adaptation and disaster risk reduction seminar - kathryn matthews, deloitte

Building our Nation’s Resilience to Natural Disasters

Kathryn Matthews

Melbourne, 24 June 2014

Australian Business Roundtable for Disaster Resilience and Safer Communities

Building Our Nation’s Resilience to Natural Disasters © 2014 Deloitte Access Economics Pty Ltd

Background to the Paper

• Roundtable members


What is the (economic) problem?

• The problem is large: The total economic costs of natural disasters in Australia are estimated to average around $6.3 billion per year – every year.

• And it is getting larger: In today’s money (i.e., taking out inflation), the total annual cost of natural disasters is forecast to reach $23 billion by 2050.

• An ounce of prevention would make sense: An increase in pre-disaster resilience expenditure could see Australian Government expenditure on future natural disaster response costs cut by 50%.


Why will costs rise?

• Conservative costing: Even after allowing for inflation, costs will rise notably. That isn’t due to any allowance for the effects of climate change.

• People and place: Partly the lift in costs will be due to population growth. And partly it is because population density will lift

• Housing and infrastructure values will lift too.

• But another factor will be WHERE we will live: Australians will increasingly live in the ‘pretty bits’ of our nation. But many of them are low lying coastal regions, which tend to be more at risk in natural disasters.


It can be done … History proves it, and a range of economic studies suggest the same

Case Studies – Range of Benefit Cost Ratio of specific resilience measures


So ‘prevention’ makes sense. But why is it so hard?

• Good progress has been made in some areas: for example, the National Strategy for Disaster Resilience, Geosciences Australia, Bushfire and Natural Hazards CRC.

• But fresh impetus and new approaches are required if we are to address the most difficult challenges, such as existing settlements.

• Improving resilience can be achieved with the combination of: • aligned government financial support (consistent with reduced future

disaster relief and recovery costs to government)

• appropriate price signals from business, and

• increased awareness of risk by individual home owners.

• However the coordination challenge is large and alignment of incentives is critical.


The key recommendations

1. Coordinate: Improve coordination of pre-disaster resilience by appointing a National Resilience Advisor and establishing a Business and Community Advisory Group.

2. Commit: Commit to a long term annual pre-disaster resilience fund.

3. Invest: Identify and prioritise pre-disaster investment activities that deliver a positive net impact on future budget outlays.


Building a more resilient Australia


Where to next?

• The Productivity Commission is considering these issues and due to report at the end of the year

• A second paper on the issues around data and research is being finalised now

• To get involved go to the website and register interest. http://australianbusinessroundtable.com.au/

adaptation and disaster risk reduction seminar - kathryn matthews, deloitte

Services