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Monday, January 10, 2011

If weather-related disasters are the new normal, how do we pay for rescue, recovery and rebuilding? A natural disaster levy?

I posted yesterday on the killer floods in the Australian state of Queensland, which have worsened in the 24 hours since. Nearly every news item I am hearing is talking about new flood levels threatening the records, and this afternoon came news of a wall of water hitting the mid-sized regional city of Toowoomba, west of Brisbane.

The formula I'm focusing on is the scientifically well-established proposition that more people and more property will be exposed to more severe natural disasters more frequently under the main climate change scenarios - and actual experience is bearing this out.

Even if this represents human-caused climate change influences overlaid on natural weather cycles, for example hotter average weather conditions on top of a normal drought cycle, the end result is more devastation. The same goes for more violent or rain-filled storms on top of a classic wet season. All of this gets much worse if cyclone or bushfire wind speeds increase, as is expected to be the case, making already lethal events even worse.

Climate change overlaid on Australia's long-established weather patterns of 'droughts and flooding rains' will mean more extreme weather-related disasters which in time will unambiguously become climate-related disasters as well. For example, rising sea levels combined with more intense floods will mean more inundation, and cyclonic storm surges will penetrate deeper onshore if the winds driving them are more powerful.

Nobody should be shielded from this likelihood, least of all because climate change has become part of the nation's culture wars in recent years.

I've been well mentored in business, I believe, not to raise problems unless you want to profer solutions as well. So here goes.

We need to make disasters part of the overt national economic discussion, rather than putting them in the 'shit happens' category, or believing that a blend of insurance, government aid and corporate and community charity will always pay the way.

1. Let's have a national natural disaster cost index, including a segment specifically for weather-related events, so we can plan for the cost and compare outcomes year on year. Droughts, cyclones, bushfires, hail, floods and drought all go into the mix, as do rogue cold snaps, and away from the weather don't rule out earthquakes, tsunamis, land slides and the like.

2. As a developed nation, Australia will want to respond and recover from these natural disasters in a timely, compassionate and economically effective way. So that will mean a big budget because the days in which we could rely on volunteers to deal with every disaster will soon be behind us, if they aren't already, and even training and equipping volunteers doesn't come cheap.

3. So where does the money come from, because we all know government coffers are not exactly overflowing with spare cash at the moment. Well, the source is obvious. With the mining industry having fought off a 'super profits' tax so viciously, and now having second thoughts about a more modest rent tax; with the fossil fuel sector having so effectively underminded a price on carbon, at least until now; with commodity prices still so high; with their own vital infrastructure and value chains so vulnerable to extreme weather events - isn't the answer clear? How about the miners and drillers pay!

4. Thus, while time is taken to develop an effective price on carbon through either an emissions trading scheme or a carbon tax, let's move straight away on a carbon-pollution related natural disaster levy on the mining, minerals processing and fossil fuel industries that sit behind much of the human-induced global warming that is driving adverse climate impacts. Sure they will howl, but they can claim for support from the multi-billion dollar fund when disasters strike them too.

This is not all in jest, or a try-on, although I recognise that economists will have all sorts of reasons why managing the risk of catastrophic losses should be left to the private enterprise experts - the insurance industry. Unfortunately, at the point where underwriting disasters ceases to be capable of being profitable, the insurance industry won't be there to do its job.

I reckon kick off at $10 a tonne of CO2 whether it goes into the atmosphere from Australia or overseas, because the effect on disasters in Australia will be the same. If that's not enough to keep up with the cost of disasters, then bump it up in $5 a tonne increments year on year. If that's still failing to keep up, then the point will be well made.

Disasters are now a regular part of the economy. Their type and seriousness vary, but then the stockmarket fluctuates, interest rates rise and fall, and unemployment can be extremely bad or wonderfully benign or anywhere in between.

If we want to regularise the reality of the climate change threat with Australians, or people anywhere, we need to move disasters from being bad stuff that just happens to some unfortunates to be part of the economic mainstream. That's how we get everyone engaged, isn't it?

1 comment:

  1. Natural disasters are something that we as humans simply can not control. During inclement weather some people are uncertain, or some may be inattentive to what is going on around them. perth weather forecast