Studies show that there is a correlation between a home being on a flood plain and its property value. Floodplain disclosure on a property can result in a one per cent to four per cent decline in value, while a flood can result in a decline of between 18 per cent and 25 per cent, says Ebbwater Consulting.
But it can be difficult or even impossible in some parts of Canada to know whether a home is in a location that is at risk for flooding, which raises serious issues for homeowners and governments concerned with flood mitigation and prevention.
The latest flood maps from government officials are 20 to 25 years old, according to Blair Feltmate, head of the Intact Centre on Climate Adaptation.
Some municipalities have updated their flood mapping, while others have not, leaving third-party organizations as the only source for up-to-date flooding information in certain areas. This dynamic can result in conflicting information from government and private sources.
Tamsin Lyle, principal at Ebbwater, said this issue brings inequality of information into play.
Real estate holders and real estate investment trusts (REITs) have gathered information to create their own flood maps, according to Lyle. She said the maps are used to make financial and investment decisions, but the insights are not shared with the public.
“An average person who’s buying a home in Richmond doesn’t have the same information. And so they’re poorly off at the end of the day because they’re going to make a decision without having a full picture of their risk, including their financial risk,” she said.
A recent Canada Housing and Mortgage Corp. (CMHC) and the Insurance Bureau of Canada (IBC) report found that the disclosure of natural hazard and climate risk is urgently needed in the country’s housing market. One of the report’s key recommendations is a “climate score” called the Real Estate Index for Climate Risk. It would function like a credit score and would accurately reflect the risk of an adverse climate event, according to the CMHC.
Steve Mennill, the CMHC’s chief climate officer, said that a similar system is already used by property insurers but should be extended to potential buyers. “A scoring system would help us to approach this issue with the same data and models for pricing that’s used throughout the industry in offering financial products like mortgage loans,” he said.
The data and mapping used for insurance purposes has the best information when it comes to flooding, according to Dylan Clark, research lead at the Canadian Climate Institute.
“In many cases they have better data than the government, provincial or federal. And they probably have better data than the CMHC that is insuring some of these properties and portfolios. And so there is a real need to ensure that data is more available not just to individuals, but also to local governments who don’t have the money to pay for this kind of flood-risk data.”
Clark added that public policy can help fill gaps left by this “information asymmetry.”
In response to the growing need for information on flooding and how it can affect aspects of homeownership, like insurance, Public Safety Canada and the Task Force on Flood Insurance and Relocation released a report exploring low-cost flood insurance and strategies to mitigate flood impact.
“We know that in many communities across Canada, even if an individual wants to buy insurance to protect themselves from f looding, it may not be available,” Clark said.
The report also highlighted the need to create resources, such as an online flood portal, that can provide open and accurate information on risks to ensure that governments and citizens are able to make informed decisions.
Clark pointed out that such a portal would need to accommodate all types of flooding. Many third-party sources on flooding information tackle only one type, making it difficult for Canadians to understand the overall risk.
“Not only is it tough to find the information, but there is not one single point at which people should go that is the authoritative source of information,” he said.
“There’s an increasing recognition that we do have to adapt in order to protect our communities from climate change impacts. And I think there’s more and more evidence coming out, which is that getting ahead of this is really the fiscally responsible thing to do.” ■