Climate Roulette: The human side of climate risk

Climate and Energy

No one can fully get their mind around climate change. Confronting even one dimension of the problem—socioeconomic, environmental, cultural, geopolitical—can be overwhelming. Fortunately, we don’t have to know everything about climate change to confront it effectively. We can examine it through the lens of risk. As part our series on climate risk, this blog looks at how climate change and extreme weather are beginning to increase risks we encounter in our daily lives.

Standard disclaimer: We’re economists, not scientists. We’re here to offer an economist’s take on the issue, not make our own assertions about climate science.

Your daily dose of risk

Risk is a part of almost everything we do. When confronted with a decision, big or small, our brains silently assess and weigh the risks of our different options. The information we weigh is rarely complete or accurate, but our inner calculus churns constantly.

Certain actions increase certain risks. Smokers have an exponentially higher risk of developing lung cancer, and non-smokers seem to beat lung cancer more often. Driving in winter conditions increases the risk of collisions. Likewise, there are things we can do to reduce certain risks: eating healthy and exercising, buying snow tires and driving slower.

We can think of climate change along the same lines—even though quantifying and estimating that risk is a challenge. Every tonne of greenhouse gases we pump into the atmosphere very slightly increases the risk of heat waves, superstorms, droughts, floods, power outages, crop failures, ecosystem collapses, etc. Many of these challenges amplify one another in unhelpful ways, which has led to the moniker “threat multiplier”. Moreover, climate risks are dynamic. Today’s threat may not be tomorrow’s threat, and certain risks can get larger over time.

What types of risks will climate change create or exacerbate?

Mind and body

A warming world destabilizes many of the factors that underpin our health. On an individual level, there’s a growing body of literature on mental health, cognition, and mortality. A 2018 study found that extreme heat reduced cognitive function in otherwise healthy young adults. The consequences can be far-reaching—from educational attainment to productivity. Another new study forecasts heat-related deaths in Canada could increase five-fold by mid-century compared to historic norms.

There’s also a relationship between greenhouse gas emissions and other health-damaging pollutants. Among the worst is particulate matter (a.k.a. soot) generated by coal-fired electricity, heavy industry, vehicles, and, increasingly, forest fires exacerbated by climate change. These particulates can aggravate and increase the risk of heart diseases and lung diseases (asthma in particular). Let’s take coal as an example—we can actually quantify the benefits of avoiding one tonne of pollution from coal power across provinces.

Figure 1: Cumulative avoided health impacts from air pollution for selected outcomes, 2015-2035  Source: Pembina Institute, 2016

In addition to chronic health issues, climate change is increasing the risk of disease transmission. A quick example: Warmer average temperatures are expanding the territories of disease-carrying insects like ticks. The incidence of Lyme disease in Canada has increased sevenfold over the last decade.

Figure 2: Number and incidence of confirmed and probable Lyme disease cases in Canada

Source: Health Canada, 2018

Weaving these risks together reveals a tapestry of emerging public health challenges. Renowned medical journal The Lancet puts it succinctly: “Anthropogenic climate change threatens to undermine the past 50 years of gains in public health.” Canadian doctors are issuing a similar warning.

Climate risk in our communities

Summarizing the community-level risks of climate change in such a small space is impossible. Luckily for the wonks, a new study from the U.S. catalogues them in incredible detail.

Here are a few headlines:

First, our communities won’t work as well. Extreme weather—especially flooding—will disrupt how our cities and towns function, claiming lives and livelihoods in the process. Costly rebuilds like the ones in Fort McMurray, Saint John or Interior British Columbia will increasingly command our attention and resources. A new report from Intact Centre on Climate Adaptation shows the trend in insurance claims from extreme weather.

Figure 3: Catastrophic insured losses in Canada (1983-2017)Source: Intact Centre on Climate Adaptation, 2019

More plainly, insurance payouts for catastrophic losses have averaged $1.9 billion a year since 2009. Between 1983 and 2008, they averaged $405 million.

It’s important to point out that climate change didn’t necessarily cause any of these events. Rather, it led to conditions that increased the risk of events like this occurring. In the case of the Fort McMurray fire, unusually hot and dry conditions and strong winds made fires worse—the same way that not using snow tires or wearing a seatbelt can make winter collisions worse.

Our infrastructure won’t work as well, either. Extreme weather poses new risks to our roads, bridges, homes, and supply chains, affecting delivery of vital services like water and power. Take electricity generation, for example, which is responsible for 67% of all water withdrawals in Canada. Warmer average temperatures mean warmer water, which means we’ll need more of it to cool off our powerplants, which means less efficient power generation. Abnormally dry seasons will also disrupt hydropower generation. Peak demand for power during heatwaves has already disrupted power supplies in Canadian cities. (Fortunately, we can plan ahead on this particular issue.)

Finally, we won’t work as well. Since we’re less likely to be healthy, we won’t work as much or as productively. This poses new risks to employment, investment, trade, and economic prosperity. By 2030, heat waves alone could cost the world US$2 trillion in labour productivity.

There’s much more to say here. Next week’s blog will take a look at some of policy tools we can use to help communities manage some these risks (including ecofiscal policies).

Climate risk does not respect borders

Let’s briefly zoom out further. Climate risk has implications for a host of geopolitical issues, including resource development, trade, food security, international relations, and immigration.

Climate change will alter the relative scarcity of natural resources between countries. It will shift the distribution and quality of water, forests, and arable land, creating large-scale societal risks that will spill over borders. Lower global crop yields and potential food web collapses will likely reduce access to nutrition, posing new risks for everything from childhood development to international relations.

Perhaps the most profound geopolitical risk is water access. A brand new study finds that the Himalayas—a water source for roughly 2 billion people—could lose two-thirds of their glaciers by 2100.

Sea-level rise is another significant geopolitical risk, which could displace tens of millions of people in the coming decades. Relocating these climate refugees will require extraordinary multilateral co-operation, making current tensions over immigration look comparatively minor.

Of course, these massive multilateral issues will spread across different geographies and demographics unevenly. Developing countries will bear a disproportionate share of climate risk, in part because they lack adaptive capacity.


Looking at these (painfully brief) examples, what patterns emerge? First, the risks of climate change are far-reaching. They will be felt by all levels of society, all levels of government, and unequally across geographies and demographics. Second, that heightened risk will increasingly cost lives and livelihoods and strain our infrastructure and institutions.

Third, we can do something about all of this. We can take steps to reduce these risks. Every action taken to address this massive challenge matters. Staying under two degrees Celsius as outlined in the Paris Agreement could save the world trillions—as much as $17 trillion a year by 2100.

Looking at climate change through the lens of risk helps illustrate why inaction is a lose-lose proposition. Next week, we’ll take a look at some of the policies that can help Canada brace for what’s coming.

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