Treasury to examine economic impact of climate change
For the first time in almost a decade, the federal Treasury will model the economic impacts of climate change on the country.
For the first time in almost a decade, the federal Treasury will model the economic impacts of climate change on the country.
As reported by the Sydney Morning Herald, Treasurer Jim Chalmers will have his department look into how climate change is affecting the Australian economy and budget. The move comes as part of a wider plan to research the risks of climate change to households, businesses, and key institutions.
The move is a long time coming. At the start of 2022, new research from Deloitte Access Economics found $380 billion in gross domestic product could be saved over the next 30 years, if we simply planned ahead for natural disasters like floods, fires and heatwaves.
“Targeted investments in physical (such as infrastructure) and community resilience measures (such as preparedness programs) are predicted to significantly lessen this increase in costs,” stated the report.
The research estimated that over the past 50 years, natural disasters had cost $120 billion. As climate change gets worse, that number is predicted to hit $150 billion in just 10 years. By 2050, it’s expected to cost $39 billion per year, if nothing changes.
If that wasn’t enough to motivate change, there was also an analysis by the Reserve Bank last year that found there are already 254 “climate-sensitive suburbs” across Sydney’s north, and many more places around the country. Meaning that climate change could lead to a fall in house prices and increased insurance costs.
Before 2013 and the election of the Abbott Government, modelling of climate change’s financial impact was something the Treasury was always involved in, which is what prompted the current Labor government to restart its research and use its findings to inform the intergenerational report.
“Labor committed to restoring Treasury’s role in modelling climate risks and opportunities for the Australian economy, and this work is already under way,” Mr Chalmers said on Wednesday.
“Treasury is working closely with other departments to rebuild this capacity after years of neglect under the Coalition, and we’ll have more to say about this important work.”
“Treasury’s modelling will help us chart a path that maximises jobs and opportunities for our country as we take advantage of this transformation.”
While touring flood-affected areas of Sydney earlier this week, Prime Minister Anthony Albanese also spoke on the need to examine climate change policies.
“We need to act on climate change, we’ve been saying that for a long period of time. We need to make sure as well that we’re a part of global action because one thing that is true is Australia acting alone won’t be enough,” he said.
“My government is taking climate change seriously and engaging with the world to ensure that global action steps up.”
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