The challenge of managing water risk

Water is an essential element of agricultural production. But it’s a relationship that requires a delicate balance. Too little water means a withering of growth, but too much of it can wash away hopes too.

Water is an essential element of agricultural production. But it’s a relationship that requires a delicate balance.

Too little water means a withering of growth, but too much of it can wash away hopes too.

Farmers in Alberta can manage much of their production risk through crop insurance. But like their urban counterparts, flood insurance protection for homes, barns and other structures is not an option.

The disastrous 2013 flood in Calgary drew major attention to the lack of a flood insurance options for all Albertans.

In fact, Canada is the only one of the G-8 nations without some kind of flood insurance coverage.

A study released in 2013, ironically just before the big flood, looked at the viability of overland flood insurance in Canada.

The work was commissioned by the Co-operators, and it outlined the industry’s concern over too little government action to mitigate flood risks. The other big issue the report noted is a lack of reliable flood mapping.

When there’s a challenge in agricultural insurance, the go-to guy has become Central Alberta’s own Rick McConnell. After many years with AFSC, he did work internationally in crop insurance in places like Ukraine and Guatemala.

Presented with this latest dilemma, McConnell has been working with the Alberta Federation of Agriculture and Aquanty Hydrosphere Analytics on developing a project that might answer the insurance industry’s needs, and lead to better protection and planning for all kinds of water-related issues.

McConnell explained that to define “water risk’’ for the research work, they needed to expand the scope beyond just “water flowing over a river’s banks.”

That only impacts limited numbers of people located near rivers. If you broaden the picture to include heavy rains, which prevent seeding or flood out crops because of saturated soil, and then add in drought, you’ve got something that impacts basically all farmers.

But how do you find a way to accurately describe the entire water cycle?

“There are computer hydrology models to simulate how water moves through the landscape,” explained McConnell. “But most of them have been simpler, focusing on a particular part of the cycle in a certain area.”

Examining a water flow challenge of this magnitude and complexity would take a much bigger, holistic approach, and a whole lot of computer power. Fortunately, the Waterloo, Ont., firm of Aquanty has one of the world’s leading hydrology models and the computer resources available for such a task.

So the Alberta Federation of Agriculture is hoping to get a project going to showcase all that such a comprehensive water flow forecaster could do.

McConnell pointed out that insurance companies haven’t wanted to deal with flood insurance, because without solid numbers to reflect the risks they face, they can’t set a premium rate.

“If we could showcase this system works for rural areas, it could also apply to urban settings, and help convince international re-insurance companies to get involved. They backstop local insurance companies. It could take away the excuses insurance companies use to opt out of flood insurance.”

If funding from the Agri-Risks Initiative under Growing Forward 2 can be secured, the project would focus on the South Saskatchewan River basin first. It would run data for the last 20 years through the hydrologic computer simulation model, to assess the risk of water-related events. Factors such as elevations, land contours, soils, rainfall and snowmelt would all be plugged into the mathematical equations for flow.

“Then the model could be tested on certain things in history,” outlined McConnell. “We could tell if a quarter section of land was too wet to seed, and then compare it to crop insurance claims. Once we calibrate the model to many events, we could go to the re-insurers and demonstrate the predictability of the past.

“Then we could start looking at 2016, and use soil probes, satellite imagery and crop conditions to check the model’s water movement estimates for the present. That would support the model’s predictions for the future. Assessing climate change could also be built in.”

The potential for the model is huge. It could be used to establish premium rates for flood insurance. But you could also build a virtual dam and assess its impact, and compare that with other water diversion strategies. It could project flow of contamination from an oil or gas spill, because those flow along with the water. It could be used for irrigation planning, or assessing fisheries habitat.

“Once it’s set up . . . while the focus is for assessing for water-related risk of overland flooding, excess moisture and moisture deficiencies in an insurance context in rural areas, it could easily be used to expand and answer questions for urban areas for flood. Questions for any water-related issues could be posed.”

“Once you’ve got it done for the South Saskatchewan, it wouldn’t be as costly to do it for the North Saskatchewan, because all the things you’ve put into this for insurance purposes would be known now, and you’d just have to enter the data from that river area.”

But the whole idea has to start somewhere. Because of the vast rural areas dependent on the right amount of water for food production, having agriculture lead the charge for such a comprehensive water model seems fitting.

Now it’s just a matter of seeing whether the federal agriculture minister agrees, and provides the research funds to get the ball rolling this spring.

Dianne Finstad is a veteran broadcaster and reporter who has covered agricultural news in Central Alberta for more than 30 years. From the Field appears monthly in the Advocate.