The impact of natural hazards

The effects of bushfires, floods, storms, and other extreme weather events are becoming increasingly critical for our communities, environment, and economy. The Insurance Council of Australia reports The Insurance Council of Australia, “Insurance Catastrophe Resilience Report: 2020-21 shows that Australians are five times more likely to be displaced by a natural disaster than someone living in Europe, while the associated costs are significantly growing.

The Australian Business Roundtable for Disaster Resilience & Safer Communities, 2021 estimated the costs of natural disasters in the past, and extended their analysis to different climate change scenarios. [Deloitte Access Economics, Special report: Update to the economic costs of natural disasters in Australia]. Its key findings were:

  • At the time of writing (2021), natural disasters costed the Australian economy $38 billion per year on average, representing approximately 2% of Australia’s Gross Domestic Product (GDP) in 2020. Even under a low emissions scenario – whereby timely action will see emissions start to fall and reach zero by 2100 – this cost will rise to at least $73 billion annually by 2060, or 4% of Australia’s GDP in 2020.
  • Even if a low emission scenario is achieved, the cost of natural disasters is forecast to be $1.2 trillion in cumulative costs over the next forty years.
  • Two thirds of the costs from natural disasters will be incurred in QLD and NSW over the next forty years, as warming oceans enable tropical cyclones to move further south.

In addition to reducing the impact and cost of disasters, building resilience delivers additional social and economic benefits. These include jobs, new skills, investment, higher business and community confidence and consumer benefits arising from lower insurance premiums, for example. Meanwhile, community resilience programs strengthen bonds between communities and neighbourhoods.

Each sustainable and resilient timber home, new or upgraded, may look like a small drop in the ocean, but it’s a decision on our future, and that of our grandchildren. It’s our way to walk the talk.

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