Despite increasingly severe wildfires, floods and extreme heat events, climate adaptation in Canada remains marginal to federal and provincial governments.
Catastrophic weather events, increasingly fueled by climate change, are already causing serious harm: lives lost, rising health risks, surging insurance premiums and widespread property damage. Yet, Canada spends more than ever on disaster recovery while systematically underinvesting in adaptation to reduce those losses.
There are four institutional barriers to adaptation in Canada: short-term crises and major shocks dominating policy; misleading economic narratives; serious flaws in government budgets; and the failure to value and account for natural assets.
We recommend several initiatives to address these obstacles, starting with making adaptation a core part of Canada’s nation-building strategy and creating a National Adaptation Office. Addressing the distorted picture in government budgets of adaptation’s costs and benefits, and adding accounting for and valuation of natural assets are also essential steps.
Crises and shocks crowd out long-term thinking
It is difficult for governments to prioritize long-term needs when acute crises and shocks occur, especially when these combine into a polycrisis.
The pandemic, followed by the surge in inflation and then interest rates, dominated the early 2020s. Seismic geopolitical shocks added to the polycrisis with Russia’s invasion of Ukraine, large-scale attacks and two major wars in the Middle East, and the Trump 2.0 administration’s shocks in trade, defence, Canada-U.S. relations and other areas.
The urgency of these challenges meant short-term economic needs were prioritized over long-term thinking and strategy. Climate risk, despite its systemic, longstanding and compounding nature, received little attention at the federal and provincial levels — except during catastrophic weather events. Even then, governments’ focus faded quickly once their response to the emergency phase ended.
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Climate adaptation policy remains a key weakness as of early March 2026. Ottawa’s far-reaching and much-needed policy reset since the spring of 2025 has focused on areas such as defence, infrastructure, major projects, regulatory reform and diversifying trade. Climate adaptation has not been a core priority, in spite of its compelling economic and financial merits.
For their part, provincial adaptation efforts have usually been treated as optional rather than essential economic and infrastructure policy, leading to reactive approaches instead of preventive and proactive action to reduce extreme weather risks.
Misguided narratives and populist fallacies
Despite clear and compelling evidence, federal and provincial approaches lack understanding that climate adaptation is crucial to effective economic policy.
Populists at the federal and provincial levels have exacerbated this problem by making the deeply flawed argument there is a choice between economic growth and preserving natural assets (e.g., wetlands and forests) that are critical to adaptation. They have created and sustained the mistaken view that Canadians cannot afford essential adaptation investments.
The reality is the exact opposite. Adaptation is an essential economic policy. Canada cannot afford not to address adaptation. Every dollar invested in adaptation can yield up to $15 in economic benefits and avoided costs – $5 in direct benefits by reducing repair and replacement expenses and $10 in indirect benefits such as fewer supply-chain disruptions and avoiding declines in productivity.
Adaptation decreases government spending in emergency response and disaster relief, as well as reduces future public investment needs due to its creation of more resilient infrastructure. Firms and households suffer less property damage and mobility disruptions, and reduced insurance costs. Businesses face fewer and shorter disruptions in operations and supply chains.
Flawed budgetary approaches
Municipal and community experience clearly demonstrates that adaptation measures — from flood protection to wildfire risk reduction and nature-based solutions — deliver substantial economic returns and infrastructure savings.
Yet the budget frameworks of the federal, provincial and most municipal governments include current outlays for adaptation while excluding its future economic returns and avoided costs. This asymmetry hinders political understanding of adaptation’s large net economic benefits and helps distort policymaking. It leads to disaster recovery being treated as unavoidable expenditure, while prevention is viewed as optional spending.
A 2026 study by the Canadian Climate Institute of proactively upgrading public infrastructure assets to adapt to extreme rainfall and rising heat estimated lower net costs of $10 billion annually for Canada, compared to no adaptation outlays. The savings are also more than $5 billion per year compared to reactive upgrading of these assets only when they are replaced.
Failing to value and account for natural assets
Natural assets are critical to climate risk management by reducing flooding, decreasing extreme heat and lessening erosion. For example, upstream wetlands reduce flood damage in urban areas by up to 38 per cent, while expanded tree canopies in cities can reduce heat under them by as much as five degrees Celsius.
Swamps and marshes in one watershed alone on the border of Burlington and Hamilton in Ontario provide stormwater management services that would cost more than $1.7 billion to replace with built infrastructure. Beyond reduced flooding, wetlands across Canada help lessen climate change through carbon sequestration services estimated at $22 billion each year.
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Apart from a small minority of municipalities, including Calgary and Mississauga, most local governments, as well as the federal and provincial governments, fail to account for and value natural capital and ecosystem services.
These accounting and valuation gaps obscure the ongoing, large net benefits of natural capital. Moreover, the lack of pricing for the costs of using public natural assets fosters their overuse, facilitating their decline and degradation as well as increasing pollution.
There are multiple ways to reduce these institutional barriers to adaptation.
A core part of Canada’s nation-building strategy
Climate adaptation needs to be embedded in Canada’s nation-building agenda. Major infrastructure, housing and economic strategies should be prepared using an adaptation lens, with resilience treated as a core requirement.
Governments should adopt systems-based approaches that assess and prioritize long-term risk reduction, not just short-term cost savings. These approaches should also analyze and reflect side effects across health, infrastructure and environmental systems.
Create a National Adaptation Office
Creating a National Adaptation Office and providing meaningful resources to a new director would offer policy focus and capabilities. Drawing upon the most applicable aspects of the Major Projects Office and Defence Investment Agency models, this would help strengthen federal-provincial co-ordination, build policy capacity and accelerate resilient infrastructure design.
It would support and help catalyze improved land-use planning, large-scale retrofits and sustained investment in natural infrastructure.
Reform fiscal budgeting and accounting
Fiscal frameworks need to change at all three levels of government. Public budgets and cost-benefit analyses should systematically account for avoided losses and reduced disaster recovery spending. Governments should align financial disclosures with important new international standards for climate risk and natural asset accounting, building on municipal approaches already underway.
Value and protect natural capital
Natural infrastructure should be recognized and managed as essential public assets. Wetlands, forests and shorelines are cost-effective risk-reduction systems. Federal and provincial governments should integrate natural asset inventories into infrastructure planning, protect ecosystems and create stable funding mechanisms for their maintenance and restoration.
Until governments treat adaptation as systemic risk management and an essential economic and security strategy — embedding it in budgeting, infrastructure planning and natural asset stewardship — reactive disaster spending will continue to outpace preventive action.
Institutional reforms at the federal and provincial levels are vital. Otherwise, adaptation will remain fragmented and under-resourced, regardless of how severe climate-fueled disasters become.
