Global warming to cost Australia up to $423 billion over 40 years

Sweltering temperatures fanned by global warming will cost the economy up to $423 billion over the next four decades, reduce the nation’s production of wheat, and leave taxpayers footing the bill for more expensive natural disasters.

Treasurer Jim Chalmers will use the sixth intergenerational report, to be released on Thursday, to show the full impact of climate change on the economy. This includes the tourism sector, with fewer visitors likely to come to Australia as attractions such as the nation’s beaches disappear.

Heatwaves, floods and natural disasters will deliver a $423 billion hit to the economy by 2063, according to the intergenerational report.Credit: Louie Douvis

The report, which forecasts how the economy, population and workforce are expected to develop over the next 40 years, will detail the major economic and fiscal threats posed by higher temperatures.

Chalmers will reveal that climate change will reduce labour productivity so much that it will cut the nation’s economic output over the next 40 years by between $135 billion and $423 billion in today’s dollars.

This forecast is based on the assumption that global warming will exceed the target set by the Paris Agreement on climate change, an international deal Australia signed up to that aims to limit warming as far below 2 degrees as possible.

Climate change is already intensifying heatwaves, which are forecast to become even more frequent, intense and last longer as the earth heats up.

The report forecasts that an increase in the number and severity of natural disasters could blow out spending on crisis responses at least threefold by 2063.

The State of the Climate report from the CSIRO and the Bureau of Meteorology found that climate change would cause “an increase in the risk of natural disasters from extreme weather, including ‘compound extremes’, where multiple extreme events occur together or in sequence, thus compounding their impacts”.

Australia’s already variable rainfall patterns would become increasingly erratic, with more frequent droughts, flooding, heatwaves and declining rain over cropping regions in the south-east of the continent. This would contribute to a four percent cut in crop production by 2063.

To date the atmosphere has warmed, on average, by 1.15 degrees and the UN’s Intergovernmental Panel on Climate Change said current action is insufficient to meet the Paris target.

The Albanese government’s current target to cut emissions 43 per cent by 2030 and reach net zero by 2050 is consistent with international efforts leading to warming of more than 2 degrees.

The intergenerational report will also show that the shift to decarbonise the global economy could offer major opportunities to Australia’s mining industry.

It will show global demand for critical minerals such as lithium, cobalt, manganese and rare earths – all vital for battery manufacturing and magnets in wind turbines – could climb by 350 per cent by 2040.

Australian lithium exports alone are tipped to double over the next five years.

Decarbonisation technologies require steel, copper, nickel, lithium and other metals.Credit: Jessica Shapiro

But international demand for Australia’s thermal coal, the nation’s fourth-largest export, could be halved by 2063 as nations slash their greenhouse emissions.

Chalmers said the report revealed large shifts facing the economy and society while also highlighting the efforts the government was taking to mitigate the impact of climate change.

“We take our responsibility to address climate change very seriously,” he said. “In little over a year, Australia has gone from a global embarrassment to a global leader in how we’re responding to the threat of global warming.”

Shadow treasurer Angus Taylor accused the government of being too focused on long-term issues rather than worrying about cost of living pressures that were hurting Australians now.

“People right across this country are worried about what’s going to happen in 40 hours or 40 days and they want to know what their life is going to be like in 40 weeks’ time,” he said.

“Forty years away is a long, long time for those who are simply trying to make ends meet and we’re seeing that on the ground here and right across Australia.”

Greens leader Adam Bandt said a string of tax proposals from his party, ranging from axing next year’s stage three tax cuts to winding back negative gearing on rental properties, would raise $1 trillion in additional revenue which could be used to tackle issues such as climate change.

“If Labor had the courage to enact these sensible reforms, the government would have almost a trillion dollars over the next decade to put dental and mental health into Medicare, build public homes, and rapidly accelerate the transition out of coal and gas into clean energy,” he said.

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