"Australians have focused a lot on the transition risks of climate change: focusing on the impacts that different carbon abatement policies will have on the economy and on communities in an effort to reduce emissions. But we focus much less on the physical impacts of climate change which are already occurring and, on current projections, will continue to worsen.
Why is this? One reason is data. There are many datasets which have been used to analyse the impact of different carbon abatement policies. The same cannot be said for adaptation.
This is the core innovation of the Zurich Resilience Solutions (ZRS) capability. By mapping the physical risks of climate change across every 10 square meters in Australia, it provides unparalleled insights into the tangible impacts of climate change on different assets and locations."
["The Zurich-Mandala Climate Risk Index: The impact of climate change on the Australian tourism industry", September 2024]
For the last two decades science has been telling the Australian general public that flood, rain, wind, storm, hail, heat, drought and bushfire are the horsemen of climate change and they are upon us now - not arriving some time in a distant future. Now the insurance industry is pointing to this fact of life.
The Zurich-Mandela risk report released this month looks at the effect climate change will have on Australia's natural and manmade tourism assets.
Given the degree to which tourism underpins local economies and the wider NSW Northern Rivers regional economy generating as it does up to $1.6 billion annually supporting est.14,416 jobs, this is a serious issue for the far north, its seven local government areas and the estimated 315,775 men, women and children who live there.
The Northern Rivers tourism industry is known to be vulnerable to externalities. Since 2018, flooding and bushfires have damaged natural amenity and infrastructure, while COVID-19 restrictions reduced visitation and spend in the region, with total visitor expenditure in 2021 down $423 million on 2019 levels.
[Dept. of Regional NSW, Northern Rivers Regional Economic Development Strategy – 2023 Update]
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Zurich Insurance Group, media release, 7 September 2024:
Zurich and Mandala release first Climate Risk Index for the Australian tourism sector
9 September 2024
Zurich Financial Services Australia (Zurich) and Mandala Partners (Mandala) today released Australia’s first Climate Risk Index for the Australian tourism sector.
Utilising Zurich’s global exposure analysis capability, the report analyses the impact of climate change on Australia’s top tourism sites – including major airports, national parks, beaches and museums – under different Intergovernmental Panel on Climate Change (IPCC) scenarios.
The Index – the first comprehensive, quantitative climate assessment of its kind for Australian tourism – finds that currently, half of Australia’s tourism assets are in an elevated risk category, facing considerable climate and natural peril risk.
This is set to rise to between 55 and 68 per cent of Australian tourism sites by 2050 under either an intermediate (two degrees Celsius of warming by 2041-2060) or extreme (three degrees) IPCC future climate scenario respectively. Under the more extreme scenario, 80 per cent of tourism sites will experience an increase in risk between 2025 and 2050.
Australia’s tourism industry plays an important role in the nation’s economy, contributing more than $170 billion in annual expenditure and over 620,000 jobs.
In terms of economic impact, around 30 per cent (up to 176,000) of these jobs nationally could be jeopardised – 65 per cent of which are outside our capital cities – in the event of a disaster scenario similar to that experienced following the bushfires of 2019-20.
The analysis also reveals that climate risk varies significantly by geography and site type (natural or man-made).
Queensland has both the highest number of sites facing elevated risks (79 per cent) and the most sites in the highest risk category (52 per cent) compared to any other jurisdiction. After Queensland, Western Australia and the Northern Territory have 69 per cent and 63 per cent of sites in the highest risk categories, respectively. Across the southern states, the risks were relatively lower.
By site category, the Index finds that all 31 of the busiest airports in Australia fall into the highest climate risk categories, including 94 per cent in the most extreme category, due to their geographic location and susceptibility to perils such as wind and storms.
Similarly, all of the analysed wine growing regions, botanic gardens, scenic roads & rail, and rainforests & national parks were found to be in the highest climate risk categories. Natural geological formations, museums, galleries and stadia face relatively lower risk.
Justin Delaney, Chief Executive Officer, Zurich Australia & New Zealand, said: “Australia’s tourism assets not only play a significant role in an increasingly diverse visitor economy but are collectively central to our national identity.”
“This analysis, conducted in partnership with Mandala, serves to highlight the critical importance of improving resilience across our tourism assets, both to ensure the sustainability and longevity of these sites and to minimise downstream economic impacts – particularly in regional areas – on employment, business formation, consumption and investment.”
“More broadly, it also serves to highlight the quantum of data and insights that are available to understand the prevailing risk environment in order to shape and prepare our collective response,” Mr Delaney said.
Adam Triggs, Partner, Mandala Partners, said: “In Australia, we have focused a lot on how to reduce carbon emissions but have focused less on how to prepare for the physical impacts of climate change that we are already seeing: tourist attractions destroyed by bushfires, tourism sites made inaccessible by floods, man-made attractions damaged by hail and airports closed because of extreme winds”.
“A key reason for Australia’s more limited focus on the physical impacts of climate change is a lack of data, and this is exactly the gap that our partnership with Zurich seeks to fill,” Dr Triggs said.
The release of the Climate Risk Index for the tourism sector builds upon and follows a similar analysis by Zurich and Mandala on the climate risk facing the Australian energy generation sector in November 2023, the first assessment of its kind for an entire critical infrastructure asset class.
A full version of the report is available here.
-ENDS-
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Excerpts from the Zurich-Mandela report.
Source: Zurich Resilience Solutions using Jupiter Intelligence’s ClimateScore Global 2.6; Mandala analysis
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Despite more natural sites facing climate risk overall, the proportion of man-made sites facing severe risk is higher
The Zurich-Mandala Climate Risk Index found that currently, 55% of natural tourism sites in Australia face climate risk. Of these sites, 14% are in the highest risk category, a further 23% are in the second highest category and 17% are in the third highest.
Most natural sites in Australia are either national parks, rainforests or beaches. These sites face significant risk from floods, storms and bushfires due to the potential for environmental degradation, which can permanently alter these sites. Extreme weather can also result in seasonal shifts, disrupt ecosystems and impact tourist visitation patterns.
Despite a higher volume of natural sites showing vulnerability to climate change overall, the proportion of impacted man-made sites facing severe risk is higher. Just under half of all man-made assets fall within the top three risk categories, with one quarter of these in the highest risk category. The most at-risk man-made sites are vineyards and airports, which face significant risk from heat, bushfires and flooding. Likewise, scenic roads (including bridges) and railways face significant risk....
In the 25 years from 2025 to 2050, the proportion of Australia’s tourism sites in the three highest climate risk categories will rise from 50% to 55%. Sites in the highest three risk categories are likely to face significant risk from multiple perils with a high impact on environmental degradation, tourism functionality and appeal, accessibility, and ecosystem balance (i.e. a national park with a ‘high risk’ from storms and a ‘very high risk’ from heat).
Under the more severe SSP5-8.5 climate scenario, which assumes little or no climate action and up to three degrees of warming by 2041-2060, 80% of sites will see an increase in risk between 2025 and 2050. Under this scenario, 68% of all sites will be in risk category 3 or above by 2050.....
