Over time, more frequent floods and wildfires are threatening Manitoba's fiscal resilience

In 2025, summertime wildfires in Manitoba killed 2 people, displaced 33,000 others, burnt quaternary per cent of the province's set ashore mass and cost the province hundreds of millions of dollars at the very least.

In 2026, June storms and subsequent flooding led 50 municipalities to declare states of emergency, damaged 30,000 vehicles and deluged hundreds of homes, businesses and agricultural fields, spawning insurance claims in excess of $925 million.

The total cost of this one-two punch of natural disasters is difficult to quantify in human terms. In financial terms, it's safe to measure the impact in the billions.

The combined cost of the wildfires and flooding will have a serious impact on the provincial budget in the short term, as money that could have been devoted to programs or deficit reduction are diverted to disaster financial assistance and infrastructure repairs.

How Manitoba responds to these disasters on a longer-term basis will be even more significant, as the climate in this part of North America — already subject to some of the greatest weather extremes in the world — becomes even more variable.

To put it in even more blunt terms, the collective inability of this planet to avoid climate change has forced jurisdictions like Manitoba to suddenly adapt to a new reality where more frequent extreme weather events ought to be expected.

Premier Wab Kinew acknowledged as much during his most recent news conference about his government's response to this June's storms and flooding.

"The challenge of a changing climate is that government services are going to have to change as well," he said at the Manitoba Legislative Building on July 10.

"Part of what we're doing is learning on the fly as we start to more clearly understand the impacts, but also to try and plan ahead, particularly on infrastructure and energy policy decisions."

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Kinew said Manitoba must drive its budget balance down to zero to create more fiscal wiggle room to cover unforeseen expenses such as the responses to natural disasters.

This is easier said than done. As of December, Manitoba Finance expected the province to end the 2025-26 fiscal year with a $1.6-billion deficit. Finance Minister Adrien Sala said in March this annual deficit would drop to $498 million for 2026-27 and expressed confidence in that projection because 2026 was not expected to be a bad fire season.

While you can't blame Sala for failing to predict unusual June rainstorms instead, climatologists have been warning for decades that climate change will lead to even more variability on the Canadian Prairies.

This poses a serious challenge for Manitoba and the City of Winnipeg. Both build their budgets by allocating only money they expect to spend on any given line item — not on what they might need to spend if a severe weather event or natural disaster happens to occur.

University of Winnipeg economist Phil Cyrenne said governments might need to create a disaster stabilization fund that would effectively function as a massive insurance policy.

"There needs to be some larger insurance role if climate change issues are going to be manifested in terms of flooding or fires," Cyrenne said in an interview Friday.

"But the problem is, you can always run an insurance scheme if you have uncorrelated risks. If everybody's going to have these risks at the same time, then it's hard to really insure against them."

This is not fearmongering. While flooding tends to be somewhat localized in Canada, bad wildfire seasons can and do affect many regions of the country at the same time.

As well, the compounding effects of disasters every year or two are not only measured in the cost of housing evacuees or compensating disaster-assistance claimants. Entire industries, namely tourism and agriculture, are threatened by frequent severe events.

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Consider the past 20 years alone: serious flooding in 2006, 2009, 2011, 2014, 2022 and 2026. Serious wildfires in 2011, 2013 and 2025.

Less economic activity means less tax revenue for the province, which in turn translates into less of the fiscal resilience Kinew spoke about when he said the province must return to balanced budgets.

The premier said he expects this balance to be aided by a weather-related windfall for Manitoba Hydro.

As of Friday, the Crown corporation's main reservoir, Lake Winnipeg, was sitting just above the top of its recommended operating range for the first time since 2022, thanks to widespread rain across the Assiniboine River drainage basin this June.

Hydro, however, has financial issues of its own. The utility carries $25 billion worth of debt, faces a $30-billion tab to fix its aging infrastructure and has not fully costed out its plan to generate more electricity.

Cyrenne said while Manitoba Hydro's fiscal situation is not a crisis just yet, it is getting to the point where it requires more investment.

"If I was the finance minister, I would be very wary about taking much in the way of a dividend from them at this time," the economist said.

In other words, flooding won't pay for wildfire damage, at least not in the long run. Climate resilience in Manitoba will require more than looking to the sky for help.

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