Australia is confronting increasing risks from natural disasters due to climate change, with significant economic consequences. A recent report by the Actuaries Institute highlights that current adaptation investments are insufficient. If this gap persists, climate-related losses could more than double in the coming decades, causing long-term challenges for the country’s economy and infrastructure.
The report notes that natural disasters currently cost the Australian economy around 38 billion Australian dollars annually. Frequent cyclones, widespread floods, wildfires, and severe storms are placing long-term stress on multiple sectors. By 2060, these losses could reach 73 billion dollars.
Policy weaknesses and flawed frameworks are identified as key factors behind the investment shortfall. Conventional cost-benefit analyses fail to fully account for long-term risk reduction, delaying critical projects including coastal protection, flood defences, fire safety infrastructure, and reconstruction in high-risk areas. This shortfall poses a threat to national stability and safety.
The insurance sector is also affected. Rising climate risks have increased premiums in various regions, and some areas are becoming difficult to insure. The institute warns that without enhanced adaptation investment, insurance markets will become increasingly volatile, with negative consequences for other sectors of the economy.
Lead author Ramona Myrie emphasised that adaptation investment is essential now to reduce future costs. Additionally, national climate risk assessments and adaptation plans must be translated into actionable steps. Rapid improvements in infrastructure, urban planning, natural resource management, and city development are crucial for Australia’s long-term stability and public safety.
AJ