In his 2021 book Value(s), Mark Carney used the phrase “Tragedy of the Horizon” as shorthand for the catastrophic impacts of future climate change. People in business, politics, banking – and most of us – accord little value to avoiding costs beyond the “horizon.” The benefit of acting now to avoid “beyond the horizon” catastrophes is often perceived as less than the current cost of undertaking mitigation policies.¹ Another way to describe the problem is cognitive dissonance: most of us recognize two or more outcomes, but highlight only one.
A perfect example of cognitive dissonance took place in the months leading up to the spring 2025 federal election. Opposition Leader Pierre Poilievre repeatedly used “axe the tax” as a rhetorical weapon against the federal government’s carbon tax. To be generous, Poilievre emphasized that the carbon tax on fossil fuels was mildly regressive as a share of family income. His rhetorical weapon ignored the mitigation potential of the carbon tax to reduce greenhouse gas (GHG) emissions.
Once elected Prime Minister, Carney acceded to public hostility and eliminated the carbon tax. Many argue that more effective mitigation policies are caps on estimated emissions from energy-intensive sectors such as manufacturing cement and refining Alberta’s oil sands. The cap constrains, at least somewhat, the external costs borne by the world’s population due to Canada’s high per capita GHG emissions – in particular emissions from oil sands exploitation.² At present, it appears that the majority of Canadians are unwilling to accept any significant mitigation policy – unless the costs to them are offset by a very large subsidy.
Paying for forest fires
Most political leaders – but not all, President Donald Trump being a prominent exception – agree that burning fossil fuels is the major cause of a dramatic increase in forest fires across Canada and the United States in the summer season. The political and policy difficulty is to address the “tragedy of the horizon” and cognitive dissonance. In other words, we need to publicize the future, thereby stretching the horizon sufficiently that taxpayers appreciate today the cost of future climate change catastrophes. One way to do that is to examine the cost of dealing with forest fires in recent summers. The province of British Columbia provides a good test case of the hypothesis that climate change is already dearly costing taxpayers.
FIGURE 1: BC SUMMER FOREST HECTARES BURNT, 2008–25
Source: Government of British Columbia, Wildfire Season Summary, 2025.
Note: 1 square kilometre = 100 hectares
Figure 1 illustrates the area (in thousands of hectares) of forest burnt in British Columbia between 2008 and 2025. The first observation is the dramatic increase in average annual forest area burnt: 930,000 hectares in 2017–25 relative to 165,000 hectares in 2008–16. It is hard to find factors other than climate change to explain the difference. The second conclusion is a dramatic increase in variance of annual forest area burnt in the second period. With better forest management, it may be possible to reduce future forest area burnt. Perhaps the annual area burnt will decline in the next decade. It is doubtful. Extending the trend line is a better prediction of future events than a return to the 2008–16 range.
The record annual area burnt to date is 2,840,000 hectares in 2023. In that year, the BC government estimates the cost of provincial fire suppression at $1.1 billion. Robert Gray, a wildfire ecologist, Robin Gregory, an adjunct professor at UBC, and Calvin Sandborn, a legal counsel at University of Victoria, have recently published estimates of indirect forest fire costs, ranging from 1.5 to 20 times the direct cost of fire suppression:
- Evacuating communities threatened by oncoming fires and housing them in hotels;
- Restoring burnt homes, farm buildings and public buildings;
- Where insurance is accessible, the cost is rising;
- Forgone benefit of harvesting trees that have been burnt;
- Health costs attributable to air pollution arising from fires.
Based on Gray, Gregory and Sandborn, my estimate of average annual 2017–25 direct plus indirect costs of BC forest fires is ten times the direct cost of forest fire suppression. The estimated average annual adaptation cost per family (direct plus indirect costs per family) is $1,260.³ Most indirect costs accrue to individuals, subject to insurance. In addition to fire suppression, some indirect costs (e.g. evacuation of communities, increase in health care costs due to fire impact on air quality) accrue to the province.
There is a good case to require that BC households finance the direct plus indirect costs borne by the provincial government via an earmarked tax – as opposed to an addition to the provincial debt.⁴ Introducing an earmarked tax enables households to appreciate the rising cost of climate change and minimize cognitive dissonance. The tax could take several forms – for example, a supplementary personal income tax or a change in the provincial sales tax. Inevitably, the political temptation is to bury these costs as one more item increasing the provincial debt.
Cognitive dissonance at work
The term cognitive dissonance might seem more suitable for discussions among psychologists. But it is on display in the current debate over development of an oil pipeline from the Alberta oil sands to BC’s north coast. With Canada representing only 1.5 per cent of annual global emissions, Canadians have a more or less GHG free ride when refining and transporting oil sands. Doing so, we add substantial GHGs to the world atmosphere but distribute 98.5 per cent of the GHGs to non-Canadians.⁵
Alberta Premier Danielle Smith hopes to refine more oil sands and export the bitumen via the BC coast. She is keen to get her pipeline, increase oil tankers and thereby increase Alberta’s GDP. Firmly opposed to any such project is BC Premier David Eby, who intends to protect the environmentally sensitive BC coast from the threat of pollution from oil tanker disasters. On a much larger scale, Brazil faces an environmental disaster: enabling transition of tropical forest to agricultural use. It is doubtful that Smith intends to enter into a discussion of the environmental value of either the BC coast or Brazil’s tropical forest. In early October, Danielle Smith captured the Globe and Mail lead:
The Alberta government is taking the lead on an application for a major new oil pipeline to the BC coast in an attempt to break through several federal policies that Premier Danielle Smith has blamed for scaring away private investors.
The idea is to hammer out a proposal for a one million barrel a day bitumen pipeline. The proposal would be sent to Ottawa’s new Major Projects Office by May 2026 … Alberta does not want to be the financial backer but hopes the project will be deemed in the national interest.
Two questions arise, and both relate to cognitive dissonance.
Why was Poilievre’s “axe the tax” campaign so popular with voters that Carney’s first decision as Prime Minister was to axe the tax? The short answer is cognitive dissonance: most Canadians are not willing to address both cost and benefit of a carbon tax on fossil fuels. Carney ignored the potential benefit that the “polluter pays” today for future environmental benefits. A similar event took place when Prime Minister Brian Mulroney introduced the value-added goods and services tax (GST) in 1991. The GST simplified the federal sales tax and spread it more equitably among sectors than its predecessor. His government also introduced a negative income tax that addressed the regressive impact. Nonetheless, in the subsequent election his government was swept from office.
The other question is, who bears today’s cost of the environmental damage, whether forest fires or potential costs of damage from an oil spill on the BC coast? Are Danielle Smith and the potential owners of a new pipeline discussing the consequences to the Alaskan coast of the 1989 Exxon Valdez oil spill of 240,000 barrels and willing to bear the costs if something similar should happen to the BC coast? The coast is not for sale. Why then should BC acquiesce to a pipeline when today Alberta’s provincial per capita GDP is the highest among Canada’s ten provinces?
Notes
¹Mitigation policies are explicitly intended to reduce GHG emissions. A simple example is Justin Trudeau’s introduction of an escalating carbon tax on gasoline. The logic is simple: polluters should pay. Faced with a higher gasoline price, people will hopefully drive smaller cars and/or electric vehicles. Whether 17 cents per litre (the BC tax on gasoline prior to its elimination) had any effect on reducing gasoline consumption is admittedly dubious.
² An externality is a transaction in which the purchaser pays only some of the costs arising from a purchase; the costs not borne by the purchaser are external costs. A car owner pays the price of filling his tank but does not pay the external cost arising from GHG exhaust when burning the car’s gasoline.
³ Adaptation is the cost of repairing the damage created by climate change. Gray, Gregory and Sandborn’s range of indirect costs is 1.5 to 20 times direct fire suppression costs. The assumption underlying the estimate of average family total direct plus indirect costs for 2017–25 is that indirect costs are four times direct costs. The peak direct cost estimate is $1.1 billion in 2023, when 2,840,000 hectares burned; hence, the total 2023 cost estimate is $5.5 billion. Since the average 2017–25 burnt forest is 930,000 hectares, the average annual total cost can be estimated at $5.5 billion times the ratio of 930,000 to 2,840,000, or $1.8 billion. The number of families in BC is estimated at 1.425 million, based on four people per family and a population of 5.7 million. Therefore, the average 2017–25 annual total cost per family is $1.8 billion divided by 1.425 million, or $1,260.
⁴ An earmarked tax is a tax with a label to publicize the allocation of the revenue raised. When the Saskatchewan government introduced its hospitalization insurance and improved post-Depression schools in the 1940s, it raised a sales tax labelled “health and education tax.”
⁵ If Danielle Smith’s new pipeline is built, Alberta plays the role of free rider. By increasing world supply of petroleum, the GHGs from another pipeline will be shared around the world. Canada’s share of annual GHG emissions is about 1.5 per cent of global emissions; hence Canadians bear only 1.5 per cent of whatever incremental damage accrues to the world increase in GHGs.
The Johnson/Shoyama graduate policy school at the University of Saskatchewan / University of Regina regularly publishes policy briefs online. This article is an edited version of the JSGS working paper on forest fires published in December 2025. The JSGS version includes Robert Gray’s contribution via an appendix analyzing indirect costs of forest fires in British Columbia.
