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The total economic cost of disasters is increasing along with the cost of disaster recovery.
According to Deloitte Access Economics, disasters cost the Australian economy on average of $38 billion per year and will rise to at least $73 billion annually by 2060 under a low emissions scenario.
These increasing costs are driven by a combination of factors including climate change, population growth, particularly in exposed areas, and the rising real value of property.
Existing stresses or pressures in the natural and social environments may cause natural hazards to disproportionately impact vulnerable communities.
Investing in disaster risk reduction across each of the natural, social, built and economic environments can reduce our vulnerability to disasters and help achieve broader social and economic benefits.
Investment in risk reduction and resilience can deliver a triple dividend:
- Avoid loss and suffering
- Reduce future disaster costs
- Unlock economic opportunities and broader economic and social benefits to be realised even in the absence of a natural hazard.
All levels of government, communities and the private sector already make significant investments to reduce disaster risk but are now actively seeking a return on that investment in terms of immediate outcomes and avoided losses.
This presents a significant opportunity for public and private sectors to work together to identify and leverage the broader economic value and opportunity created by investments in disaster risk reduction and resilience.
In particular, there is a need to focus on:
- Finding or developing financing and funding pathways to address existing high priority risks across all environments
- Identifying financing mechanisms and pathways to pursue disaster risk reduction measures in planned projects, particularly infrastructure and development projects.
Enabling Resilience Investment
The National Emergency Management Agency is supporting CSIRO to implement and scale-up the Enabling Resilience Investment approach.
Enabling Resilience Investment provides an assessment and decision-making framework to inform interventions to reduce disaster risk and adapt to a changing climate.
It takes a place-based approach to develop fundable risk mitigation opportunities that create value and community benefits (i.e. jobs, infrastructure, and social capital) for communities in cities, suburbs and rural and regional Australia.
In doing so, the approach supports communities, regions and economies to recover, transition, and develop towards sustainable, well-adapted and disaster-resilient futures. Enabling Resilience Investment tools, products and services are available through the CSIRO’s website.
Resilience Investment Vehicle Pilot
The National Emergency Management Agency is collaborating with Insurance Australia Group, National Australia Bank, Queensland Reconstruction Authority, Resilience NSW, and CSIRO on a pilot to fund a range of infrastructure (built, social and natural) that builds community resilience to natural hazards.
Recognising that there is a shortfall of public capital to fund disaster risk reduction activities, the Resilience Investment Vehicle Pilot aims to direct capital (public and private) to finance new and/or adapt existing infrastructure that builds resilience, reduces disaster risk and derives a financial return for investors.
Ultimately the pilot aims to:
- prove the concept with a view to implementing the approach across other regions at scale
- build the understanding and capabilities required to enable the development of projects eligible for resilience investments
- capture and share learnings that contribute to building the conditions of a national resilience investment market.