The property market is predicted to have $571 billion wiped from it by 2030 as a result of climate change and extreme weather events if a business as usual approach is taken, according to a new report released by the Climate Council.
Damage related loss of value would rise to $611 billion by 2050 and $770 billion by 2100 if the modelling in a report titled Compound Costs: How Climate Change is Damaging Australia's Economy comes true.
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| After a big storm in 2016, houses sitting on the beachfront at NSW's Collaroy washed away. Peter Rae |
These figures are based on "the market correction that would be required to account for the fact that some buildings were much more expensive to insure," said a co-author of the report Dr Karl Mallon.
The report said climate change and extreme weather events would send damage costs and insurance premiums up for properties in risk-prone areas, which would cause banks to lend less to these properties as the annual costs of the borrower had risen.
In turn, high-risk property values would decrease relative to the general market.
The report modelled that by 2030 one in every 19 properties would have annual insurance premiums and self-insurance costs exceeding 1 per cent total property value per annum.
The most at-risk areas were in Queensland where flooding was common.
The extreme weather events built into the model were flooding, coastal inundation or seawater flooding, bushfires, windstorms and subsidence – the process of land moving beneath a property, mainly caused by drought in Australia.
Released on Thursday, the report analysed 15 million industrial, commercial and residential addresses around the nation.
Dr Mallon said the researchers had assumed a business as usual approach to climate change in their model. This assumed there would be no change to the trajectory of global emissions until the second half of this century, when technological advances began to curb emissions.
Dr Mallon said the report's findings should be looked at carefully by those in the financial services sector and business more broadly.
Besides insurers, who would obviously be impacted if the frequency of extreme weather events increased, Dr Mallon thought banks and mortgage lenders would have to start pricing climate change into their loans.
He said business productivity would be affected but by how much was beyond the scope of this study.
“This is not just residential dwellings, these are factories, these are offices, these are commercial premises. What we’ve looked at here is the damage but what we haven’t look at is the business disruption.”
It was time research moved beyond qualitative analysis and began putting a dollar value on the effect of climate change, Dr Mallon said.
Links
- Report: Compound Costs: How Climate Change Is Damaging Australia’s Economy (pdf)
- Climate Change Could Wipe Billions Off Property Market: New Report
- Climate change could wipe $571bn from property values by 2030
- Infographic: Impacts of Climate Change on the Food System
- Emergency Leaders: Australia unprepared for worsening extremes
- Electric vehicles powered by renewable electricity are reliable, practical and increasingly affordable
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