There’s not a lot of point in the conservative Liberal-National federal government pleading ignorance on the extent of the current bushfire crisis, 12 years ago, economist Professor Ross Garnaut made a prophecy that has devastatingly come true.
In the 2008 Climate Change Review prepared by Professor Garnaut, which examined the scientific evidence around the impacts of climate change on Australia and its economy, he predicted that without adequate action, the nation would face a more frequent and intense fire season by 2020.
Speaking to ABC News about the latest bushfires and the potential economic fallout, Professor Garnaut refrained from taking a direct shot at policymakers who ignored many of the review’s calls for action.
However, he noted: “If you ignore the science when you build a bridge, the bridge falls down.”
The initial damage bill from Australian bushfires that began in September has risen to $700 million, according to Insurance Council of Australia estimates, and is likely to grow.
ICA’s Campbell Fuller told ABC News that 1838 homes have been destroyed across Australia since September and there have been 8985 insurance claims for fire-related damage and destruction.
However, insured losses are just a small part of wider economic losses.
The total cost of the 2009 Black Saturday bushfires was estimated at $4.4 billion.
Conservative estimates put the final cost of the current Australian bushfires well into billions of dollars, while some analysts say it could cost the economy $20 billion in lost output.
ABC News reports the head of economic analysis at SGS Economics and Planning, Terry Rawnsley, has done some early estimates on the economic cost of the bushfires.
Based on previous modelling of the Tathra fires in 2018, and taking account of $700 million worth of insured losses, the economic fallout from the latest fires could be as high as $3.5 billion, he said.
Between $2 billion to $3 billion includes the direct costs to fire-affected regions such as the loss of tourism and retail income, and the impact on agricultural production.
He predicts that some of the worst-affected communities will never fully recover.
And smoke haze in major capital cities could be an additional $500 million drag on the economy.
“These are places not directly impacted by bushfires, but people aren’t out and about, and people are calling in sick with respiratory and asthma illnesses,” he said.
Mr Rawnsley said while SGS Economics had modelled the loss of income from livestock such as sheep and cattle being destroyed, it had not modelled the actual loss of the assets, the loss of the sheep and cattle itself.
ABC News reports Professor Tom Kompas, one of three chief investigators in the Centre of Excellence for Biosecurity Risk Analysis (CEBRA) at the University of Melbourne, said the economic cost of the bushfires would be “massive”.
He said he intended to do precise modelling on the impact later this month.
His earlier research on economic impacts of climate change had predicted $1.2 trillion in cumulative damages from now to 2050 assuming a global temperature increase of 3.8 to 4.0 degrees Celsius by 2100.
However, the $1.2 trillion in losses looks at infrastructure lost due to sea-level rise, losses in agricultural and labour productivity and limited human health and biodiversity impacts.
“It does not include the cost of bushfires on infrastructure and resulting increases in insurance premiums,” he said.
“It also does not include damages from human health effects due to pollution and smoke-related illnesses, losses in tourism, losses to major environmental assets or the costs of emergency management, recovery and relocation.”
AMP Capital chief economist Dr Shane Oliver estimated a reduction of between 0.25 and one per cent in the level of national economic output as a result of the fires, which he forecast would show up mostly in the March quarter.
Based on Australia’s gross domestic product (GDP) of about $2 trillion, a one per cent drag could equate to about $20 billion.
Still, even a lesser 0.25 per cent hit would be a major drag on economic growth, in an already slowing economy.
While the Federal Government’s $2 billion cash injection was helpful and would assist rebuilding efforts, he said this lift in growth would not become apparent until the June quarter or even later in the year.
Economists at JP Morgan said in a research note that the immediate impacts on GDP remained hard to identify, but there would be a cost based on disruption to infrastructure and productive capital.
It said the Grattan Institute estimated that 80 per cent of Australia’s GDP comes from 0.2 per cent of its land mass (generally its most densely populated areas), while major bushfires mostly occur “in non-productive, non-residential, and non-cleared land”.
ABC News reports Tourism Australia was reluctant to provide early economic estimates, with a spokesman saying the organisation was still gathering feedback from industry and monitoring impacts on future bookings.
However, he said based on past severe weather events and natural disasters, “tourism is an extremely resilient sector”.
Australian Tourism Industry Council (ATIC) executive director Simon Westaway estimated the cost to the tourism industry could be hundreds of millions of dollars.
The bushfires have impacted many parts of Australia during the peak of the holiday summer period, and could also hurt international inbound tourism due to global media coverage of the fires.
Professor Chris Dickman at Sydney University has estimated more than one billion mammals, birds and reptiles may be affected by the bushfires.
He told ABC News that animals had been killed either directly by the flames, or could be killed indirectly by the lack of food, water and shelter resources in the burned environment, as well as predators such as feral cats and red foxes.
WWF-Australia chief executive Dermot O’Gorman said this heart-breaking loss included thousands of koalas on the mid-north coast of New South Wales, along with other iconic species such as kangaroos, wallabies, gliders, potoroos, cockatoos and honeyeaters.
The WWF also noted other losses including that of pollinators such as bees, moths and other insects, and the loss of trees.
“Many forests will take decades to recover and some species may have tipped over the brink of extinction,” Mr O’Gorman said.
A spokeswoman for the CSIRO told the ABC News: “As the fires are still burning across vast areas of Australia, an accurate analysis of the total carbon dioxide emissions released from the bushfires is not possible.”
Dr Rebecca Patrick, co-lead of the Health Sustainability Research Group at Deakin University, predicted the start of a new decade could see the rise of climate litigation.
She expected more human rights and environmental justice lawsuits to be filed against fossil fuel companies and high-emission sectors.
Professor Garnaut is reluctant to put a dollar figure on the latest bushfire catastrophe.
“Any quantitative estimates just scratch the surface,” he said.
“And most Australians would feel that even greater than economic losses, are the loss of beautiful places of Australian historical significance.”
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One Response
Other economists have assessed the cost in the near is over $4 trillion. Thanks Scomo and your coal corrupt cronies.
Also coal not being the only cause. Using white paper is also a huge factor. There is no white 100% post-consumer recycled paper made in Australia as only one mill in the Gippsland forest that makes all brands that are often falsely marketed with trick wording to infer that are made from the fruit of our recycling efforts when not at all. Only pre-consumer recycled paper that is standard virgin paper making methodology. The only real 100% post-consumer recycled copy paper made in Australia is the Ecocern gray/brown product. Made only from the fruit of our recycling efforts.