Costing Climate Change Impacts to Ontario’s Public Infrastructure

In June 2019, the Financial Accountability Office of Ontario (FAO) launched the Costing Climate Impacts to Public Infrastructure project (CIPI) to analyze the costs that climate change impacts could impose on Ontario’s provincial and municipal infrastructure, and how those costs could impact the long-term budget outlook of the province.

Climate change presents a serious risk to Ontario’s public infrastructure and the impacts are projected to be increasingly costly through accelerated infrastructure deterioration, increased operating expenses and increased service disruptions. To complete the CIPI project, the FAO partnered with the Canadian Centre for Climate Services (CCCS) to provide regional climate projections needed for the costing analysis and the detailed engineering analysis conducted by WSP Canada.

The first two phases of the CIPI included an assessment of the state of repair on provincial and municipal infrastructure. The third phase, set to conclude in 2022, provides the climate costing analysis across three public sectors: buildings, transportation, and public water. The project cost analysis also includes an assessment of costs associated with adapting public infrastructure to different climate hazards, as well as a comparative analysis of different asset management strategies.

Results from the first sectoral analysis on the costs to public buildings (released on December 7, 2021) estimates that climate change will add roughly $6 billion to the costs of maintaining public buildings and facilities in a state of good repair over the remainder of this decade (2022-2030). By the end of 2100, under the high emissions scenario (RCP8.5), additional cumulative maintenance costs could rise to $116 billion without intervention.


Understanding and Assessing Impacts

The Costing Climate Change Impacts to Public Infrastructure (CIPI) project led by the Financial Accountability Office of Ontario (FAO) followed an interdisciplinary approach combining analysis from asset management, engineering, climate science and economics. In the first and second phases of the project, the FAO assessed the composition and state of repair of provincial and municipal infrastructure and released its findings in November 2020 and August 2021, respectively. In the third phase (concluding in 2022), the CIPI project used an infrastructure deterioration model developed by the Ontario Ministry of Infrastructure (MOI), to project the financial impacts of select climate hazards on Ontario’s public infrastructure under different emissions scenarios. The model analysis is based on data from:

  • Climate variable projections: downscaled regional projections of extreme precipitation, extreme heat, and freeze-thaw cycles under low, medium, and high emissions scenarios
  • Provincial and municipal asset inventories (public buildings/facilities, transportation infrastructure, and water infrastructure): the current replacement value (CRV), costs of maintaining in a good state of repair and repair backlog
  • Climate costs elasticities: relationships between climate variables (e.g., changes in temperature and precipitation) and infrastructure costs, including both damage and adaptation costs

While public infrastructure faces many climate hazards, the CIPI project focuses on extreme rainfall, extreme heat, and freeze-thaw cycles as they are the most likely to have the greatest budgetary impacts and can be projected with the greatest degree of scientific confidence. The FAO partnered with WSP Canada to provide analysis on the engineering aspects of the CIPI project. The Canadian Centre for Climate Services (CCCS) provided regional projections under the low (RCP2.6), medium (RCP4.5) and high (RCP8.5) emissions scenarios for the selected climate variables using the BCCAQv2 dataset.

Identifying Actions

Maintaining public infrastructure in a good state of repair will become more expensive over the rest of the century due to climate change impacts. In the third and final phase of the CIPI project (Fall 2021 – concluding 2022), the FAO worked with WSP Canada to analyze the ‘climate cost elasticities’ of infrastructure damage over time in the absence of adaptation measures and compared this against the costs under different adaptation strategies. This approach focused on assessing the impacts of the climate change variables (extreme heat, extreme precipitation and freeze-thaw cycles) on four types of costs:

Damage Costs
Asset management in changing climate without adaptation:

  1. Changes in the useful service life (USL): Assets may deteriorate more rapidly (or more slowly in some cases) due to long term changes in key climate variables. Accelerated asset deterioration results in more frequent or additional rehabilitation costs, and in accelerated asset renewals.
  2. Changes to operations and maintenance (O&M) expenses: The cost of O&M may also be impacted by changing climate variables in the absence of adaptation measures.

Adaptation Costs
Asset management in a changing climate under two different approaches to adaptation:

  1. The reactive strategy assumes public buildings are rebuilt at the end of their service life (asset renewal) to withstand late-century projections of extreme rainfall and extreme heat. Asset renewal costs occur only at the end of service life when the asset is fully replaced. This results in a gradual adaptation of assets, with 77% of buildings adapted by 2100.
  2. The proactive strategy assumes most public buildings are retrofitted during their service lives to withstand late-century projections of extreme rainfall and extreme heat. Retrofit costs are associated with replacement of components at any point during the asset’s life. This strategy sees nearly all buildings adapted by 2060.

Implementation

This case study, which is still in progress, relates to the assessment of climate change impacts and does not contain information on the implementation phase using the results of the assessment.

Outcomes and Monitoring Progress

Results from the cost analysis of climate impacts to public buildings and facilities were published in December 2021.

  • Changes in selected climate variables will increase the cost of maintaining Ontario’s public buildings in a state of good repair regardless of whether buildings are adapted.
  • The long-term implications for budgets will depend on the severity of future climactic changes.
  • The cumulative costs, the timing of costs and the proportion of buildings adapted vary between the different adaptation strategies:
    • No adaptation strategy: $116 billion in cumulative additional costs is projected by 2100 (high emissions scenario). However, all building assets will remain vulnerable to climate change.
    • Proactive adaptation: there are much higher up-front costs compared to the other strategies. However, the cumulative costs by 2100 are lower than the no adaptation strategy at $104 billion (high emissions scenario). Furthermore, all public buildings are adapted by 2060, reducing vulnerability significantly over time.
    • Reactive strategy: the costs have a similar growth profile as the no adaptation strategy, but with cost savings occurring near the end of the century totaling $91 billion (high emissions scenario). However, only 32% of buildings are adapted by 2060 and only 77% by the end of the century resulting in increased vulnerability to climate hazards over time.
  • The assessment of asset management strategies does not account for the significant un-costed benefits of adaptation, namely the cost savings of decreased vulnerability and minimized public services disruptions.
  • Results from this assessment represent the lower-bound costs to public asset owners only, as they do not consider the complexity of the full range of climate hazards on the wider built, social, economic, or environmental systems.
  • The interdisciplinary methodology, including the novel application of the deterioration model using climate cost elasticities, provides a useful template for asset managers across several sectors.

Next Steps

The final deliverables for phase 3 of the CIPI project are expected in 2022. These include:

  • An assessment report on the financial impacts of extreme precipitation, extreme heat and freeze-thaw cycles on public transportation infrastructure
  • An assessment report on the financial impacts of extreme precipitation, extreme heat and freeze-thaw cycles on public water infrastructure
  • A summative report that will bring together the findings and outcomes of the CIPI project

Resources

Link to Full Case Study

Additional Resources: