Report highlights climate change risks to new housing

A report from the Canadian Climate Institute says efforts to build new homes need to consider climate change-related risks to address affordability.

The Canada Mortgage and Housing Corporation, or CMHC, estimates 5.8 million homes need to be built across the country by 2030 to meet housing affordability targets.

Thursday’s 132-page report, titled Close to Home, analyzes climate-related financial risks for those new homes.

The authors found that under existing policies, more than 370,000 of those homes could be built in areas at high risk of flooding or wildfire damage. They said that could cost homeowners, insurers and taxpayers up to $3 billion in costs for rebuilding and disaster relief, undermining affordability efforts.

“The most affordable home is the one you don’t have to rebuild after a disaster,” said Ryan Ness, the institute’s director of adaptation.

The report detailed challenges contributing to the issue across Canada, such as gaps in land use policies allowing housing to be built in high-risk areas, as well as outdated and incomplete flood and wildfire hazard maps.

Where are risks located?

The report found most of the projected costs are connected to a relatively small number of new homes expected to be built in the most hazardous zones.

Redirecting just three percent of new homes from the highest-risk flood areas to safer ground could reduce Canada’s overall flood risk to new housing by nearly 80 percent, the authors asserted. They projected 92 percent of new homes lost to wildfires would be concentrated in 20 municipalities, mostly in BC.

The report said total climate-change related costs to new housing are projected to be highest in BC, which could face up to $2.2 billion in additional annual costs in a worst-case scenario. That is followed by Manitoba, which is projected to face up to $360 million in annual costs, Alberta at $220 million and Quebec at $214 million.

The territories are expected to face lower overall costs related to wildfire and flood risks as fewer homes are slated to be built in the North. However, the average cost per home could be high.

While the CMHC estimates just 1,300 new homes need to be built in the Yukon, the report said the territory faces the highest projected average cost of flooding per new home nationally, at between $210 to $1,200.

The report found existing Yukon and NWT housing stock also faces substantially higher costs per home related to wildfire damage, estimated at $1,100 and $530 respectively.

Across Canada, the risk of wildfire damage to existing housing is estimated at a total annual loss of $730 million, with the highest total costs projected in BC and Alberta.

Report calls for government action

The report’s authors said all levels of government need to take action to ensure new housing is not built in hazardous areas.

“Building more homes in unsafe places would be an incredibly costly mistake,” said Rick Smith, president of the Canadian Climate Institute.

“Fortunately, there are ways to build millions of much-needed homes that avoid these future costs. This report shows the path forward for policymakers.”

The report issued three collective recommendations for federal provincial and territorial governments to address the issue:

• Steer housing and infrastructure investment to low-hazard areas and away from high-hazard zones;
• reform disaster assistance programs to deter risky development; and
• update hazard information and mandate its disclosure in real estate transactions.

The report also called on provincial and territorial governments to strengthen land use policies to direct new housing away from high-hazard zones, while asking the federal government to empower and support Indigenous communities to build climate-resilient homes in safe areas.