Assessing the Canadian Commercial Real Estate Sector's View and Preparedness regarding Flood Risk
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The process of climate change, with its projected occurrence of extreme weather events, such as flooding, has clear implications on the Canadian Commercial Real Estate (CRE) business sector. CRE businesses, which are exclusively used for business activities and commercial profit making purposes, are impacted directly and indirectly from flooding. There is a serious need for understanding potential flood vulnerability and climate change adaptation within the CRE property framework. A conceptual understanding of the extent and scale of the effect of flooding on the CRE properties would be worthwhile for relevant stakeholders. Realizing an increase in the frequency and intensity of flooding events in Canada, the main question this research poses is “are Canadian CRE companies motivated to engage (implement) climate change adaptation to de-risk their commercial properties from extreme impacts of flooding.” To answer this question, the research adopts an approach of strategic and critical evaluation of literature to grasp fundamental knowledge of the CRE business vulnerability (BV) to climate change and flooding, and understanding literature surrounding climate change adaptation to de-risk the sector from extreme impacts of flooding. A survey questionnaire provided insight into Canadian CRE companies’ awareness of flood vulnerability and knowledge of potential flood impacts on their commercial properties, and awareness of a climate change adaptation framework to manage the flood risks. It was noted through survey responses that most CRE companies view climate change and flooding as a serious problem, although many companies are not well-aware of flood impacts (direct or indirect) that can disrupt their commercial properties’ operations. In fact, the CRE sector does not take risk of flooding as one of their priorities. This is in part due to differential attitude towards their knowledge and experience of flooding. Findings also revealed that knowledge of a climate change adaptation framework to manage the flood risks is lacking in this sector which poses a serious threat in the wake of extreme flooding situations in Canada. At the same time, results showed the important role governments and insurance industry can play in facilitating climate change adaptation efforts in the CRE sector. Overall, the results showed lack of a perception of Canadian CRE companies towards flood vulnerability, which plays a significant factor in their lack of motivation towards implementing a climate change adaptation framework, which is highly concerning for the economic activity of the CRE sector and the Canadian economy. Companies are somewhat motivated – perhaps because of the federal government’s and the insurance industry’s potential funding initiatives – to implement risk awareness and risk assessment processes, but are not extensively motivated to implement risk management process to comprehensively de-risk potential impacts of flooding in their commercial properties. However, the perception can certainly change with the increasing magnitude and severity of floods and it is possible that the financial implications of floods on CRE properties will be visible in the future. This study is extremely useful for those involved directly/indirectly with the Canadian CRE sector in developing an understanding of the vulnerability of this sector in the context of flood risk.