Under the current policy environment, the property market is expected to lose a whopping $571 billion by 2030 from climate change and extreme weather according to new modelling released by the Climate Council on Thursday.
The report, Compound Costs: How Climate Change is Damaging Australia’s Economy, attempts to put a price on climate inaction in the context of a federal election fought in part over climate change policies and their associated economic costs.
Property has emerged as one of the most vulnerable sectors to the economic impacts of climate change.
It’s not news that insurance premiums are going up as a result of climate change, but the council’s modelling shows that one in 19 property owners could be hit with unaffordable insurance premiums by 2030 (that is, costing 1 per cent or more than the property value per year).
Some regions will be hurt worse than others, with South Australians to be “acutely and catastrophically affected” thanks to numbers of low lying properties near rivers and coastlines.
Looking further down the track, more than $226 billion in commercial, industrial, road, rail, and residential assets will be at risk from sea level rise by 2100 if greenhouse gas emissions continue at high levels.
The report also expects that commercial insurance will eventually stop covering common climate change events such as coastal inundation and erosion.
But it’s not just flooding that people have to worry about. According to the report, 3 per cent of properties are built on soils that can contract and break foundations in a severe drought.
Property will not be the only sector to suffer. Australia’s agricultural sector will also take a big hit as a result of climate change under current policy settings, with the accumulated loss of wealth due to reduced agricultural productivity and labour productivity projected to exceed $19 billion by 2030, $211 billion by 2050 and $4 trillion by 2100.
Severe droughts are increasing as a result of climate change, which could reduce GDP by as much as 1 per cent every year.