1. Un-Natural Alliances: Multiple Criteria Decision Making 2017
Insurers, Bankers, Institutional Investors and Environmentalists Should Cooperate to Address the Growing Contagion of Climate Change
Multiple Criteria Decision Making 2017
Dr. Blair Feltmate
Head
Intact Centre on Climate Adaptation
July 10, 2017

2. Agenda Climate change is real, human-induced and irreversible
Climate change is costly (Property & Casualty insurance)
Examples of applied Multiple Criteria Decision Making
Basement Flooding: uninsurable housing (P&C insurance) → mental health impacts (Health insurance) → mortgage arrears (banking/mortgage market)
Loss of Wetlands: has an impact on urban/rural flood risk, and an impact on biodiversity → both impacts viewed as unrelated
Business sector impacts of climate change
Institutional investors
Securities commissions
Credit rating agencies
Conclusion
Multiple Criteria Decision Making could be used as a tool to materially reduce Canada’s climate risk profile

4. (0.08 oC/ decade for past 100 years)
What Science Tells Us About
Climate Change
It is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century
(0.08 oC/ decade for past 100 years)

5. Source: International Energy Agency
World Energy Supply 5
Million Barrels Oil Equiv./Day
build 1,500 new coal plants now
Source: International Energy Agency
1.3 billion new people

6. Costs of Extreme Weather: Catastrophic Insurable Losses
Uninsurable Housing Market Growing
Fort Mac Fire
Alberta and Toronto Floods
Eastern Ice Storm
Ontario Wind and Rain
Quebec Floods
Courtesy: Insurance Bureau of Canada (Values in 2015 dollars)
Note: Cost to government and homeowners 3-4X that of private insurers. .

7. Limited flood coverage will lead to mortgage defaults
60% of Canadians do not have sufficient funds to cover 1 month’s worth of necessary costs
48% of Canadians live pay cheque to pay cheque (Canadian Payroll Association)
[Intact Centre working with RBC and Canadian Tire on basement flood protection programs]
“Serious flooding has happened more than once on some properties and there are people who can’t get insurance. If we can improve their risk profile maybe they can get insurance.”

8. Home Flood Protection Program: CSA Standard
Purpose - Home Flood Protection Program
Limits potential for basement flooding
Limits potential damage if basement does flood
Technical Aspects of Assessment
Assessment time per property = 2 hours
Homeowner required to accompany assessor
Assessment reviews 50 points of reference – for example:
direct water away from foundation
disconnect downspouts
place plastic covers over window wells
Connect battery back-up to sump pump, etc.
“HFPP Lite” – a simplified, electronic version
ROI – $1 yields $7 avoided basement flood losses per 10 years

9. Flood Resilient New Community Design Program: SCC Standard
Purpose – establish best practices for designing new residential communities that are flood-resilient

10. The Health Stress of Flooding is Pan-Canadian

11. Retaining wetlands helps to lower flood risk
Loss of Wetlands
Retaining wetlands helps to lower flood risk
Environmentalists
Wetlands
Biodiversity
Ecosystem services
Natural capital
Deep ecology
Capital Markets
Business continuity
Cash flow
Lower insurance
Lower cost of capital
Fiduciary duty

12. Hydro Electric Power: California Drought (2011-2016)
California in its 5th year of drought
Hydro power generation is impacted
Hydro typically constitutes 18% of California’s electricity supply – drought of reduced supply to 10% – some hydro dams can become stranded assets
Conversely, repeated flooding can create stranded substations

13. Fire Impact: Ft. Mac Fire Costliest Insurable Natural Disaster in Canadian History
2,400 structures destroyed
About $3.6 billion in insurable losses
Increases in P&C premiums
Oil production from Suncor stopped for 1 month
Fuel shortages across Petro-Canada gas stations in Western Canada
estimated cost > $1 billion in provincial GDP (figures not final)
Fire created a suspended asset in the oil sands sector

14. Recreation: Ski Resorts in Western Canada
“When it doesn’t snow and it just rains all winter, well then it doesn’t matter what kind of snow-making equipment you have – it’s over.”
Over past 100 years Whistler snowfall has dropped 20%
Ski resorts can become stranded assets

15. Credit Rating Agencies
Capital Markets:
Paying attention to climate risk
Canadian Securities
Commissions
[Administrators ]
Institutional
Investors
Credit Rating Agencies

16. Conclusion Requires Stakeholder Coordination/ Integration to
Climate Change and Extreme Weather
Events will get worse (climate change is irreversible)
Every day we don’t adapt is a day we don’t have
MCDM Applied to Climate Change – Must Coordinate Across…
Property & Casualty Insurance
Health Insurance
Banking/Mortgage Market
Environmentalist Community
Securities Commissions
Institutional Investors
Credit Rating Agencies
Governments (Federal, Provincial, Municipal)
Requires
Stakeholder
Coordination/
Integration to
Limit Climate
Change
Risk/Impacts