“It’s really driving home how water … touches every aspect of our lives and communities. It truly does, in ways that we don’t know about.”
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
