Storms get people’s attention. They make the business case for resilient infrastructure because we count up how much not having resilient infrastructure costs in terms of human life, lost business, insurance costs and clean-up. Resilient infrastructure is, from this economist’s point of view, a risk mitigation or insurance policy – it involves building redundant infrastructure – just in case.

We appear to be leaving the business case for resiliency to chance. We need not. The case can be made.

The Case for Insurance Made in a NY Minute

When risks happen they tend to heighten the focus on the costs both of adapting and cleaning up if you don’t adapt.

In the case of NY, it was hurricane Sandy that heightened the attention. The cost of clean-up meant that the huge cost of adaptation may be justified:

“The city would offer incentives to building owners to move important stuff like electrical equipment higher off the ground. It would amend zoning and building codes to encourage new buildings to be raised higher, and require hospitals, telecoms and other utilities to meet tougher resilience standards. Mr Bloomberg put the price tag at nearly $20 billion, with city and federal sources for only $15 billion identified so far. But put beside New York’s extraordinarily high economic output, the price is hardly outlandish. New York’s plans illustrate that although climate change is global, adaptation is local.”[1]

Climate change involves increased volatility and all infrastructure must be built to higher standards to withstand the effects.

Toronto, my hometown, has opened a new park at the mouth of the Don River that is really a large landform or berm and wetland to protect Toronto’s financial district against a 1 in 500 year flood. It is kind of like the NY plan on a much smaller scale. The $135-million project does however allow for more than $2-billion in public- and private-sector investment that would not have been able to be built without the flood protection the park offers.

“The new Corktown berm is the sort of seldom-used infrastructure that protects neighbourhoods during extreme weather events”[2].

The need for this type of infrastructure comes from two sources. First, volatile weather and the need for adaptation to climate change. Second, development. The justification for the need comes from the avoided costs of the disaster that doesn’t happen.

Storms and Development

In terms of adaptation, cities are having to design infrastructure to deal with rising sea levels:

“For around 2,000 years sea levels remained relatively constant. Between 1880 and 2011, however, they rose by an average of 0.07 inches (1.8mm) a year, and between 1993 and 2011 the average was between 0.11 and 0.13 inches a year. In 2007 the Intergovernmental Panel on Climate Change (IPCC) forecast that seas could rise by as much as 23 inches by 2100, though since then many scientists have called that forecast conservative.”[3]

As well as sea-level, more violent storms are having an impact.

In Toronto stormwater has flooded the city three times in the month that its park-berm-landform opened. The 126 millimetres of rain recorded in the most recent storm beat the previous record set by 1954’s Hurricane Hazel. The city gets an average of 74.4 millimetres during a normal July. Flooding turned parts of highways into rivers with cars abandoned in feet of water. The power failed in parts of the city. Some subway trains stopped. A commuter train was flooded and had to be evacuated. With some foresight, “the Corktown berm is built to withstand flood waters coursing down the Don River … equivalent to the intensity of Hurricane Hazel, the worst storm to have hit the region.”[4] The worst storm to hit Toronto occurred a matter of weeks after it opened.

Added to the more volatile weather is the increased development. In 1990, 70 per cent of the Toronto watershed where the new park is located was impervious. By 2005, it exceeded 85 per cent. In New York, “since the flood map was last updated in 1983, floor space inside the city’s flood plain has risen 40%, to 535m square feet…. New York now has 400,000 people, 270,000 jobs and 68,000 buildings inside the 100-year flood plain.”[5]

We can wait for the next storm to make the business case for more resilient infrastructure with the risk that we again act for the short-term, or will forget before the decisions are made. Or, we can do the climate risk analysis and make the case based on increased development and that our resiliency insurance policy is covering more valuable items than in the past. Nature is fickle, we need to recognize that the cost of insurance has gone up because of nature’s vicissitudes and because of increases in our our wealth.

[1] “Coastal cities and climate change: You’re going to get wet” The Economist June 13, 2013.

[2] “New Toronto park doubles as flood protection” Globe & Mail June 28, 2013

[3] The Economist, Op.Cit. Jun 13th 2013

[4] Globe & Mail June 28, 2013 Op. Cit.

[5] The Economist, Op.Cit. Jun 13th 2013