The cost of natural disasters to the Australian economy is set to soar in the coming years as a result of climate change and increased population in exposed areas, according to a report from the Australian Business Roundtable for Disaster Resilience & Safer Communities (ABR).
The average annual cost of nat cats will rise from $38bn in 2020 to $73bn by 2060, even under a low-emissions scenario whereby emissions start to fall and reach zero by 2100.
The report, put together by Deloitte Access Economics, reveals that costs will increase significantly under alternative emissions scenarios.
A high-emissions scenario – where emissions continue to rise during the 21st century, reaching 3°C above pre-industrial levels just after 2060 – sees costs reach $94bn, representing a 29% increase relative to the low emissions scenario.
“Over the next 40 years, the different trajectories will lead to a $125bn difference in cumulative cost in present value. Even if a low-emission scenario is achieved, the cost of natural disasters is forecast to be $1.2trn in cumulative costs over the next forty years,” the report warns.
The report finds that coastal population centres in southeast Queensland and northeast NSW face the highest increases in costs as they become more exposed to tropical cyclones and floods, due to warming oceans enabling tropical cyclones to move further south.
Costs in Melbourne and Brisbane will also increase significantly, as major rivers in these cities alongside growing populations will lead to greater losses associated with flooding for Melbourne, and tropical cyclones and floods for Brisbane.
The report says greater investment in both physical infrastructure and community preparedness programmes is needed, even under a low-emissions future.
“These investments could also lead to additional co-benefits beyond avoided impacts such as employment opportunities, improved service reliability, greater business confidence and incentives for innovation,” it says.
Ahead of the COP26 climate talks in Glasgow next month, dozens of countries around the world have committed to net-zero emissions by 2050, but Australia is yet to do the same.
Australia’s Prime Minister Scott Morrison has not yet confirmed he will attend the COP26 climate summit in Glasgow, while the country’s 2030 emissions reduction target – a 26%-28% cut – is low compared with most other countries.