The report, Coming Ready or Not: Managing climate risks to Australia’s infrastructure, notes that “while infrastructure is interdependent, action in adaptation is isolated at the organisational level”.
It looked at road and rail, electricity, financial services, property and water.
The first three were found to be “underprepared”, property was given an “early preparation” mark while the water sector was given a “relatively advanced preparation” mark.
On water, the report found: “There is sector-wide collaboration on modelling impacts and responses and investigation of interdependencies with electricity and telecommunications is underway.”
The urban water sector provides an example where adaptation to climate change is being undertaken through collaboration, not just across the sector but with related infrastructure systems and government.
Sydney Water, for example, is working with other industry bodies to develop a quantitative tool to assess climate impacts on water infrastructure and gain regulator support for adaptation actions.
Meanwhile, the Queensland coal mines still hold water from last year’s floods, costing the industry $7 billion in lost exports.
“The implications of climate impacts on interdependent systems and communities remain underexplored,” the report added.
By looking at the management of climate risk across the Australian economy, critical industry sectors and specific company examples, a number of key findings are apparent:
- Government policy is fragmented
- The business response is uneven
- Infrastructure is highly interdependent but action on adaptation is isolated at the organisational level
- Concern about climate change has fallen among those sectors most exposed.
Climate Institute chief executive officer John Connor says research for superannuation funds puts the global annual cost of unmitigated climate change at more than $US1.6 trillion ($A1.53 trillion).
“Australia represents 2 per cent of the global re-insurance markets,” he said.
“But given extreme weather events such as floods and fires, over the last five years it has incurred 6 per cent of the losses.”
Modelling for the 2008 Garnaut Review conservatively estimated that the annual costs of unmitigated climate change on Australia’s infrastructure would reach 0.5% of GDP (about $A9 billion) in 2020 and 1.2% of GDP ($40 billion) in 2050.
According to the report, “local councils are left to implement infrastructure risk management policy”
Meanwhile, business response is “uneven”.
“While some organisations understand and manage climate risk exposure, many infrastructure owners and operators maintain assets to historic climate setting standards,” it said.
For example, analysis undertaken to date indicates that while Brisbane and Melbourne have respectively $3.4 billion and $2.2 billion in exposed assets, a rise in average global temperatures of “only” a couple of degrees sees their exposure increase to $33 billion and $40 billion respectively.
Finally, concern about climate change has decreased in exposed sectors.
According to CSIRO, companies reporting completion of vulnerability assessments have declined from 60% to 47% between 2008 and 2010.
The report’s recommendations for the business sector include:
- Assess exposure and vulnerability to climate risk impacts: identify material climate risks for your operations, supply chain, customers, employees as well as interrelated infrastructure systems
- Implement a climate risk management plan: establish a three to five-year plan to manage climate adaptation requirements and explore potential business opportunities and sources for competitive advantage
- Disclose material climate risks to the market: Ensure shareholders and investors are informed of material climate risks and risk management strategies to protect shareholder value
- Collaborate to build capacity: participate in cross-industry and public discussions about climate risk to build understanding and resilience to emerging climate risk across the community.
This article first appeared in ILN’s sister publication BEN Global.
