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The economics of flooding in B.C.

How has flooding around B.C. thus far affected tourism, supply chains, the insurance industry and general movement around the region?
Storms closed highways and flooded communities in B.C. over the weekend and into Monday

Flooding that has led to evacuations, road closures and declarations of states of emergency has overwhelmed communities and residents across British Columbia. The tolls have been immense. What exactly are the economic impacts of this natural disaster?

Here is a breakdown of how it has thus far affected businessestourismsupply chains, the insurance industry and general movement around the region

B.C. storm a ‘double tragedy’ for businesses, communities

Communities face slow economic recovery without proper plans in place, says expert

Severe rainfall ravaged much of southern B.C. the past few days, choking off highway access to many communities and displacing some residents who were forced to evacuate amid flooding.

While many British Columbians’ homes have been damaged and communities thrown into uncertainty, the province also faces a “double tragedy” on the road to recovery, according to Jeremy Stone.

“People are experiencing multiple traumas, especially in the business sector,” said the director of the Recovery and Relief Services Inc. consultancy.

“They're also experiencing the loss of business or disruption of their income.”
When British Columbians begin returning home to assess the damage, economic opportunities both for business owners and employees within the community may be greatly diminished.

Stone, whose Vancouver-based firm specializes in economic recovery and disaster planning services, said this amounts to “a double tragedy for a lot of these folks” who may not find consistent income in their communities as recovery efforts unfold.

He said many entrepreneurs operate home-based businesses that may also have been severely damaged or even destroyed during this most recent disaster. If and when other business owners are ready to return to business as usual, they may find that their employees are not coming back.

“There needs to be on one level some really proactive work — preferably before something like this happens — where there are communication plans in place and back-to-work plans are in place so that businesses can connect with their employees and everyone can get going again,” Stone said. 

“But for businesses that are going to be shut down, there needs to be support for the employees themselves.”

He noted other jurisdictions facing similar disasters will often enlist locals to help work on the direct recovery efforts before regular employment within the community resumes once again.

Stone said he was impressed with Merritt’s evacuation plans, whereby residents were evacuated to Kelowna if their home addresses were even-numbered and those with odd-numbered addresses were sent to Kamloops.

That’s not necessarily the same case for businesses.

“I definitely know that many other communities don't have that kind of plan. How do we immediately triage to businesses? How do we immediately support businesses and [secure] their major infrastructure like computer servers or major equipment,” Stone said.

“Oftentimes it’s just left to the individual businesses: ‘We hope you have a business continuity plan and if not, tough luck.’”

Since regional districts often lead the recovery phase of such disasters, Stone said having a business person in the room to advise regional districts on the potential impacts of closing transportation infrastructure or allocating specific relief funding.
Communication problems also frequently pose challenges during the recovery phase.

“You [can] have a mayor or council member go to the media saying things like, ‘We're completely shut down, don't come here,’ and then the business community saying, ‘Oh my gosh, I think we actually need some people to come here because we desperately need some income in the short term,’” Stone said.

The reverse is also often the case, he said, noting a community’s brand can take a hit if politicians urge people to visit before a town or city can support an influx of visitors.

With severe weather events expected to increase in the coming years — January data from the Insurance Bureau of Canada reveals $2 billion was paid out last year in insured damage compared with an annual average of $600 million from 2000-10 — more businesses will need to prepare for potential impacts brought on by such storms.

Last summer’s wildfires as well as the heat dome brought many parts of the province to standstill. And this most recent storm has already seen dozens of highways closed, significant power outages and throngs of residents displaced from their communities.

Stone is urging jurisdictions to be thoughtful about their economic resilience plans by ensuring proper committees are already in place and communications priorities are aligned ahead of any disaster.

“It is possible to do this, but there hasn't really been a lot of funding or political will for it,” he said.

Wild weather has mixed effect on B.C. tourism

Flood evacuees flock to hotels; ski resorts see snowpacks recede

Business owners in B.C.’s tourism sector are thankful that the so-called atmospheric river, which dumped up to 230 mm of rain in parts of the province November 13 through 15, came during its shoulder season.

Summer tourists have long gone, while ski resorts are yet to open and holiday-season visits are more than a month away.

Before the storm, which prompted flooding and evacuations in pockets of the province, including the entire 7,000-person town of Merritt, executives at the 210-room Kelowna Sandman Hotel & Suites were expecting to be 60% occupied, front desk manager-in-training Abhi Rawat told BIV.

“We’re full,” he said, adding that the hotel is providing evacuees with a government rate, and that the hotel would be compensated for those discounts by the B.C. government’s emergency services department.

A series of landslides and wash-outs closed all highways connecting the Lower Mainland to the Interior. Some motorists were stranded on Highway 1, between Sumas Way and Whatcom Road, in Abbotsford.

People who were able to get out of that logjam provided business for hotels, such as the Abbotsford Hotel, on Clearbrook Road, just off the highway.

Front desk clerk Raj Sidhu told BIV that guests occupied 40 of his hotel’s 42 rooms on November 15, with most of the reservations being last-minute online bookings.
He said he thought many of those customers were motorists who had not intended to stay in a hotel overnight, and that on a standard mid-November night the hotel would see about 45% occupancy.

Often, when there is rain on the coast, Interior mountains get snow.

The atmospheric river, however, carried water and warmer air that drenched Big White Ski Resort, which had been planning to open on November 25.

“We lost about 30 cm of snow,” Big White vice-president of sales and marketing Michael Ballingall told BIV. “We had about a 50 cm base, and we’re down to about 22 cm.”

He said he is concerned that a section of the Coquihalla Highway, between Hope and Merritt, washed away.

“That's where all our groceries come from, for all our restaurants,” he said. “Our customers come down that road. People who come from overseas do ski safaris – visiting Big White, Revelstoke, Kicking Horse, that's what they do. They rent a car in Vancouver, and do a little circuit. So we're fielding calls from people who are concerned [about the roads].”

Damage to the Coquihalla Highway appears to be extensive, and government officials have yet to project a date when the highway could reopen.

Some good news is that the Okanagan’s wine region should be able to weather the storm, Wine Growers British Columbia CEO Miles Prodan told BIV.

November is as slow a time of year for wine tourists as it is for grape growing. Most fruit has been picked, he explained.

Some wineries have left grapes on vines with the intention of making icewine, but this year had been shaping up to be a low-yield year for icewine, with only 80 tonnes of grapes registered to be left on vines, and only four wineries registered to pick those grapes and make the wine.

In order to make icewine, wineries must register their intent with the BC Wine Authority, which is the regulatory authority for BC VQA.

B.C.’s hospitality sector is also unlikely to take a hit from the storm, according to BC Restaurant and Foodservices Association CEO Ian Tostenson.

“I think we’ll be all right, apart from supply chain disruption in the Interior,” he said. “It's going to be a problem, but it was already was a problem, and is just going to be exasperated. This is a shoulder period for us.”

B.C. highway washouts, closures to severely strain supply chains running through Vancouver

The massive atmospheric-river rainstorm that struck B.C. over the weekend will likely bring continued disruptions to an already strained supply-chain situation in Western Canada, as all Canadian highway access to the Port of Vancouver has been cut off.

However, depending on the type of damage that was done by the widespread mudslides from the Fraser Valley into the B.C. interior, the exact extent of the damage to Canadians’ ability to import/export through Vancouver’s port remains unclear, one official said.

“The short answer is, we don’t know yet,” said Dave Earle, president and CEO of the BC Trucking Association. “Yesterday [Monday] was all about rescue and safety – and today is all about assessment and understanding.”

According to the B.C. Ministry of Transportation and Infrastructure’s DriveBC dashboard, Highway 1 and 7 in the Abbotsford-Chilliwack-Hope area continue to be closed both ways due to flooding and mudslides as of Tuesday at noon. 

Those closures effectively shut off all road access from the east, and each of the highways feeding into those routes (Highway 1 from Lytton, Highway 5 from Merritt and Highway 3 from Princeton) are also closed. Damage on these portions of Highways 1 and 5 are especially daunting, with aerial photos showing a portion of Highway 1 being washed out completely and another stretch of Highway 5 now missing a bridge.

The only other Canadian highway coming into Metro Vancouver – Highway 99 – is now also closed due to mudslides just south of Lillooet. Provincial ministers are scheduled to provide an update to the situation this afternoon.

Both Canadian rail line operators are also reporting disruptions, although it is unclear how severe their situation is. CP Rail confirmed a track outage north of Hope that is “affecting rail service in the region,” a spokesman said. CP’s rail network map shows the Hope route as the operator’s only line into Vancouver.

For CN Rail, the company confirmed “there have been mudslides and washouts” and that ”northbound and eastbound traffic from Vancouver, as well as inbound to Vancouver from east/north of Kamloops continue to be impacted.”

Port of Vancouver officials confirmed the closures, adding that - as of now - "all rail service coming to and from the Port of Vancouver is halted because of flooding in the B.C. interior."

"Both CN and CP Rail indicate that no rail traffic is currently able to transit from Kamloops to Vancouver," a Port of Vancouver statement said. "Both rail lines are conducting damage assessments of multiple impacted sites and infrastructure threats to establish access and repair activities required. No timeframe for re-opening of the rail lines is currently available."

For Earle, there are two ways to look at the situation from the trucking transport perspective. First, as a consumer getting their goods from elsewhere in Canada, there should not be any worries because there are still flexibility within the system to get products into and out of the Lower Mainland – including the option of going through the United States.

“We are going to see some real creativity,” he said, although he declined to speculate on specific routes that may be explored. “I’m seeing inquiries about bypass routes and carrier availability about moving things through a whole bunch of different routes. 

“The message I’ve been delivering to everyone – and it’s an important message – is to calm down. You are still going to get your toilet paper; let’s not repeat what we did in 2020. Your goods will still get there. It may take a little longer, and it may have to take a different way to get to where it needs to go. It may also be a little more expensive. But it’s okay because it will get there.”

Far more concerning, Earle added, is the implication for B.C. and Canadian producers looking to get their goods to market. Earle noted that the mudslides covering roads in the Lower Mainland area (especially near Bridal Falls) happen annually and should only take days to clean up, causing minimal disruptions.

The washouts on Highway 1 and Highway 5 north of Hope, however, is far more concerning because it is uncertain how long it will take to rebuild the sections of road that were washed away completely.

“In the short-term, the Lower Mainland disruptions on Highway 1 and 7 – I think – are regular debris flows,” Earle said. “I’m hearing one of the rail lines is anticipating getting back into service in the next 3-5 days, which is good news.

“For Highway 1 and 5, I’m concerned,” he added. “Those are the two big ones. 
Highway 3, as much as it is a major route, is a minor highway. The same is with Highway 99; yes, it’s a route, but it’s not a good one. From a macro-economics point of view, I am concerned, because how will mills get their goods to market?”

Ultimately, the supply chain will find a way, Earle said – because that is exactly what a supply chain does. However, the current system exists because of cost and time efficiencies – efficiencies that are now slated to be severely upended by potentially long-term closures of two major highways linking Vancouver to the rest of Canada.

“If we can’t run lumber on a vehicle from Kelowna or Merritt to the Lower Mainland, what can we do?” he added. “Can we move it on rail and go to the inland port at Ashcroft? Can we run a truck instead coming south and going east instead? There will be some solutions. It will be more costly, and it will take more time. It’s not going to be as efficient, and that’s the concern when we are talking about an already strained supply chain.”

Earle added that the entire transport industry is weary, since the last two years have seen everything from blockades and pandemic blockages to wildfires and heat waves disrupt an already strained supply chain.

“I will not be sad to see 2021 go. It’s one thing after another, after another, then after another. Everybody is feeling the pressure. Again, this is what we choose to do, and it’s always good to see how you rise to the occasion. But my gosh, can we catch a break just for a little bit?”

Insurance industry bracing for ‘significant damage’ from B.C. storm

Severe weather caused $2.4 billion in insured damage in 2020

It took just days for storms to batter B.C., shut down highways and flood communities over the weekend and into Monday. The full financial cost of this deluge may not be known for at least a month, according to one expert.

“It is very early days,” said Rob de Pruis, the director of consumer and industry relations at the Insurance Bureau of Canada (IBC). “There is going to be significant damage to many of these different communities and that can be traumatic.”

He said insurers haven’t had enough time to quantify the number of claims or the total dollar amounts likely to be claimed as a result of the extreme weather event that has closed dozens of B.C. highways, cut power to thousands and forced evacuations.

“People were just evacuated and there's still lots of flooding that's happening around,” said de Pruis, whose industry association represents the country’s private insurers.

“We probably won't have that information for about a month or so.”

Severe weather caused $2.4 billion in insured damage in 2020, according to IBC data released in January. de Pruis said between 2000 and 2010, the Canadian insurance industry was paying out an annual average of $600 million for such claims.

“We are seeing more frequency and more severity of these weather events in this past decade than we have in the previous years,” he said. 

“So it is something that the insurance industry has taken notice of and they are developing products to help provide that financial protection.”

For example, overland flood coverage began emerging in 2015 and de Pruis said about half of British Columbians have purchased the optional coverage.

Regarding the potential for insurance costs to go up, he said the insurance industry is well capitalized for events such as the B.C. storm. But de Pruis noted that just as these events are increasing in frequency, the cost of rebuilding has also been increasing.

“We need to work together — both with government, stakeholders and the insurance industry — to really help build more resilience, and try to identify areas and determine what can we do to help prevent or mitigate some of these damages from happening in the future,” he said.

Meanwhile, many of the southern B.C. communities hit hard by the recent storm are also still reeling from this summer’s wildfires.

“It's very, very difficult for people. Compounding that is just the pandemic that we have as well,” de Pruis said.

“So right now if you have been evacuated or if you know that you have damage, don't delay, reach out to your insurance representative right away and start that process because there are some coverages available to you.”

The IBC has launched a Community Assistance Mobile Pavilion (CAMP) to field insurance questions from B.C. policyholders dealing with fallout from the recent storm. The CAMP initiative operates virtually via phone, email and social media, as many B.C. residents are still be displaced.

The IBC is also urging policyholders to prepare for flooding events by following four steps:

1.     Keep a current and detailed home inventory.  
2.     If your neighbourhood is prone to flooding, take precautions throughout your house and property. 
3.     Assemble a disaster safety kit.
4.     Create a 72-hour emergency preparedness plan ​for your family.

Lower Mainland still cut off due to flooding

Sections of Trans Canada and Highway 99 still cut off due to washouts and slides

The sun came out today, following a three-day deluge that broke rainfall records and washed out and closed highways throughout B.C., triggered landslides that derailed trains, caused power outages, ran a barge aground in English Bay, and necessitated the evacuation of the entire town of Merritt.

Parts of Abbotsford and Chilliwack also remain under an evacuation notice. Schools have been closed in Abbotsford, Chilliwack, Mission and other parts of the Fraser Valley and Lower Mainland.

The Lower Mainland remains cut off from the rest of B.C., as sections of major highways, including sections of the TransCanada Highway in Abbotsford, and Highway 99 south of Lillooet, were closed due to washouts and landslides.

Dozens of other highways and roads in B.C. are still closed. The Malahat Highway on Vancouver Island was closed, but has re-opened to single-lane traffic only, and long delays are to be expected.

Rail lines have also been cut off, which will lead to even more supply chain problems -- something exacerbated first by the pandemic and then, this summer, by wildfires.

All trains coming to and from the Port of Vancouver have been halted due to flooding in the B.C. interior, according to the Port of Vancouver. Both CN and CP Rail have said that no rail traffic is currently able to move between Kamloops and Vancouver.

The Ministry of Transportation will hold a press briefing later today to provide an update on highway closures and reopenings. DriveBC advises against any travel to Abbotsford and surrounding areas.

More than 200,000 British Columbians lost power, and many outages continue, due to both flooding and high winds. The town of Hope was without power Sunday and Monday, according to BC Hydro.

The economic costs of the flooding are not yet known, but are sure to run into the hundreds of millions if not billions.

"The magnitude of the damage is unbelievable," said Bridgitte Anderson, president of the Greater Vancouver Board of Trade (GVBOT). "It's going to take weeks, even months, for us to really fully understand the impact of the damage this has caused to our economy.

She said $500 million worth of goods moves through the Port of Vancouver every day, and is now suffering yet another interruption in the flow of goods by truck and rail. On top of the pandemic, which caused severe supply chain disruptions, wildfires this summer also halted the flow of goods by rail.

"The port has already been working overtime in the past many months to make up for the impact of the pandemic on global supply, so this will be a further blow for the port, as we're all trying to handle the supply chain shortages that we've seen," Anderson said.

"We have supply chain issues already that have been impacting us because of the pandemic, and now we can't goods...down to the Lower Mainland. The scope of this is really remarkable."

The Town of Merritt remains evacuated, as the town's sewer and drainage system has suffered a total failure. A city official says citizens in Merritt may have to remain evacuated for a least a week.

Katerina Anastasiadis, CEO of the Abbotsford Chamber of Commerce, said the Trans Canada Highway from Whatcom Road to No. 3 in Abbotsford remains cut off, as is No. 7 Highway, which connects Mission to Abbotsford.

“It also reaches up to Maple Ridge,” Anastasiadis said. “So Maple Ridge, Mission, Abbotsford connections are cut off due to flooding.”

She is just beginning to hear reports of damage to businesses in the area. The Clarion Hotel in Abbotsford has cancelled all events this week, she said, as much of the town is under water and under evacuation notice.

The flooding has underscored what Anastasiadis said has been flagged by the city as a potential problem: the need for better dyking systems, particularly to address flooding problems in the region known as Sumas Prairie. Sumas Prairie is actually a former lake that was drained. Flooding has practically returned it to a lake.

“This is something the city actually has been aware is a big risk for us, with our dyking systems and something we worked with the federal government on to get infrastructure money for,” Anastasiadis said. “I’m hoping, with this incident, that they can see this is definitely a pressing issue for us. We need to be able to have reliable sources of funding to build this kind of critical infrastructure.”