Snowed Under: Climate Risks From Extreme Snowfall in the Great Lakes Region of North America

[A version of this article was originally published in the 2024 Material Risk Engagement Q4 Report and in the Engagement 360 Q4 Report.]

Key Insights:

Over the last weekend of November 2024, the Great Lakes region experienced an extreme snowfall event, seriously impacting residents and businesses. Local towns declared a state of emergency after being hit with approximately 140 cm of snow, leading to prolonged highway closures and widespread power outages affecting more than 60,000 people.¹ Snow squalls, driven by cold air over the Great Lakes, created hazardous travel conditions and stranded many vehicles.² Emergency services worked tirelessly to assist those affected, and residents were advised to stay home due to the dangerous road conditions.

As climate change reshapes weather patterns globally, the physical impacts of climate change on corporate assets and business operations are a growing concern for investors. North America’s Great Lakes region is experiencing unique challenges. In this article I provide an overview of the physical and financial consequences of climate change-induced snowfall in the region. Focusing on the implications of increasing extreme snowfall events, the article underscores the importance of proactive risk management and investment in resilience planning and infrastructure.

The Great Lakes Region: A Climate Change Hotspot

The Great Lakes region, encompassing parts of both the United States and Canada, is home to one of the largest freshwater systems on Earth, containing 84% of North America's fresh surface water.³ This region includes agricultural lands, forests, urban areas, and diverse shorelines, all of which are integral to the local economy and environment. The Great Lakes themselves play a crucial role in moderating regional climate conditions, influencing temperature, precipitation, and weather patterns.⁴ However, climate change is already taking a significant toll on the region. Increased precipitation and extreme weather events are causing flooding, erosion, and declining water quality. These changes are impacting agriculture, infrastructure, natural resources, and public health, making the region particularly vulnerable to climate variability.⁵

A Paradox of Climate Change

Paradoxically, climate change is leading to increased heavy snowfall in the Great Lakes region. Warmer global temperatures result in less ice cover on the Great Lakes, allowing more moisture to evaporate into the atmosphere. When cold air masses move over warm lake waters, this moisture is picked up and transformed into significant lake-effect snow. Consequently, areas downwind of the lakes, particularly in northern regions, are experiencing more frequent and intense snowfall events.⁶ This phenomenon highlights the complex and sometimes counterintuitive impacts of climate change on local weather patterns.

The number of days with snow cover has generally decreased across most of Canada due to later snow onset in the fall and earlier snow melt in the spring.⁷ However, there are regional variations. Areas downwind of the Great Lakes have experienced increases in snowfall due to lake-effect snow.⁸ Future projections indicate that while overall snow cover may decrease, heavy snowfall events could become more frequent in certain regions due to changing weather patterns.⁹ 

Financial Impacts of Extreme Snowfall Events

The Great Lakes region has a long history of extreme snowfall events that have had significant financial impacts affecting both public infrastructure and private properties. For instance, the November 2022 lake-effect snowstorm in Buffalo, New York, resulted in over 203 cm (80 inches) of snow over four days,¹⁰ causing widespread power outages, structural damage to buildings, and major disruptions to transportation networks. These events lead to increased costs for snow removal, road maintenance, and emergency services, as well as higher insurance claims due to property damage. 

The Insurance Bureau of Canada (IBC) has reported a significant increase in insurance claims related to severe weather, including snow and ice damage. According to the IBC, insured damage from severe weather events in Canada now routinely exceeds CAD 2 billion annually, with a substantial portion attributed to water-related damage, which includes snow and ice.^11,12 Additionally, businesses face operational disruptions, with supply chains being particularly vulnerable to delays and increased costs. 

Overall, the financial impacts of extreme snowfall events in the Great Lakes region are escalating, reflecting broader trends of increasing extreme weather events linked to climate change. These trends underscore the growing financial impact of extreme snowfall events, and the importance for investors and companies to incorporate climate risk assessments and resilience planning into their strategies to mitigate potential losses.

Implications for Investors

The rising costs associated with snow removal, infrastructure repair, and insurance premiums can significantly affect a company’s bottom line. Moreover, disruptions in operations and supply chains can lead to lost revenue and increased operational costs. Corporate asset owners and investors should consider the following strategies to mitigate risks and capitalize on opportunities:

1. Risk Assessment and Management: Conduct thorough risk assessments to identify vulnerabilities in business operations and supply chains. Implement robust risk management strategies to minimize potential disruptions and financial losses.
2. Infrastructure Investment: Invest in resilient infrastructure that can withstand extreme weather events. This includes upgrading buildings, transportation networks, and energy systems to enhance their durability and reliability.
3. Insurance and Financial Planning: Review and adjust insurance coverage to ensure adequate protection against extreme weather events. Consider financial planning strategies that account for potential increases in insurance premiums and other climate-related costs.
4. Sustainable Practices: Promote and invest in sustainable business practices that reduce greenhouse gas emissions and mitigate climate change. This can include energy efficiency measures, renewable energy investments, and sustainable supply chain management.
5. Engagement and Advocacy: Engage with policymakers and industry stakeholders to advocate for climate action and resilience-building measures. Support initiatives that promote sustainable development and climate adaptation.

Climate change is reshaping snowfall patterns in North America, with significant financial implications for corporate assets and critical infrastructure. The increasing frequency and severity of extreme snowfall events underscore the need for proactive risk management and investment in resilient infrastructure. By understanding and addressing these challenges, investors can protect their assets and capitalize on opportunities in a changing climate. As the impacts of climate change continue to unfold, staying informed and prepared will be key to navigating the evolving landscape of risks and opportunities.

References:

1. CBC. 2024. “Intense Ontario snow strands vehicles, knocks out power as town calls emergency.” December 1, 2024. https://www.cbc.ca/news/canada/toronto/snow-storm-state-of-emergency-gravenhurst-1.7398242.
2. The Weather Network. 2024. “Ontario walloped by intense snow squalls, impressive totals piling up.” November 30, 2024. https://www.theweathernetwork.com/en/news/weather/forecasts/ontario-walloped-by-intense-snow-squalls-impressive-totals-piling-up.
3. United States Environmental Protection Agency (EPA). “Great Lakes Facts and Figures.” Accessed December 2024. https://www.epa.gov/greatlakes/great-lakes-facts-and-figures.
4. NOAA Climate Program Office. “Observed and Simulated Trends in Heavy Lake Effect Snow Events Across the Great Lakes Basin.” Accessed December 2024. https://cpo.noaa.gov/funded_projects/observed-and-simulated-trends-in-heavy-lake-effect-snow-events-across-the-great-lakes-basin/.
5. Walsh, R. 2023. “Beyond the Surface: The Consequences of Shrinking Great Lakes Ice Coverage.” Midstory Media Thinkhub. September 6, 2023. https://www.midstory.org/beyond-the-surface-the-consequences-of-shrinking-great-lakes-ice-coverage/.
6. GLISA. “Lake-effect Snow in the Great Lakes Region.” University of Michigan and Michigan State University supported by the National Oceanic and Atmospheric Administration (NOAA). Accessed December 2024. https://glisa.umich.edu/resources-tools/climate-impacts/lake-effect-snow-in-the-great-lakes-region/.
7. Government of Canada. “Changes in snow.” Accessed December 2024. https://www.canada.ca/en/environment-climate-change/services/climate-change/canadian-centre-climate-services/basics/trends-projections/changes-snow.html.
8. GLISA. “Snow in the Great Lakes: Past, Present, and Future.” University of Michigan and Michigan State University supported by the National Oceanic and Atmospheric Administration (NOAA). Accessed December 2024. https://glisa.umich.edu/resources-tools/climate-impacts/snow-in-the-great-lakes-past-present-and-the-future/.
9. Government of Canada. “Climate trends and projections”. Accessed December 2024. https://www.canada.ca/en/environment-climate-change/services/climate-change/canadian-centre-climate-services/basics/trends-projections.html.
10. Donegan, B. 2024. “Historic snowstorm drops over 80 inches in Buffalo area as western New York digs out.” Fox Weather. November 15, 2022. https://www.foxweather.com/weather-news/buffalo-lake-effect-snow-november-2022.
11. Insurance Bureau of Canada (IBC). 2023. “Severe Weather in 2022 Caused $3.1 Billion in Insured Damage -- making it the 3rd Worst Year for Insured Damage in Canadian History.” January 18, 2023. https://www.ibc.ca/news-insights/news/severe-weather-in-2022-caused-3-1-billion-in-insured-damage-making-it-the-3rd-worst-year-for-insured-damage-in-canadian-history.
12. Balu, N. 2024. “Canada’s Insurance Sector Faces Deluge of Climate-Related Catastrophe Claims.” Insurance Journal. September 3, 2024. https://www.insurancejournal.com/news/international/2024/09/03/791129.htm.