Working Group II: Impacts, Adaptation and Vulnerability


Other reports in this collection

12.6.2. Investment and Insurance

According to Pittock et al. (1999), based on Insurance Council of Australia figures, major climatic catastrophe insurance losses from 1970 through 1996 averaged AU$208 million yr-1. Of these losses, nearly half were from tropical cyclones; one-quarter were from hail. Other flooding and storm damage accounted for most of the rest; losses from fire were less than 10% of the total. Figures provided by the Insurance Council of New Zealand show that insurance industry payouts for New Zealand climatic catastrophes averaged NZ$23.5 million yr-1 (inflation-adjusted) between 1980 and 1998.

In an Australian study of insurance and climate change, Leigh et al. (1998a) examined four major climatic disasters: the Brisbane floods of 1974, the South Australian bushfires of 1983, the Nyngan floods of 1990, and the New South Wales bushfires of 1994. Total estimated damage from these four events was AU$178 million, $200-400 million, $47 million, and $168 million, respectively; however, the insurance industry bore only 39, 31, 9, and 33% of the cost, respectively. Government relief assistance was roughly equal to that from the insurance industry, and about 70-90% of that was provided by the federal government.

Leigh et al. (1998b) have reported on the potential for adaptation to climate change by the insurance industry in Australia by setting out an array of reactive and proactive options. Responses include reducing insurers' exposure or controlling claims through risk management to encourage disaster mitigation measures. The latter has the advantage of reducing overall losses to the community, rather than merely redistributing them among stakeholders. Natural disaster insurance can be more selective, so that good risks are rewarded and poor risks are penalized. Such rate-based incentives can motivate stakeholders to plan to more effectively minimize exposure to disasters. However, some individuals and businesses may have difficulties if some previously insurable properties become uninsurable against flood because of an increase in location-specific flood frequency. Government intervention and possible co-insurance between government and insurers also were canvassed. Cooperation between insurers and governments to ensure development and enforcement of more appropriate building codes and zoning regulations was regarded as desirable.

12.6.3. Energy and Minerals

Energy demand, essentially for air conditioning, is likely to increase in the summer and in more tropical parts of Australia and New Zealand (Lowe, 1988). However, winter demand for heating will similarly decrease in the winter and in cooler areas. Thus, increasing population in tropical and subtropical parts of Australia may combine with climate change to increase overall energy demand.

The other major uses of energy in Australia are transport and manufacturing. Transport demand generally will increase because of population growth but may be significantly affected by the changing distribution of growth across the continent, which in turn may be affected by climate change.

In general, warming will slightly reduce energy efficiency in most manufacturing, including electricity generation, but this is relatively minor compared with possible technological improvements in efficiency. Any decrease in water supply (see Section 12.3.1), such as is expected in the Murray-Darling basin in Australia, would impact adversely on hydroelectric generation and cooling of power stations, especially where there already is competition between water uses. Fitzharris and Garr (1996) predict benefits for hydroelectricity schemes in New Zealand's Southern Alps because they expect less water will be trapped as snow in the winter, which is the time of peak energy demand for heating.

12.6.4. Coastal Development and Management, Tourism

Economic development is proceeding rapidly in many coastal and tropical areas of Australia and New Zealand. This is fueled partly by general economic and population growth, but it is amplified in these regions by resource availability, shipping access for exports, attractive climates and landscapes, and the growth of the tourism industry. This selective growth in investment is leading to greater community risk and insurance exposure to present and future hazards, while many classes of hazard are expected to increase with global warming (see Table 3-10). Thus, present development trends are likely to make the impacts of climate change worse, especially for sea-level rise and increasing intensity of tropical cyclones. Particular attention should be paid to the implications for the risk to life and property of developments in coastal regions, as well as ways to reduce vulnerability to these hazards. Possible adaptations include improved design standards, zoning, early warning systems, evacuation plans, and emergency services.

Management of waste and pollution from settlements and industry will become more critical because of the potential for flood and waste discharge to impinge on water quality, including inland and coastal algal blooms, as well as adverse effects on ecotourism associated with damage to coral reefs (see Section 12.4.7). Sediment and pollution fluxes into the GBR lagoon already are a major concern (Larcombe et al., 1996). This could be exacerbated by greater flood flows (see Sections 12.1.5.3 and 12.6.1) and increasing population and development. Higher temperatures will accentuate algal blooms.

The other major tourism and recreation sector that is likely to be seriously affected by climate change is the ski industry, which will be faced with significant reductions in natural snow cover (see Sections 12.2 and 12.4.4) and limited acceptance of artificial snow (Konig, 1998). Also, as the potential ranges of certain agricultural pests such as the fruit fly (see Section 12.5.7) and disease vectors such as mosquitos (see Section 12.7.1) increase, possible transfer of such pests and diseases through tourism may become an increasing issue.

12.6.5. Risk Management

As a result of the large uncertainties associated with possible future climate, as well as the stochastic nature of extreme events, there is great need for a risk management approach to development planning and engineering standards. In accordance with the precautionary principle, uncertainty should not be allowed to stand in the way of risk reduction measures, which in any case often will have other benefits such as protection of coastal and riverine environments.

Australia and New Zealand have jointly developed a risk management standard (Standards Australia and Standards New Zealand, 1999) that is designed to provide a consistent vocabulary and assist risk managers by delineating risk management as a four-step process that involves risk identification, risk analysis, risk evaluation, and risk treatment. Beer and Ziolkowski (1995) specifically examined environmental risk management and produced a risk management framework.

Examples of the application of a risk analysis approach are given in Sections 12.5.2 for pastures in New Zealand, 12.6.1 for storm surges, and 12.8.4 for irrigation water demand.

height="1" vspace="12">

Other reports in this collection

IPCC Homepage


height="5">