Natural disaster costs in Canada are rising at an unsustainable rate, the Vancouver Sun reported. Increasing losses could make it harder for communities to rebuild.
What are the costs of natural disasters?
As our planet warms, more water evaporates into the atmosphere. The reduction in the amount of water on land leads to drought and makes certain areas more susceptible to wildfires. Meanwhile, supercharged storm clouds full of water cause increasingly intense storms, leading to flooding and wind damage.
Natural disasters are costly for both individuals and their governments.
According to a report from Canada's Institute for Catastrophic Loss Reduction, most of Canada's natural disaster costs between 2008 and 2024 came from the loss of personal property. This included the destruction of people's homes in storms and fires. Meanwhile, things like repairing utilities and transportation infrastructure contribute to public-sector costs.
Canada currently loses about $9.2 billion each year to natural disasters, according to the report. This equates to 3% of the country's construction spending. If natural disaster costs continue rising at their current rate, losses will account for one month's worth of construction spending in 2038, and two months' worth in 2050.
Why should you care about the costs of natural disasters?
As insurers attempt to recoup the losses from natural disasters, insurance policies become more expensive. People who live in highly at-risk areas might have difficulty finding coverage at all. This means they'll have to foot the whole bill if disaster strikes.
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For example, State Farm stopped offering new homeowner's insurance policies in California, a state prone to wildfires and earthquakes. In the Upper Midwest, extreme weather was associated with a 39% increase in homeowner's insurance premiums over seven years.
As the losses keep piling up, it becomes harder to pay them down, leaving long-term economic repercussions.
"It's like having more and more of your credit card bill just paying the interest, instead of paying down the balance," Keith Porter, one of the ICLR report's authors, told the Vancouver Sun.
How climate resilience helps with natural disaster costs
Simple mitigation efforts like changing building codes can prevent losses associated with natural disasters. Meeting specifications for new buildings or retrofitting old ones might be expensive in the short term. But it is incredibly cost-effective in the long term.
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Absolutely 👍 In fact, the National Institute of Building Sciences estimated that each dollar invested in climate mitigation in the U.S. saved $13 in potential losses.
The NIBS report noted that houses can withstand hurricane storm surges if they are situated sufficiently high above sea level. It also recommended that more localities adhere to the International Wildland-Urban Interface Code, which is designed to mitigate the risks that wildfires pose to properties. California adopted this code following devastating wildfires in Los Angeles in 2025.
In light of the report on the cost of natural disasters, Porter advised Canada to prioritize climate resilience.
"This is a warning for us not to keep doing what we've been doing for the past several decades," he told the Vancouver Sun. "Because very soon, we will no longer be able to afford that."
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