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Almost all taxpayers’ money for natural disasters in Australia goes to the recovery phase, with only 3 per cent invested in preparation and mitigation, as a new report finds hundreds of billions of dollars would be saved with better planning.
Research by Deloitte Access Economics reveals that investment in disaster preparedness, such as floods or fires, coastal damage and heatwaves, can result in a $380 billion increase in gross domestic product over 30 years.
Global warming is expected to increase financial losses due to coastal damage. Credit:Brook Mitchell.
The research, commissioned by Andrew Forrest’s philanthropic Minderoo Foundation, estimated natural disasters had cost $120 billion over the past 50 years but, with escalating impacts from global warming, that bill is expected to hit $150 billion over the next decade, and keep rising to $1 trillion by 2050 under business as usual.
Last year, the federal government announced a $10 billion public funding initiative to create an insurance pool that covers flood damage caused by cyclones. It is an attempt to lower premiums for small businesses and households that are now at greater risk due to climate change.
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In September, The Reserve Bank released a report that showed that climate change is cWe could lower property prices across large sections of Sydney’s north, with many homeowners facing declining equity in their houses and rising insurance costs.
Deloitte Access Economics lead partner Pradeep Philip said the findings of his report were an “economic reality check” that should spur reforms to contribute to a reduction in global warming and help communities mitigate future disasters because both issues are “intrinsically linked”.
“For Australia, mitigation alone will not be enough,” Dr Philip said. “Adaptation requires adjusting to actual or expected future climate changes to reduce our vulnerability to asset and customer risks.”
Andrew Gissing, general manager at Risk Frontiers natural disaster consultancy, stated that big-scale projects to mitigate future disasters should be undertaken now, as they can take decades.
