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Natural Disaster Costs in Australia

Author

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  • Dhillon, Liam

    (Monash University)

Abstract

As climate change continues to amplify the incidence of extreme weather events, policymakers are increasingly cognizant of the mounting financial burdens brought by a warming world. This paper examines the costs which have followed natural disasters in Australia between 1970-2022, utilising data from the Insurance Council of Australia and the Australian Institute for Disaster Resilience. The financial impact of disasters is estimated by applying loss ratios to insurance claim data and overlaying mortality and injury costs. An autoregressive integrated moving average model is then applied to forecast these costs out to 2030. The results show an average annual cost of between $2.9 billion to $6.7 billion between 1970-2022 and highlight the tendency for large-scale events to drive the majority of losses, with events in the top decile of costs accounting for 68% of all losses incurred in the period. The scale and volatility of costs following extreme weather events reinforces the need for both physical and fiscal preparedness of governments in meeting the economic challenges presented by climate change.

Suggested Citation

  • Dhillon, Liam, 2023. "Natural Disaster Costs in Australia," Warwick-Monash Economics Student Papers 58, Warwick Monash Economics Student Papers.
    • Handle: RePEc:wrk:wrkesp:58
    as

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    File URL: https://warwick.ac.uk/fac/soc/economics/research/wmesp/manage/58_-_liam_dillon.pdf
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    References listed on IDEAS

    as
    1. Stéphane Hallegatte & Valentin Przyluski, 2010. "The Economics of Natural Disasters," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(02), pages 14-24, July.
    2. Ariel Ortiz-Bobea & Toby R. Ault & Carlos M. Carrillo & Robert G. Chambers & David B. Lobell, 2021. "Anthropogenic climate change has slowed global agricultural productivity growth," Nature Climate Change, Nature, vol. 11(4), pages 306-312, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Climate Change ; Global Warming ; Natural Disaster ; Economic Costs ; Disaster Management ; Climate Policy ; Environmental Policy JEL classifications: Q51 ; Q54 ; Q58;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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