Cost from natural disasters in Australia to quadruple by 2050

With the cost of natural disasters in Australia projected to almost quadruple by 2050, member organizations of a business roundtable are coming together to build more resilient and safer communities meant to help prevent these costs.

“Each organization plays a crucial role in either community planning or disaster recovery, and believes there is an opportunity to develop a national, long-term approach to managing natural disasters through a co-ordinated resilience response that focuses on prevention,” notes a statement from the Australian Business Roundtable for Disaster Resilience & Safer Communities, which released a whitepaper Thursday.

The whitepaper projects the cost of natural disasters will rise from the current $6.3 billion annually to approximately $23 billion a year in 2050 as population density increases and the severity and frequency of storms, floods, cyclones and bushfires grow.

The paper suggests a fresh approach to pre-disaster resilience is required to enable more effective prioritization of mitigation expenditure, based on the national interest and the best economic return, the statement notes.

It also spells out how a national investment in cost-effective resilience and preventive activities can reduce by more than 50% the impact on government budgets of having to respond to disasters. The Australian Government currently spends an estimated $560 million each year on post-disaster relief and recovery compared with an estimated $50 million on pre-disaster resilience.

Among other things, the whitepaper recommends:

• appointing a national resilience advisor to co-ordinate and prioritize activity across all levels of government, and establish a business and community advisory group to leverage knowledge and expertise to support the advisor;
• committing to long-term annual consolidated funding, which would consolidate current mitigation spend and centralize new spending, for pre-disaster resilience (a $250-million fund could deliver $12 billion in savings over time); and
• identifying and prioritizing pre-disaster investment activities that deliver a positive net impact on future budget outlays.

It also includes case studies on a number of communities that practically illustrate how preventive spend now saves money into the future. Examples include that a program focusing on building more resilient new homes in high-cyclone risk areas of South East Queensland would save three dollars for every dollar spent up front, while raising the Warragamba Dam wall 23 metres would reduce flood costs from $4.1 billion in 2013 to $1.1 billion in 2050, equating to more than eight dollars for every dollar spent up front.

“Through carrying out mitigation works that make our communities safer, government is enhancing the economic and personal well-being of all Australians as well as enabling a reduction in insurance premiums for those exposed to natural perils,” Mike Wilkins, CEO of IAG, notes in the statement.

“We have built the world’s largest database on natural disaster losses and are prepared to share this research to work with all levels of government and like-minded commercial organizations, to ensure that Australian communities are better positioned to plan for, and respond to, the ever-present threat of natural catastrophes,” adds Heinrich Eder, CEO of Munich Re.

“We believe that damage prevention and mitigation are the best and most cost-effective means to protect and lift the living standard of communities,” Eder adds.