PG&E’s bankruptcy highlights the climbing costs of extreme weather
Facing billions in claims as a result of last year’s deadly wildfires in California, the United States’ largest utility firm, Pacific Gas & Electric, filed for bankruptcy this week.
But when PG&E does eventually emerge from bankruptcy, the problem will not have gone away: it will still need to plan for future wildfires given climate change is making extreme weather much more common.
“That is a lot of liability that is not your normal utility expense,” explained David Wiggs, former chairman and CEO of the Texas-based El Paso Electric Co., in an interview with The Associated Press.
However, the rising costs of extreme weather — think cherry blossoms blooming in Victoria, B.C., while Toronto was buried under record snowfall — are not just a North American problem, nor are they a problem for big corporations alone.
Federal funding and liabilities as a result of flood damage and other similar catastrophes reached $2 billion in 2013 and 2014, up from roughly $100 million per year two decades earlier.
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The Insurance Bureau of Canada (IBC) says claims relating to natural disasters have reached roughly $1 billion annually, up from $400 million per year decades earlier. Yet even that number doesn’t include costs associated with extreme weather events that don’t reach a catastrophic scale.
“There’s a risk that some of the cost estimates we see are actually quite conservative,” says Sarah Burch, the Canada Research Chair in Sustainability Governance and Innovation and a professor in the University of Waterloo’s department of geography and environmental management. “It’s really important to grasp what those costs might be to incentivize more ambitious action on climate change.”
Laura Coristine, who is affiliated with the University of Calgary’s Environmental Science program, isn’t so sure costs will be the lever that coaxes Canadians into stronger climate change action.
“What does a billion dollars mean?” She says. “It sounds like a lot, but what does it mean to me? How does it affect me?”
The IBC can say claims associated with natural disasters are steadily rising, Coristine says, but unless a person has lived it, “it can be kind of tenuous, like we’re talking something in the future [that’s] not 100 per cent.”
Whether people realize it or not, the costs do filter down to them. Some of the survivors of last summer’s California wildfires are at risk of experiencing homelessness without payouts from PG&E, while some who fled the Fort McMurray blaze in 2016 have been forced to rebuild away from their support systems, some in jobs more tenuous than before.
People might actually be one ‘nudge’ away from connecting climate change, the thing that is killing the polar bears, to climate change, the thing that has a direct impact on their day-to-day lives, says Dr. Courtney Howard, an emergency physician in Yellowknife and president of the Canadian Association of Physicians for the Environment.
While the rising cost of disaster relief might not resonate, Howard says, the financial difficulties tied to heightened anxiety and depression caused or exacerbated by living through extreme weather and natural disasters might.
“One aspect of a climate change event is that decreased ability to earn income which can be negative to a person’s socioeconomic status which is a negative determinant of health,” she says. “Seeing things change so quickly can lead to anxiety.”
But do those whose daily lives haven’t shifted much yet understand?
There are no numbers exploring that, says Roger Francis, director of energy, environment and transportation policy at the Conference Board of Canada. Research so far has honed in on the billion-dollar figures and less on “understanding consumer behaviour vis-a-vis climate change adaptation.”
Getting people to grasp that could be a game changer in terms of conversations around bracing for the extreme impacts of climate change, Burch says.
“It changes our calculation of what is a reasonable cost of doing something about it,” she says. Admittedly, she adds, it’s an uphill battle: because Canada is relatively rich compared to other countries “we have the luxury of a fairly significant cushion.”
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And while Canadians are able to understand how a carbon tax might add to their monthly bills, Burch says its “a much messier pathway from these large government expenditures for disaster relief in assistance” even though the tax dollars have to come from somewhere.
Tornados, windstorms, floods, ice storms and other forms of severe weather cost $1.9 billion in insured damage last year, according to a January release from IBC. It’s the fourth-highest loss amount the Bureau has on record, one it called notable due to the fact “no single event” was responsible.
IBC vice-president Craig Stewart put it bluntly in a statement last month: “The cost of inaction is too high.”
— with files from The Associated Press and The Canadian Press
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