Economic Impacts of Flooding

Flooding is Canada’s most costly type of natural disaster [1]. Flooding is responsible for extreme damage and destruction to property, public areas, and the environment which incurs enormous costs for government. In addition to damage costs, flooding results in lost productivity, reduced hours worked, and losses in GDP, due to the need for resources to be put toward recovery efforts and away from daily activities. In 2015, the Parliamentary Budget Office reported that flooding cost the Federal “Disaster Financial Assistance Agreements” (DFAA) program $673 million between 2005-2014 [2]. Between them, Alberta, Saskatchewan, and Manitoba represented 80% of DFAA weather costs over that period. It is worth noting that these costs do not represent the full cost of flooding, only the federal taxpayers’ contribution to those costs. The costs are also increasing as the number of catastrophic weather events increases, due to a changing climate. In previous decades, “the cost of weather-related disasters was roughly equivalent to one per cent of Canada’s annual gross domestic product (GDP) growth. In the last decade, disaster costs have climbed to between five and six per cent of annual GDP growth.” [3], p.iii. A 2020 report suggests that that some 836 thousand (~7.7%) Canadian properties are at a “high risk” of flooding [4], Table 1. Estimating the costs of flood damage is very difficult. Typically, effects are grouped into either “Tangible Direct Damage” effects, such as physical damage to which a dollar value can be assigned, or “Intangible and Indirect Damage” effects, such psychological trauma and loss of life to which assigning a price-tag is more difficult. This page will not dive into the technical details underlying such estimates, but a useful background report can be found here [5]. Some examples of the issues considered in each group follow.