Research says climate change is doubling Australia’s annual losses

DROUGHTS, floods and storms could result in a total loss of $452 billion to Australia’s GDP between 2022 and 2050, according to new research launched recently.

Aquanomics: The economics of water risk and future resilience report published by global professional services company GHD, reveals Australia will suffer an average annual GDP loss of 0.6 per cent due to water risks such as droughts, floods, and storms.

The research places Australia in the third most vulnerable position when projecting the future economic impact of these events in seven countries, behind the US and China.

It also highlights that Australia’s agricultural and retail sectors could be particularly hard hit and these rising threats need to be tackled now with greater focus on solutions like water recycling, desalination, and smarter irrigation.

Lindsey Brown, Australian Water Market Leader at GHD, explains: “To create resilience to the increasing risks from extreme weather events we need to adapt how we build water infrastructure, optimise the performance of existing infrastructure and prioritise nature-based solutions to water management across industries.”

Storms are expected to have the greatest direct impact on the Australian economy (AUD$102 billion), followed by floods (AUD$64 billion) and droughts (AUD$41 billion).

This is the first time the economic impact of these three types of events have been calculated at a GDP and sector level.

The Aquanomics report builds on concerns highlighted recently by the Intergovernmental Panel on Climate Change (IPCC) that revealed over half of all natural disasters worldwide since the 1970s have involved water.

In addition, in 2021, the Emergency Event Database (EM-DAT) stated that drought, flood and storm disasters affected close to 100 million people globally through displacement, economic damage, food insecurity and injury.

Aquanomics highlights the potential impact of extreme weather events on five critical economic sectors in Australia: agriculture; banking and insurance; energy and utilities; fast-moving consumer goods (FMCG) and retail; and manufacturing and distribution.

It reveals that Australia’s agricultural sector is particularly vulnerable, with projected annual output losses of over 5 percent by 2030 and 8 percent by 2050.

Re-emphasising the importance of tackling the future potential threats posed by droughts, floods and storms across the country, Lindsey said that Australia needs to ‘reorient’ its relationship with water.

“By focusing on economic impacts of extreme weather events in our Aquanomics report, we aim to help identify and unlock the social and environmental benefits of tackling water risk head-on.”

Read more about the research here ghd.com/aquanomics