Total financial losses from natural disasters worldwide in Y 2015 amounted to $100-B, with insured losses at $30-B.
The Y 2009 Black Saturday wildfires in the State of Victoria that broke out on 7 February that year rank among Australia’s worst natural disasters.
173 people were killed when 400 fires, driven by strong winds and an exceptional heatwave, spread rapidly across large portions of the state.
7 years on, many communities still struggle to recover from that disaster, which burnt about 450,000 hectares of land, destroyed 2,000 homes and closed dozens of businesses.
Black Saturday was just 1 of several natural disasters in recent years, which have prompted Australian authorities, businesses and communities to study the costs of such events and how better to prepare for them.
In Y 2010 a government inquiry estimated the economic cost of Black Saturday at A$4.4-B (US$3.3-B) with insurance claims of A$1.2-B.
New research published by the Australian Business Roundtable for Disaster Resilience & Safer Communities, which reviewed the economic and social costs of Black Saturday and other national disasters, found that the true costs of disasters are at least 50% higher than the estimates.
“This is a conservative number,” says the CEO of Insurance Australia Group. “If you include the increase in domestic violence, the increase in alcohol and substance abuse, the increase in school truancy etc, and the long-term impact on societies which are rent asunder by disasters, it would probably be larger.”
The Australian Business Roundtable estimates natural disasters caused A$9-B of damage in Y 2015, that is about 0.6% of Australia’s GDP (gross domestic product) and this annual figure is expected to 2X by Y 2030, according to financial modelling conducted by Deloitte Access Economics.
The increasing threat posed by weather-related disasters linked to climate change is one of the reasons for the creation of the Australian Business Roundtable, which comprises the CEO’s of some of the country’s biggest companies and the Australian Red Cross.
It lobbies the government, businesses and others to take a more coordinated national approach to make communities more resilient, keep people safe and reduce the costs of natural disasters.
One of the main findings of its work is that spending more on pre-disaster mitigation and critical infrastructure that builds community resilience, such as electricity networks, small dams and bridges, could vastly reduce the economic costs of disasters.
A combination of government budget pressures and short-term thinking has means that public funding is often skewed only towards emergency response.
A report by Australia’s Productivity Commission last year found the government spent A$11-B on disaster recovery between Y’s 2009 and 2013, compared with just A$225-M on mitigation efforts.
The Roundtable identified a lack of adequate planning as a hurdle to building resilience.
It believes local planning authorities need to consider the risks of building in flood plains or areas prone to forest fires and set appropriate specifications and regulations.
Homeowners play a critical role in mitigating risks to their properties.
The Head of reinsurer Munich Re’s geo risks research unit, says measures such as flood protections or reinforced roofs to guard against high winds, storms and hail can potentially reduce the costs associated with climate risks.
A global study by Munich Re found that total financial losses from natural disasters worldwide in Y 2015 amounted to $100-B, with insured losses at $30-B.
Some simple precautions can help mitigate damages to homes and businesses. Be prepared.
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