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Reducing Individual Costs of Permafrost Thaw Damage in Canada’s Arctic

By | Article
March 4, 2021
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Green trees and a house beside body of water

Buildings in northern communities are vulnerable to permafrost thaw, such as Dene Fish and Hunt Camp along the Mackenzie River in the Northwest Territories, Canada. Photo: Alan Emery

Permafrost thaw is one of the world’s most pressing climate problems, already disrupting lifestyles, livelihoods, economies, and ecosystems in the north, and threatening to spill beyond the boundaries of the Arctic as our planet continues to warm. To examine the effects of permafrost degradation, and increase our understanding of what this phenomenon means for the future of the region (and the world), The Arctic Institute’s new two-part permafrost series aims to analyze the topic from scientific, security, legal, and personal perspectives. The second installment of our series features eight new articles on permafrost degradation and its effects on Arctic life, research, and the world at large. But before, check out the seven articles from our first installment, starting with the Intro.

The Arctic Institute Permafrost Series 2021

Across the Arctic region, the effects of permafrost thaw are costing communities and governments millions of dollars in infrastructure repairs and mandatory relocations.1) In the Northwest Territories (NWT), one of Canada’s northern jurisdictions with a population of approximately 45,000 residing in 33 communities, the estimated cost of permafrost thaw is $1.3 billion over a 75-year time horizon, or $51 million each year.2) Each year, permafrost thaw is estimated to cost the territory $25 million in lost gross domestic product.3) Individuals incur a proportion of these costs due to the thaw’s destructive impacts on their homes and property, and impacts their ability to travel using ground transportation.4) These costs can be prohibitively high, but are non-negotiable due to the imminent threat of losing their home or mandatory relocation orders by local governments.5)

Margaret Kelly, a 77 year old resident of Fort Good Hope community, discussed the individual financial challenges of permafrost thaw in a recent Canadian Broadcasting Corporation profile.6) Kelly remarked that it is difficult to get insurance, and that it is unaffordable to relocate without government assistance, which is not forthcoming. What solutions exist to help individuals offset the financial costs of permafrost thaw on private infrastructure in Canada’s remote Arctic regions? This article discusses the financial costs of permafrost thaw, reviews existing financial assistance programs aimed at offsetting its costs, and suggests initiatives for improvement.

Permafrost Thaw and Its Costs

To minimize the damage of permafrost thaw on infrastructure, action is required at three stages.7) First, measures can be taken to protect existing infrastructure, or reducing the likelihood of the hazards of permafrost thaw. This could include clearing obstructions from around the foundation of the house, such as removing skirting, to allow wind to blow under it and keep the permafrost frozen.8) Second, action can be taken to accommodate existing infrastructure, or to reduce the vulnerability of current buildings. This could include reinforcing the foundation of homes with steel pads and wedges, as well as securing foundations to ensure that they are adequately adjusted to the current state of the permafrost thaw.9) Third, steps could be taken to avoid and plan retreat from the damages of permafrost thaw, or to reduce exposure to it. This could mean ensuring that new buildings are constructed in areas where significant mapping of permafrost has been completed, to ensure that they are only located in areas where the ground is most stable. Alternatively, the individual or community must relocate to a location to an area with stable ground.

At each step, individuals are faced with many costs. At the protection stage, removing skirting could mean that individuals would have to substitute the space storing their items under the house with a new shed to house these same items. At the accommodation stage, individuals must incur considerable expense in strengthening the foundation of their homes, either by themselves or by employing skilled experts. A 2006 study, the most recent in the Inuvialuit region, noted that the average residential detached building was assumed to have an area of about 100m2.10) The cost of adapting residential pile foundations was $208/m2. For residential, on surface, but not adjustable foundation, the cost was $1,000/m2.11) Today, it is unclear whether the average cost would have increased or decreased. On the one hand, the unpredictability of permafrost thaw has intensified unpredictability due to the acceleration of climate change.12) On the other hand, improved knowledge of permafrost thaw13) and the development of all-season roads to Northern regions,14) may help to reduce costs. At the same time, transport challenges remain virtually the same now as it did in 2006, and that suggests that certain costs remain the same. At the avoidance and planned retreat stage, individuals face an increasingly limited housing market, and may be required to spend more on housing in new areas than before.15) For example, relocation to Yellowknife, the territorial capital located on land that is less vulnerable to permafrost thaw as compared to other, and generally more northern regions, can be extraordinarily expensive. The average rent for a two-bedroom apartment in 2019 was $1,744/month, and vacancy rates are decreasing.16)

Thawing permafrost is also an equality and equity issue. The median personal income in the NWT is $50,618, but for the Inuit residing in the NWT, it falls to $25,743.17) Any cost associated with adapting to the changing climate, especially those relating to accommodation or avoidance and planned retreat, are likely to be significant. As a proportion of total income, the same expenditures would disproportionately affect Indigenous peoples, many of whom reside in remote communities most affected by the thawing permafrost. At the same time, these communities have had virtually no role in causing the global climate crisis that resulted in permafrost thaw.18) Should climate change continue to accelerate, the prospect of mandatory relocation away from individuals’ homes becomes less distant. To move away from one’s homeland creates the risk of irreversible loss of culture lived from time immemorial.19)

Current financial assistance

Current federal funding is targeted towards three main areas. First, funding goes to improving the knowledge of permafrost thaw, through activities such as mapping and conducting studies. Part of a $400,000 federal funding recently allocated towards combatting climate change in Canada’s North included developing permafrost terrain maps for zones of discontinuous permafrost in the NWT.20) This funding also includes data collection and prototyping permafrost map products throughout the territory.21) Second, funding is directed towards building or developing resilience of public infrastructure, such as roads, schools, and community buildings. For example, in Tuktoyaktuk, $10,000 is allocated towards finding a suitable place to relocate the community morgue.22) Third, funding is directed towards research and knowledge transfer. The federal government recently agreed to $17,000 in funding to establish a northern permafrost information hub for the western Canadian Arctic in Inuvik.23) These funds are absolutely necessary in the fight against the consequences of permafrost thaw, but almost none are directed towards the individual in their search for financial assistance in repairs or prevention.

In the NWT, there is financial assistance from the territorial governments to individuals to offset the costs associated with permafrost thaw. The Contributing Assistance for Repairs and Enhancements (CARE) program is available to low and modest income homeowners.24) It provides up to $100,000 as a forgivable loan to “subsidize the cost of preventative maintenance checks, repairs and renovations for their existing home.”25) Applicants are expected to contribute to the project cost.26) Individual action taken to reduce the threat of permafrost thaw damage is likely to qualify for this assistance. This initiative is helpful, although the design of this scheme as a forgivable loan, rather than a grant or a transfer, may dissuade individuals from making upgrades. In emergencies, individuals may also apply for the Securing Assistance for Emergencies (SAFE) funding.27) This is a short-term loan of a maximum of $10,000 to provide emergency repairs, which could include repairs related to permafrost thaw.28) Similarly, the fact that the SAFE funding is a loan, rather than an outright grant or transfer, may discourage individuals to make these emergency repairs, and incentivize them to wait until the structural integrity of the home or property is weakened further.

If individuals are able to afford and access it, there may be regular home insurance schemes available, but it is unclear whether this could cover permafrost thaw. Home insurance companies in the NWT are few,29) but the process of comparing prices and coverage between the companies can nonetheless be overwhelming for the average individual. Generally, home insurance would cover an individual for damages related to natural disaster, but it is unclear whether this would include damage relating to permafrost thaw. As it stands now, it is unknown whether or not permafrost thaw is an insured peril. This uncertainty means that individuals may be dissuaded from purchasing home insurance or may not make claims when damage occurs.

Improving financial assistance

The costs of permafrost thaw are only going to increase as the world continues to get hotter. For the individual, these costs can be extraordinarily frustrating and devastating. The existing options available for financial aid are inadequate to ensure that individuals are not burdened with its costs. Reform is necessary in the interests of equality and equity.

Ross Eisenberg suggests creating permafrost insurance as a means of protection against the financial costs of permafrost thaw.30) Eisenberg notes that this would require significant government involvement in creating information that insurers can rely on, and through reinsuring private coverage.31) A permafrost insurance, whether created as a new insurance product or as explicitly part of existing home insurance coverage, is necessary in the NWT context, especially given the ambiguity of whether damage caused by permafrost thaw would be insured by private home insurance. It is vital to ensure that residents may continue with their daily lives without an added, unnecessary fear of unpayable bills for repair or relocation. It allows for long-term financial planning, which enables for the healthy growth of a community and its residents.

A private or publicly backed permafrost insurance cannot stand alone in government initiatives. It must also be affordable and accessible. Insurance must be affordable, meaning that everyone who wishes to insure their property must be able to pay for it. Where individuals and families cannot afford to pay insurance premiums, the government should offer to pay or subsidize a significant proportion of the costs. This approach is similar to the approach taken in the Netherlands on health insurance, where low-income individuals may receive a healthcare allowance by the Dutch government to offset the costs of monthly premiums for mandatory health insurance.32) Insurance must also be accessible, meaning that those who want insurance should be able to receive it, and those who do not know about the insurance should receive the knowledge about it. This means that insurance companies should explicitly include permafrost thaw claims within their scope of coverage, so that individuals can be better informed when purchasing their insurance.

Other initiatives to reduce the risk of permafrost damage must complement any kind of insurance scheme. This is necessary to ensure that insurance premiums do not skyrocket, that no moral hazard is created from dependency on insurance, and that self-reliance of communities is promoted. Governments could support community initiatives to create “Permafrost Inspection Days,” where homeowners will learn to periodically assess the state of their homes’ foundations’ vulnerability to permafrost thaw, and whether repair or upgrades are necessary. It is important that these initiatives are conducted in the local language, incorporate communities’ knowledge of the land, and receive the support of communities, for any kinds of initiatives to be successful. Federal and territorial governments can assist these initiatives by continuing to provide funding for repairs through initiatives such as CARE, providing funding for these days or periodic inspections, as well as any technical assistance that is required. Any latest developments in mapping or technology should be shared with communities promptly.

At an international level, action can also be taken to reduce Arctic residents’ financial costs. One solution may be to investigate the possibility of creating an Arctic Climate Risk Insurance Facility, modeled off of climate risk insurance facilities in the Caribbean.33) Climate risk insurance facilities fill a gap in available insurance offerings, provide quicker payouts, and facilitate investments in resilience building measures.34) Thawing permafrost affects residents across the Arctic region, especially those in Canada, the United States, Russia, and Greenland. Climate risk could be pooled between these countries. Another solution could be the creation of a mechanism that translates the latest in permafrost research into accessible language to individuals. For example, in 2013, the Governments of Nunavut and the NWT collaborated to produce “A Homeowner’s Guide to Permafrost in Nunavut,” which is a plain language booklet of understanding how permafrost thaw affects the individual home.35) Similar initiatives could be taken on by Arctic Council, through perhaps the Arctic Monitoring and Assessment Programme Working Group as it has already worked on issues of permafrost, to circulate, translate, and disseminate the most advanced international research on resilience to permafrost thaw.36) It is hoped that over time, this knowledge-sharing will lower the costs of protection, accommodation, and avoidance and planned retreat for permafrost thaw. In any discussion of solutions to permafrost thaw, it is imperative that individuals are kept at the forefront, with consideration of their financial ability to cope with changes.

Conclusion

The costs of permafrost thaw are borne on individuals and society at large. For the individual, these costs can be significant and unfair. Individuals facing the dangers posed by thawing permafrost should have access to financial resources that make them more resilient. Access to financial resources to counter the impacts of thawing permafrost is an equity issue. The impact of permafrost thaw is and will continue to be disproportionate for certain groups, especially Indigenous peoples in the North located at the frontlines of the impact of climate change. Existing avenues of financial assistance are insufficient to counter the financial gap. It is up to governments at local, national, and international levels, equipped with greater financial resources than the individuals, to step up to the challenge. Doing so would be the clearest indication of the government’s commitments towards Northerners.

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