Preparing for the Costs of Extreme Weather in Canadian Cities: Issues, Tools, Ideas

This paper is part of the IMFG Papers on Municipal Finance and Governance series. For a full list of papers, please visit http://bit.ly/2ylAa2D.Development Charges across Canada: An Underutilized Growth Management Tool? by Mia Baumeister: Increasingly, compact and sustainable development has become a priority for Canadian municipalities. In order to realize these growth objectives, it is possibleto look not only to conventional land use and growth management policies, but also to fiscal instruments to achieve planning goals. Existing literature suggests that development charges, which are financial tools used by municipalities in several Canadian provinces to pay for the growth-related capital costs associated with new development or redevelopment, can influence how land resources are consumed and developments are designed. Drawing on information from the literature and interviews with key informants, this research analyzed how development charges are used in British Columbia, Alberta, and Ontario, as well as the Halifax Regional Municipality, to understand how jurisdictions employ development charges and what role these charges currently play in achieving growth objectives. The research found that few municipalities use their development charges proactively to meet planning goals. Moreover, the research revealed a divide among practitioners, with some maintaining that development charges were a revenueraising tool and a poor mechanism by which to achieve planning objectives. Others recognized that development charges could be—and were being—used as a tool to encourage compact growth, but identified several barriers to more effective and widespread use as a planning tool. Suggested recommendations for policy changes include more flexibility within legislation to collect for transit and other services, ongoing support from provincial officials to assist municipalities in designing development charge programs with policy goals in mind, and further exploration of how fiscal tools can best be used as planning tools. Preparing for the Costs of Extreme Weather in Canadian Cities: Issues, Tools, Ideas by Cayley Burgess: This paper reviews the risks to Canadian municipal finance from extreme weather and analyzes the financial tools that cities can use to prepare for extreme weather events: insurance, weather reserves, weather derivatives, and budget provision. Despite the threat of climate change, Canadian cities are not substantially increasing their use of these tools. However, improvements could be made to accounting procedures and disaster assistance regulations, and amalgamating smaller cities could improve their ability to manage risk, all of which will ameliorate the financial impacts of extreme weather. The paper proposes reasons why Canadian cities have failed to fully adapt their infrastructure to extreme weather: lack of information, low fiscal capacity, externalities, moral hazard in disaster assistance arrangements, and poor program design. It concludes by discussing how these arrangements may be overhauled to better prepare Canadian municipalities for extreme weather, including new provincial legislation and the creation of a federal infrastructure fund modelled on the United States’ Pre-Disaster Mitigation program.Institute on Municipal Finance and Governanc