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Prime Minister Mark Carney’s second budget aims to help Canadians prepare for the possibility of a major earthquake that experts forecast has a 30 per cent chance of happening over the next 50 years on the Pacific Coast.
When the federal budget was tabled last Thursday, Finance Minister François-Philippe Champagne introduced legislation to establish a “Canadian earthquake insurance facility” that the government hopes will protect Canadians “against catastrophic earthquake risks” by providing the Canadian insurance sector with emergency funding of up to $50 billion.
“We’re very encouraged,” said Liam McGuinty, the Insurance Bureau of Canada’s vice-president of federal affairs. “At some point, a major earthquake in Canada is going to happen. And the greatest risks are in B.C. and then also between Ottawa and Montreal.”
McGuinty said that even though Canada’s insurance industry is prepared for the “vast majority of earthquake scenarios,” there would be significant economic loss “in the event of a really extreme earthquake” in the country.
“That could result in tens or hundreds of billions of dollars in economic losses and it would put extraordinary pressure on the insurance system,” McGuinty said. “At that point, it’s not an insurance problem anymore. It becomes a financial stability and an economic problem for Canada.”
The Insurance Bureau of Canada says that to date, Canada is the only G7 country with significant earthquake exposure without a government-backed mechanism in place to manage the risks associated with major earthquake damage.
“That really is what the government has proposed in the budget,” McGuinty said.
Facility aims to strengthen Canada’s preparedness
Extreme earthquakes aren’t a new threat. Edwin Nissen, the Canada Research Chair in Geophysics and an earth and ocean sciences professor at the University of Victoria, says the proposal is removing what has long been a blind spot in public policymaking.
“I think it’s right that the government’s thinking ahead, planning long term for how to respond to these types of events because, ultimately, they are inevitable,” Nissen said.
“There’s a sort of race against the clock, but we don’t know how much of the clock is left to sort of prepare for those events. And that includes making sure that we’re financially resilient.”
Nissen likened earthquake prediction to a weather forecast that spans decades.
“Like a weather forecast, you’re assigning probabilities,” Nissen said. “It’s still really important because that sets things like building codes [and] insurance rates.”
The earthquakes Nissen and the insurance bureau are most worried about are natural quakes on the West Coast caused by shifting tectonic plates underneath the region in the Cascadia subduction zone — which spans all the way to northern California.
Nissen said people on the West Coast are also concerned about ensuring that oil and gas facilities — including the proposed Pacific Link Pipeline — are “seismically resilient.”
He said the pipeline would go through the Fraser River Delta, a wetland that is susceptible to earthquake liquefaction, a phenomenon where “you can get buildings sinking into the ground.”
“When that occurs at sea level, you can have things sinking into the sea, below sea level, and [when] you’re exporting a lot of oil, that has a huge environmental hazard associated with it,” Nissen said.
A similar earthquake in Christchurch, New Zealand, in 2011 killed 185 people.
B.C., Ottawa, Quebec most at risk
Nissen’s potentially disastrous forecast is for the very region where he is based: Vancouver Island and the city of Vancouver.
He said another good comparison for the possible impact of an extreme earthquake in the region would be what happened in Japan, also in 2011: “Really massive magnitude eight to nine kind of earthquakes that can generate big tsunamis.”
He said the rest of British Columbia and the Yukon are at risk to smaller earthquakes throughout the province and territory.
“But if they’re close to population centres, they can still be very, very damaging,” Nissen said.
Ottawa and Quebec — specifically regions along the St. Lawrence River — can also be at risk. They’re in the Charlevoix seismic zone, the most active from Ontario to the East Coast.
“There have been some large earthquakes in eastern Canada during the earlier period of colonization and settlement,” Nissen said. “If you felt a small earthquake growing up in eastern Canada, then that’s a nice reminder that when you have small earthquakes, you can also have big earthquakes.”
Earthquake insurance in Canada is currently optional. If someone is impacted by an earthquake and without it, they would have to try to find financial relief through the government’s Disaster Financial Assistance Arrangements (DFAA) program or other alternatives.
McGuinty said between four and seven per cent of Quebecers have earthquake coverage compared to 50 to 65 per cent in British Columbia.
If Canada faced a big earthquake tomorrow, Nissen says that would be unlucky — but “it wouldn’t be a surprise.”
“These earthquakes are inevitable. They will happen one day. It’s just a matter of when,” he said.
