Wednesday, March 20, 2013

Calculating the cost of climate change

Deniers are all in a tizzy because apparently last summer wasn't the worst ever for insured losses in Australia.  (Note that some Australian deniers are so blind to reality that they think the world is about to enter an ice age, so I wouldn't take them seriously.)

Apparently the insured value of lives lost, properties flooded (many repeatedly), public roads destroyed and homes and businesses burnt to the ground across Australia this past summer was not as high (or maybe not as many were insured) as the insured losses when 24,000 properties and thousands of vehicles were damaged by the freak hail storm in Sydney in 1999.  (Click here for the government's estimated costs for flood recovery in just Queensland, not Australia as a whole.)

Sydney real estate is among the most expensive in the world.  I'm not convinced that it is very meaningful to compare insured losses for a one-off event that predominately affected Sydney with the loss of life and livestock and the widespread damage to public infrastructure, homes and businesses across the country over the whole of last summer.

As far as I know, there are some potentially big costs that are not reflected in 'insured losses' (not counting the uninsured losses).  One example is the cost of business interruption (as a result of power outages, destroyed rail, road and communications infrastructure, damaged and destroyed property of suppliers / customers, closure of ports etc).  Businesses can incur ongoing extra costs for many months when, for example, the destruction of railways, roads and bridges means that normal transport routes are not available and alternative longer routes are the only option.  'Insured losses' would not adequately account for the broader impact on regions affected, such as how it affects tourism. Nor are they an adequate measure of the social toll, on people who have lost family members or who are trying to recover from trauma as well as property loss.

This past year wasn't as disastrous as 2010-11, during which much of the continent was inundated with water as were several other places in the world.  So much so that there was a measurable drop in sea level.  But that was a La Nina year.  2012-13 was neither La Nina or El Nino.  Heaven help us when the next strong ENSO event comes.

Seems to me we need another type of socio-economic valuation if we are to properly work out the cost to Australians of all the damage from adverse weather events as the climate changes.

1 comment:

  1. It is certainly misleading by omission to argue that Sydney's hail storm, affecting maybe 15 km2 of some of the most expensive and highly insured real estate in the country,can be introduced into cost comparisons without caveat.

    I agree with your aside about lack of insurance potentially skewing comparisons again. Many affected by this weeks tornadoes in rural Victoria will likely be underinsured or without insurance. Many places in harms way relatively frequently face rising premiums or straight-out refusal to insure. Other river valleys have seen massive erosion and stream bank 're-engineering' that will see high sediment loads,expensive rehabilitation,new sediment plugs and downstream effects to estuaries for seasons.

    A lot of the cost of damaged public infrastructure up my way will be spread over the financial year,and/or between years,and its cost blurs into ongoing ever present maintenance costs. Sure,the cost of the Sydney hailstorm had a tail as well;I remember many a blue tarp still in place months later.

    We are some way from estimating the cost of the angry summer:people in the Burnett Valley still have limited access because of flooding,six weeks after the event. Farmers down my way have had pasture under water for five weeks from three closely spaced floods,and after that inundation,it will take months for pasture to recover.


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