Why We Need to Tool Up

Climate change is having profound impacts on Canada. As a Northern country, Canada is disproportionately impacted as climate warms more near the North Pole. As the country with the longest coastline, Canada is at risk from sea level rise. As a large country, Canada’s sheer amount of infrastructure increases our risk.

Impacts of climate change are already affecting our forests, urban infrastructure, real estate and ecosystems, leading to further environmental, economic and social consequences. From increased frequency and severity of wildfires, to stressed water infrastructure, to cost increases in real estate, to altered ecosystems, these impacts are costly for businesses, governments, communities and individual Canadians.

Just as it’s critical to mitigate climate change, a changing climate presents both risks and opportunities for Canada’s regions and resource sectors. To reduce these risks and take advantage of opportunities, Canadians must adapt.

Adaptation means making adjustments to decisions, activities and thinking because of observed or expected changes in climate, while enhancing Canada’s economic competitiveness, and the well-being of individuals and communities.

To enable adaptation, decision-makers in the public and private sectors require access to relevant tools and knowledge. For many (but not all) environmental issues, economic instruments offer more flexible alternatives to command and control approaches, providing more efficient and cost-effective ways of incentivizing adaptation actions. Some of these economic instruments rely heavily on markets and work by setting an explicit price on an activity – such as the case with fees, taxes or markets. These tools can be used to raise the price for activities that fail to support the adoption of adaptation actions and/or lower the price for activities that do support adaptation. Other economic instruments work differently, influencing the implicit price for activities related to adaptation -- such as through facilitating access to financing for adaptation actions, creating risk-sharing mechanisms, and incenting different behaviours through performance-based and/or flexible regulatory processes. In addition to economic instruments, complementary measures can work on their own, or in support of economic instruments, to encourage adaptation actions – such as reducing barriers through better information and collaboration and discovering best practices through research and pilot programs.

The main advantage of economic tools is that they achieve environmental goals with greater flexibility and at lower costs than conventional regulations. This often gets at the core problem that holds governments back from setting ambitious environmental standards: it will cost too much to comply, thus hurting the economy. Canadian and international experience with economic instruments has proven and continues to prove that – when well-designed and appropriately used – economic instruments can be very powerful.

Many of the tools to support Canadians’ adaptation to the impacts of climate change are held by federal, provincial, territorial and municipal governments:

  • The federal government can use a number of supporting measures such as research, information sharing and the ability to bring different levels of government and other stakeholders together. It can also encourage climate change adaptation by expanding and modifying taxation authorities, regulatory standards, transfer programs and policies.
  • Provinces and territories can also use similar supporting and implicit or explicit pricing measures, plus other tools related to their roles as primary owners and stewards of land and natural resources.
  • Municipal governments hold dozens of tools too, ranging from those based on information (public outreach, convening of local interest groups and citizens) to pricing (development charges, fees and levies for services).
  • To help Canadians best adapt to climate change, governments will need to go beyond prioritizing and implementing these tools. They will need to come together to overcome jurisdictional silos that constrain both intragovernmental and intergovernmental coordination and collaboration, to work most effectively together.

    Private citizens, businesses, civil society and other stakeholders all play important roles in helping Canadians adapt to climate change as well – for example:

  • Forestry associations, corporations and licensees can work together with provincial and territorial governments and Aboriginal communities, to ensure more integrated resource management on provincial land bases, as well as better sharing of risks and costs amongst sectors affected by wildfire.
  • Real estate or pension funds can engage in public-private partnerships for climate-resilient or adaptive infrastructure projects, while researchers can contribute toward investigation into infrastructure-related grant options or mechanisms for intergovernmental cooperation.
  • Private landowners or homeowners can support a more resilient real estate sector by purchasing properties in low-risk areas or undertaking property upgrades like better foundations in anticipation of more frequent freeze-thaw.
  • Non-governmental organizations can continue their efforts to assess and encourage the implementation of innovative solutions such as eco-roofs and incentives for wetland conservation and restoration, to help ecosystems adapt to climate change.
  • Stakeholder engagement and actions are just as critical as those of governments in helping Canadians build a resilient Canada that is poised to continue to prosper under the impacts of climate change.

    Toolboxes for Government

    • PAS1


      The federal government’s role is extremely important in helping Canadians adapt to climate change. It holds a number of supporting tools such as research, information sharing and the ability to bring different levels of government and other stakeholders together. It also has a number of economic instruments at its disposal to encourage climate change adaptation: […]

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    • PAS2


      Provinces’ and territories’ toolboxes hold a unique set of economic instruments, due in large part to their role as primary owners and stewards of land and natural resources. Many of these tools involve collaboration and information sharing – for example, working with other levels of government, communities and private partners to identify and minimize barriers […]

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      Our cities and smaller communities, where most Canadians live, work and play, have a critical role in encouraging and incenting adaptation actions. Local governments’ authorities over local infrastructure and land use equip them with a unique set of tools, which vary somewhat from province to province, and even within provinces. Municipal governments hold dozens of […]

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    Key Themes

    keythemesthumbnailThere are a number of key themes and lessons learned that emerge from experiences to date and the review of further potential use of economic instruments in these four sectors of the Canadian economy. These themes relate to government, context, policy/tool design and communications. And these themes are important to governments and stakeholders alike, as they work together to improve upon their respective roles; understand the specific contexts in which economic instruments are used; evaluate the use, implementation and evaluation of instruments; and encourage information and awareness around those instruments.

    “Key Themes” explores these themes and lessons learned further, based on a suite of analysis prepared for the “Tooling Up for Climate Change: Economic Instruments for Adaptation” project and based on the following four research papers:

  • Economic Instruments for Adaptation to Climate Change in Forestry, prepared by University of British Columbia, in partnership with British Columbia’s Ministries of Forests, Lands and Natural Resources Operations and the Environment.
  • Paying for Urban Infrastructure Adaptation in Canada, prepared by ACT (the Adaptation to Climate Change Team) at Simon Fraser University.
  • Promoting Adaptation in Private Real Estate Decisions, prepared by All One Sky Foundation.
  • Comparative Evaluation of Payments for Ecosystem Services and Other Economic Incentives to Encourage Climate Change Adaptation, prepared by Groupe Agéco and in collaboration with Ouranos Consortium.
  • Read the full key themes

    Why the Time is Now

    The impacts of climate change on Canadians are already being felt and will likely continue to grow for some time. However, Canadian policy-makers should feel encouraged that there are a number of studies being undertaken to explore how best to incentivize adaptation actions. The four studies profiled here, along with other work undertaken under Canada’s Adaptation Platform, show that there are already a number of tools that can be put to use – or put to greater use. The sooner Canadian

    decision-makers familiarize themselves with these tools, the more likely they are to design them well, use them appropriately, and engage in ongoing learning. And the sooner Canadians are encouraged to undertake adaptation actions, the sooner they will be able to minimize the risks of climate change impacts and grasp the opportunities for building a resilient, climate-adapted Canada.

    For more information on climate change impacts and adaptation in Canada, please visit Natural Resources Canada’s adaptation website: adaptation.nrcan.gc.ca.