A damning report into the economic cost of failing to act on climate change has revealed inaction could cost Australia $100 billion every year by 2038.
Conducted by independent, crowdfunded non-profit Climate Council, the research states that 2019 was Australia’s hottest and driest year on record, which broke the previous record set in 2013 by a staggering 0.12°C.
This record heat fuelled Australia’s 2019-2020 ‘Black Summer’ bushfires, which by March, had burnt almost 19 million hectares and destroyed over 3,000 houses.
The economic cost of climate-fuelled weather events
Globally, disasters caused economic losses of $272 billion in 2020, and most of these losses were linked to weather-related disasters such as floods, wildfires and storms.
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In Australia, extreme weather disasters have more than doubled since the 1970s, costing $35 billion in the last decade alone.
To paint a more sobering picture, Climate Council’s research suggests the cost of climate change to the Australian economy could exceed $100 billion annually by 2038, if net-zero emissions are not achieved by 2040.
Climate Council economist Nicki Hutley says these eye-watering figures involve the physical damage caused by extreme weather events as well as economic disruption they cause.
“If we think about floods and bushfires, people can’t get to areas, so it’s disrupting tourism and it’s disrupting supply chains,” Hutley tells SmartCompany.
Then there are losses to productivity, which relates to how extreme heat, heat smoke and disruption to transport affects workers, Hutley says.
“So you’ve got all of these different, compounding layers, affecting the ability of businesses to carry out their work.”
How climate change affects small businesses
Hutley says small and medium businesses are the ones being affected by extreme weather events, rather than being a major contributor to them.
For Acacia Rose, director of adventure company K7, which is located in Thredbo, New South Wales, her experiences are proof of how disrupting climate change can be for a business.
Rose had to close her business for two months during what would normally be a peak season after lightning-ignited fires swept through the region in late-2019.
“That entire summer window for the business was completely lost last year,” she says.
K7 Adventures offers outdoor activities that are tailored to the seasons. In the warmer months, this includes rock climbing, abseiling, alpine photography and camping. In winter, Rose’s cross country ski school opens to deliver back-country skiing sessions, snowboarding and mountaineering.
But of course, with changing weather patterns comes changing seasons and this has been disrupting Rose’s business.
Rose says springs have become warmer, which means there’s a faster snow melt across the region, and on top of that, snow depth is less reliable.
“It’s not only impacting our business, but obviously, a whole range of other businesses in the mountains where the reliability and the depth of the snow has changed.”
Uneven effects of climate change
Australia’s climate has already warmed 1.4°C more than pre-industrial levels, compared to the global average of 1.1°C.
Within Australia, Queensland carries the greatest weight of disaster costs of all the Australian states, primarily because floods have made up the greatest proportion of economic damages from extreme weather over the last decade, followed by tropical cyclones and droughts.
Following Queensland is the Northern Territory, New South, Western Australia and then Victoria.
Hutley says in order to lessen the blow of climate change to the economy, a lot depends on how quickly we reduce emissions.
“ If we do mitigate now, we would hope that we wouldn’t accelerate from where we already are now.”