Insurance is set to get much less affordable in Australia, with the cost of natural disasters forecast to triple over the next 30 years.
- COVID, along with Russia’s invasion of Ukraine, have heralded a seismic shift in our near-future direction
- Climate change is set to triple the cost of natural disasters in Australia without urgent government spending on resilience, according to the report
- Food security will be a key challenge, with alternative protein sources necessary to meet growing demand
The CSIRO’s decadal megatrends report, published today, warns that extreme weather caused by climate change will cost the country more than $39 billion annually by 2050.
The report is intended to identify the key global forces that will shape our lives in the coming decades, with “the view to guide long-term investment, strategic and policy directions,” according to the CSIRO.
Australia’s north is already hardest hit by rising insurance premiums, with home and contents insurance costing around 1.8 times more than in the south, as of 2020.
And on average, almost double the number of households above the Tropic of Capricorn — around 20 per cent — are already foregoing insurance, compared to those in southern Australia, the report states, citing data from the ACCC.
The megatrends report also echoes recent warnings from the Insurance Council that at least $30 billion will need to be spent to protect coastal communities from sea level rise, and on relocating some vulnerable communities.
Globally, as many as 150 million people living in coastal areas could be vulnerable to the impacts of sea level rise by 2050, but that figure could be far more if Antarctica becomes less stable, the report says.
The report, last released a decade ago, is a synthesis of the CSIRO’s own data and independent data, according to Stefan Hajkowicz, principle scientist in CSIRO’s strategy and foresight team.
“With climate change, some of the things we were talking about as predictions in 2012 have become a reality for many Australians,” Dr Hajkowicz said.
“The floods have been very tough, but the other ones are heatwaves and droughts.
“Heatwaves are actually more deadly [than floods]. We can see what’s happening in Europe now, it’s pretty shocking.”
$2 billion investment needed over 5 years
Insurance Council of Australia chief executive Andrew Hall, who wasn’t involved with the CSIRO report, said insurance prices would continue to rise unless there was significant investment to build resilience and adapt our infrastructure to the threat of climate change.
“Insurance [puts a price on] risk and we’ve been consistently highlighting over the last decade that there have been more and more extreme weather events,” Mr Hall said.
There are both short and longer-term strategies to adapting our housing and infrastructure to climate change, and both need to be undertaken simultaneously, Mr Hall said.
The big picture is we need to change development planning to factor in more extreme weather events, he said.
“That needs to happen urgently. Even if land planning is reformed in the near future and quickly, we’ve still got more than a century of poor land planning decisions to go back and fix up.”
But there are also some quick changes that can be made to existing housing and infrastructure that can significantly lower the risk of damage.
“I think people get very focused on the big ticket items like land buybacks,” Mr Hall said.
“But at the household levels and street by street, there are things that can be done to improve resilience now.”
These changes could include stronger roofing for houses in cyclone-affected areas, and lifting houses on stumps in low-lying areas, he said.
“We are making homes more resilient for people living in bushfire-prone areas, and we now need to do the same when it comes to cyclone and flood.”
The Insurance Council has called for an investment of $2 billion, split between federal and state governments, over the next five years to help future-proof vulnerable towns and cities.
That investment would “reduce financial, health and social costs to the Australian Government and Australian households by at least $19 billion by 2050”, according to the council’s “Building a More Resilient Australia” plan.
COVID brought seismic shifts
As well as adapting to climate change, the CSIRO has identified six other megatrends that will define our coming decades.
Broadly they are:
- artificial intelligence and autonomous systems;
- geopolitical shifts;
- digital and data economies;
- resource pressure and biodiversity; and
- diversity, equity and transparency
Dr Hajkowicz said it would help to understand megatrends as similar to ocean rips: they could carry us along or sweep us away, depending on how we handled them.
“We use the analogy of an ocean rip for a megatrend. The better you’re able to comprehend it and understand where it’s taking you, the better you’re able to respond and survive and thrive,” he said.
“Even the climate change megatrend has an upside and a downside, depending on how you respond.”
The COVID-19 pandemic, as well as Russia’s invasion of Ukraine and climate-driven extreme weather, mean there has been a seismic shift in global influences compared to a decade ago, which makes the timing of this report especially pertinent, according to Dr Hajkowicz.
COVID has hastened an unprecedented switch to digital technology and remote working, which has brought unexpected climate benefits.
On the other hand, mental health has declined during the same period, according to today’s report.
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Russia’s invasion of Ukraine also threatens to destabilise global supply chains, and there are “big question marks” over how self-sufficient Australia can be if international supply chains break down, Dr Hajkowicz said.
“The big thing we need to look at with food at the moment is the tragic situation with the Ukraine crisis — high food prices are associated with global conflict and destabilisation.
“The key story in there for Australia is sovereign capability and supply breakdown.
Alternative proteins to meet growing food challenge
Feeding a growing global population under increasingly variable farming conditions is also identified as a challenge and an opportunity, according to the report.
Grazing of livestock is the leading driver of deforestation globally, and limiting red meat consumption has been identified by the IPCC and others as a way to reduce emissions.
Although there has been a recent shift toward plant-based and alternative proteins in some developed countries, others are seeing the opposite.
“[But] through Asia-Pacific we’re seeing an increased demand for livestock protein.”
As much as 22 per cent of the world’s protein needs could be met by alternative sources including plant-based meats and insects by 2035, according to the CSIRO report.
In Australia, where alternative proteins are growing in popularity, it’s estimated that plant-based meats could be worth around $3 billion by 2030.
Australia’s food supply is expected to be hit from multiple angles, however, with longer droughts a likely scenario in parts of the country, and some seafood stocks are also forecast to take a hit.
“Australian oceans are also warming more rapidly than the rest of the world and over 100 marine species are migrating south to cooler waters,” the report states.
“Climate changes are expected to significantly impact Australian fisheries stock over the next two decades.”
Dr Hajkowicz said today’s report was an invitation to try to understand what challenges are coming.
He said in doing so, we might even be able to thrive in changing circumstances.
“This report is a message to build resilience, to stretch the scenarios beyond where we previously thought we have to.
“We have to get out of our comfort zones and ask: how does our infrastructure and our economy continue to work in this challenging scenario?”