Droughts, floods and storms could result in a total loss of $452 billion to Australia’s GDP between 2022 and 2050, according to new research launched today.
Aquanomics: The economics of water risk and future resilience report is published by global professional services company GHD and reveals Australia will suffer an average annual GDP loss of 0.6 per cent due to water risks such as droughts, floods, and storms.
The research places Australia in the third most vulnerable position when projecting the future economic impact of these events in seven countries*.
It also highlights that Australia’s agricultural and retail sectors could be particularly hard hit and these rising threats need to be tackled now with greater focus on solutions like water recycling, desalination, and smarter irrigation.
Lindsey Brown, Australian Water market leader at GHD, said to create resilience there needs to be changes to the way water infrastructure is built.
“We need to optimise the performance of existing infrastructure and prioritise nature-based solutions to water management across industries,” he said.
Storms are expected to have the greatest direct impact on the Australian economy ($102 billion), followed by floods ($64 billion) and droughts ($41 billion).
This is the first time that the economic impact of these three types of events have been calculated at a GDP and sector level.
The Aquanomics report builds on concerns highlighted recently by the Intergovernmental Panel on Climate Change (IPCC) that revealed over half of all natural disasters worldwide since the 1970s have involved water.
In addition, in 2021, the Emergency Event Database (EM-DAT) stated that drought, flood and storm disasters affected close to 100 million people globally through displacement, economic damage, food insecurity and injury.
Aquanomics highlights the potential impact of extreme weather events on five critical economic sectors in Australia: agriculture; banking and insurance; energy and utilities; fast-moving consumer goods (FMCG) and retail; and manufacturing and distribution.
“A circular economy approach to water management includes options like supporting water authorities to design out waste and pollution and regenerate natural systems. Increasing supplies of manufactured water through water reuse and recycling also offers a reliable source of water that is not climate-dependent and can contribute to economy-wide decarbonisation efforts through energy production of green hydrogen,” he said.
Read more about the research here https://www.ghd.com/aquanomics