At what cost? Mapping where natural perils impact economic growth and communities

10 Nov 2016

Australia is at growing risk from a range of natural disasters including tropical cyclones, bushfires, storms and floods. If unmanaged, these risks will significantly impact our resource and knowledge-led economy, and damage homes, businesses and infrastructure and put lives at risk. Since settlement, a number of options have been taken on an ad hoc basis to try to manage the impacts of natural disasters including: relocating the population from heavily- exposed areas; implementing land-use planning strategies to direct growth to lower risk areas; and constructing levees and dams to minimise the impact of flooding yet without a consistent, long-term, national approach, large parts of the country, including the most populated or economically valuable, remain exposed to natural perils.

At what cost? Mapping where natural perils impact economic growth and communities is the first time the population data and economic activity of all Local Government Areas (LGAs) across the nation have been overlaid with natural perils risk levels provided by the Insurance Council of Australia (ICA) and IAG. The aim of this report, and its accompanying interactive maps and data files, is to highlight the locations at the greatest risk of natural perils and demonstrate how this risk intersects with economic activity and the communities’ capacity to respond to disasters. The analysis found:

— Areas of key economic importance at high to extreme risk include large parts of our mining industry and knowledge economy hubs in the major Central Business Districts (CBDs).

— $326.6 billion worth of GDP (20.3 per cent of the Australian economy) and 3.9 million people (17.3 per cent of the population) are in LGAs with a high to extreme risk of tropical cyclone. Recent tropical cyclones have significantly impacted on mineral and agricultural production.

— 28.4 per cent of GDP ($425.5 billion) and 24.9 per cent of the population (5.5 million people) are living in LGAs with high to extreme flood risk. The 2011 Queensland floods illustrated the disruption to the region’s economic activity and highlighted how a community’s economic capacity impacts its ability to respond and rebuild following natural disasters.

— Parts of the Melbourne CBD, and its 450,000 workers, are at very high risk of flood. Flooding has impacted on the transport network in the Melbourne CBD several times recently causing economic disruption.

— The 500,000 workers in the Sydney CBD have experienced transport disruptions caused by storms in recent years.

— LGAs with high and extreme risk of bushfire generated $175 billion (10.8 per cent) of GDP and are home to 2.2 million people (9.2 per cent of the population). — LGAs with high and extreme risk of earthquakes generate $853 billion, or 52.5 per cent, of our nation’s GDP and house 58 per cent of our population.

At what cost? highlights that not only is economic activity at risk but the high cost to human life. As our population increases, governments will face more pressure to release low-cost land in higher risk areas, putting more lives in danger. Development of this land should be informed by accurate data on natural perils risks and accompanied by appropriate mitigation measures to minimise the risks.

The report identified the Queensland LGAs of Brisbane, the Gold Coast, Townsville and Moreton Bay as containing communities deemed to be at high to extreme risk of tropical cyclones, storms and floods. Despite this risk, the population in these areas increased by more than 450,000 people between 2001 and 2015. In Victoria, 17.5 per cent of the population live in LGAs which contain communities at high to extreme risk of bushfire.

The report identified that some communities at risk may not have the economic resources required to independently prepare for and recover from natural disasters. For example, Moree Plains in New South Wales and Bundaberg in Queensland are at risk of flooding yet are low on the Australian Bureau of Statistics Socio- Economic Index for Areas: Index of Economic Resources. Economic resilience, together with high levels of social capital, translates to greater resilience to natural disasters.

Hepburn, Central Goldfields and Hindmarsh in Victoria are at high risk of bushfire yet low on economic resources which may undermine their ability to prepare for and recover after a disaster. As a result, the economic burden will primarily fall on government and these communities may take longer to recover and rebuild. This has large implications on future planning and decision making.

Recent economic analysis has highlighted that successive governments have overinvested in post-disaster reconstruction and underinvested in mitigation that would limit the impact of natural disasters on our economy and communities. As a general rule, one dollar spent on mitigation can save at least two dollars in recovery costs. The Australian Government spend on mitigation measures is equivalent to three per cent of what it spends on post-disaster efforts. The rebalance of this spending allocation is a national priority: investment in mitigation strategies reduces the cost of reconstruction and safeguards our communities.

A safer future does not just depend on Government. Individuals and communities also have what the Royal Commission into Victoria’s bushfires called a ‘shared responsibility’. While all levels of government should take steps to improve protective infrastructure, emergency management, land use planning and building regulations, individuals and businesses need to be educated and empowered to take more responsibility for their own safety. Without heightened awareness, appropriate information and a co-ordinated, long-term approach to managing risks, individuals, businesses and government will remain exposed and our future economic strength and stability will be at risk.

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