Insights

The growing risk of natural perils: preemptive action needed

Posted December 19, 2019

SGSEP IAG Natural Perils

Spatial data shows much of the Australian population is at risk of natural perils such as bushfires, floods, storms and cyclones. Without preemptive action, natural perils will continue to impact economies, damage homes and put lives at risk.

While governments have made a significant effort to manage the impact of natural perils, their focus has been on repairing rather than protecting communities. Without a consistent, long-term and national approach, large parts of the country - including the most populated or economically valuable - remain exposed to natural perils. A recent example is extreme bushfire smoke descending on Sydney, costing the city's economy between $12m to $50m each day.

SGS Economics and Planning Terry Rawnsley

Economic analysis shows that successive governments have overinvested in post-disaster reconstruction and underinvested in mitigation, which would limit the impact of natural disasters on the economy and communities. As a general rule, one dollar spent on mitigation can save at least two dollars in recovery costs. The Australian Government spend on mitigation measures is equivalent to three per cent of what it spends on recovery and rebuilding efforts.

— SGS Principal & Partner

The rebalance of this spending allocation is a national priority.

Investment in mitigation strategies reduces the cost of reconstruction and safeguards our communities. A safer future does not just depend on the government. Individuals and communities also have what the Royal Commission into Victoria’s bushfires calls a ‘shared responsibility’.

While all levels of government - including emergency services and land use planning and building regulators - should take steps to improve protective infrastructure, individuals and businesses need to be educated and empowered to take more responsibility for their own safety. Without heightened awareness, appropriate information and a co-ordinated, long-term approach to managing risks, individuals, businesses and governments will remain exposed, and our future economic strength and stability will be at risk.

The nature of risk and impact

To understand the risks faced by different parts of Australia, we assessed the natural peril risk levels provided by the Insurance Council of Australia (ICA) and Insurance Group Australia (IAG) and estimated resident population data for 2017-18, the most recent data available. We undertook the analysis at the Local Government Area (LGA) level.

The risk of a natural peril occurring is different from the impact. Even if the risk of a natural peril is low, severe events can still happen. The risk rating is a function of the likelihood of an adverse event occurring based on a range of environmental factors, for example, the proximity of a property to a flood-prone river.

The actual impact of the natural perils relates to the scale of the event and mitigating factors such as land use planning and building codes; where properties are located; building standards; and the protective infrastructure, such as levees, which can mitigate the impact. As such, the risk of being impacted by a weather event can be mitigated by planning, protective infrastructure and building standards. The level of possible mitigation varies according to the type of natural peril. For instance, infrastructure can be built to deal with heavy rain or flood, but a similar infrastructure solution is not available for bushfires.

Spatial aggregation of risk

The risk data shows the average risk levels for each property within an LGA. In each LGA it is possible that for some natural perils, the risk level would vary significantly. For example, for flooding, properties along a waterway would likely have a higher risk rating than other parts of the LGA which are on higher ground. Floods do not affect regions uniformly and can damage the same area repeatedly while not affecting properties very close by. Similarly, properties along the urban fringe can have a higher risk of bushfires than properties in built-up areas.

Summary of results

In Queensland, 4.2 million people live in LGAs with a high to extreme tropical cyclone risk. The Queensland LGAs of Brisbane, the Gold Coast, Townsville and Moreton Bay all contain communities deemed to be at high to extreme risk of tropical cyclones, storms and floods.

In Victoria, 17.1 per cent of the population live in LGAs which contain communities at high to extreme risk of bushfire. Hepburn, Central Goldfields and Hindmarsh LGAs in Regional Victoria are at high risk of bushfire. Even in Greater Melbourne, 223,000 people live in LGAs which are at high risk of bushfire.

Figure 1: Bushfire Risk Score by LGA

SGS EP bushfire
Source: SGS based on ICA iLEAD data

Figure 2: Bushfire Risk Score by LGA

SGSEP bushfires NSW
Source: SGS based on ICA iLEAD data

Sydney has a high risk of floods with 1.4 million people living in LGAs at high and very high risk of flood due to extensive development in the floodplains of the Hawkesbury, Georges and Cooks rivers and their various tributaries. In Regional NSW, 1.7 million people live in LGAs at high and very high risk of flood. This includes the LGAs of Lismore, Richmond Valley and Clarence Valley.

Storms and flooding can impact agricultural and mineral production, urban transport systems and air travel. Heavy rainfall also impacts the road network via reduced speeds, areas of flooding and more accidents. Storms can heavily impact air travel, which does not significantly damage infrastructure but disrupts short term activity.

Summary tables

The summary tables below present the 2017-18 LGA population by risk level for four natural perils (bushfire, flood, storm and tropical cyclone) for New South Wales, Victoria and Queensland.

The risk ratings are useful in comparing areas for the same peril (e.g. comparing flood risk between two LGAs), however, the risk ratings for the various natural perils are not comparable to each other. That is, the risk or potential impact of earthquake in an extreme risk area is not the same as an extreme risk for bushfires.

Table 1: Bushfire Risk - LGA 2018 Population by Risk Level

Greater SydneyRest of NSWGreater MelbourneRest of VicGreater BrisbaneRest of QLD
Extreme------
Very High-9,500-247,000--
High318,000241,500223,000635,000-1,000
Medium488,0001,120,000273,000200,500225,500781,000
Low2,830,0001,361,0002,889,500491,5002,231,5001,601,500
No Exposure1,454,50017,5001,501,500--38,500

Table 2: Flood Risk - LGA 2018 Population by Risk Level

Greater SydneyRest of NSWGreater MelbourneRest of VicGreater BrisbaneRest of QLD
Extreme------
Very High67,000291,000-66,000-30,000
High1,298,0001,436,000170,000172,0001,471,000632,000
Medium1,566,000853,000761,0001,011,000829,0001,842,000
Low1,274,000118,0001,191,000377,000-1,000
No Exposure780,00020,0002,765,00035,000157,00022,000
Thinkstock Photos 471688415

Table 3: Storm Risk - LGA Population by Risk Level

Greater SydneyRest of NSWGreater MelbourneRest of VicGreater BrisbaneRest of QLD
Extreme------
Very High-----1,000
High-135,000---28,000
Medium512,000

1,470,000

-53,0001,997,0001,113,000
Low4,579,0001,144,0004,887,0001,608,000460,0001,280,000
No Exposure------

Table 4: Tropical Cyclone Risk - LGA Population by Risk Level

Greater SydneyRest of NSWGreater MelbourneRest of VicGreater BrisbaneRest of QLD
Extreme-----612,000
Very High-

96,000

--

616,000

1,291,000
High-155,000--

1,601,000

97,000
Medium-

168,000

--240,000118,000
Low-485,000---298,000
No Exposure

5,090,000

1,846,000

4,887,000

1,573,000

-

7,000

The population growth between 2008 and 2018 by bushfire risk level shows that the number of people in NSW living in LGAs with a very high and high risk of bushfires increased by 29,000. In Victoria, there was an increase by 111,000 people between 2008 and 2018.

Table 5: Bushfire Risk - Population Increase Between 2008 and 2018 by Risk Level

Greater SydneyRest of NSWGreater MelbourneRest of VicGreater BrisbaneRest of QLD
Extreme------
Very High-

(500)

-

16,500

-

-
High

13,500

16,000

14,500

80,000

-

-
Medium

30,500

95,500

65,000

17,000

33,000115,000
Low

528,000

106,500

639,000

78,500

415,500

212,000
No Exposure

209,000

(2,000)

293,500

-

-

2,000

Figure 2 presents the population growth in a selection of LGAs which have a very high and high risk of bushfire. These LGAs account for around 70 per cent of the increase (111,000 people).

Figure 2: Population Growth

SGSEP Populationg growth 01
SGS Economics and Planning

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SGS Economics Planning Terry Rawnsley
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Terry Rawnsley

National Leader for Economic & Social Analysis | Principal & Partner

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