Barriers to effective climate change adaptation (final)

Sustainability Climate change Power resources Economics Australia
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This inquiry has concluded. The final report was sent to Government on 20 September 2012 and released on 14 March 2013.

The Productivity Commission invited interested parties to register their interest in an inquiry into regulatory and policy barriers to effective climate change adaptation.

In undertaking the inquiry, the Commission identified specific barriers that inhibit effective adaptation to unavoidable climate change, and high priority options for addressing those barriers.

The Commission was to:

  • examine the costs and benefits of the options to address those barriers where it is feasible to do so, including a 'no change' (maintaining the status quo) option
  • assess the role of markets (including insurance markets) and non-market mechanisms in facilitating adaptation, and the appropriateness of government intervention.

Key points:

  • Australia's climate is changing and will continue to do so for the foreseeable future.
  • Changes in the frequency, intensity, location and timing of extreme weather events are likely to be how most Australians experience climate change.
  • Adaptation to these changes, and the effects of more gradual climate change, will occur over time as households, businesses, governments and communities respond to incentives to manage the climate (and other) risks they face.
  • However, a number of policy and regulatory barriers may inhibit adaptation responses, suggesting the potential for government action to improve outcomes for the community.
  • Governments at all levels should:
    • embed consideration of climate change in their risk management practices
    • ensure there is sufficient flexibility in regulatory and policy settings to allow households, businesses and communities to manage the risks of climate change.
  • A range of policy reforms would help households, businesses and governments deal with current climate variability and extreme weather events. These reforms would also build adaptive capacity to respond to future climate impacts. Examples include:
    • reducing perverse incentives in tax, transfer and regulatory arrangements that impede the mobility of labour and capital
    • increasing the quality and availability of natural hazard mapping
    • clarifying the roles, responsibilities and legal liability of local governments, and improving their capacity to manage climate risks
    • reviewing emergency management arrangements in a public and consultative manner, to better prepare for natural disasters and limit resultant losses
    • reducing tax and regulatory distortions in insurance markets.
  • Further actions are required to reduce barriers to adaptation to future climate trends and to strengthen the climate change adaptation policy framework. These include:
    • designing more flexible land use planning regulation
    • aligning land use planning with building regulation
    • developing a work program to consider climate change in the building code
    • conducting a public review, sponsored by the Council of Australian Governments, to develop appropriate adaptive responses for existing settlements that face significant climate change risks.
  • Some measures should not be implemented, as the costs would exceed the benefits.
    • Household insurance subsidies, or insurance regulations that impose net costs.
    • Systematically reviewing all regulation to identify impediments to adaptation.
    • Mandatory reporting of adaptation actions.
  • Some individuals and communities are likely to face greater challenges in adapting than others, implying a role for the tax and transfer system. 
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