Australians’ well-documented affinity for sun, surf and sand continues to fuel the growth of the coastal property market. This growth defies rising interest rates and growing evidence of the impact of climate change on people living in vulnerable coastal locations.
People in these areas find it harder to insure their properties against these risks. Insurers see the Australian market as sensitive to climate risks, as the effects of climate change can trigger large insurance payouts. They price their products accordingly.
Clearly, there is a large disconnect between the coastal real estate market and the impacts of climate change, such as increasingly severe storms, tidal surges, coastal erosion and flooding. There is no shortage of reports, studies and analyzes that confirm the climate risks we are already living with. Another alarming report on the state of the climate was released last week.
We continue to talk about achieving net zero global emissions. But this “blah blah blah” masks the fact that climate effects are already with us. Even as we make deeper and faster emissions cuts, as we must, our world is now warmer. Australians will feel the effects of this warming.
Finally, we cannot afford the price of business as usual as embodied by so many coastal developments.
Read more: State of the climate: what Australians need to know about the major new report
The risks worry banks and insurers
In Australia, the disasters and environmental collapse we are experiencing will only get worse. While a wide range of businesses see this as opening up new market and product frontiers, the truth is that climate change is creating a fundamentally uncertain, unstable and difficult world.
Banks have a central role in addressing climate risks. They are exposed to climate risk through residential loans for properties that are vulnerable to climate impacts and now face insurance pressures.
It is estimated that one in 25 Australian homes will be uninsurable by 2030. The Australian Government risks bearing the high costs of supporting the underinsured or uninsured – otherwise known as the ‘insurer of last resort’.
This costly legacy shows why planning decisions made now need to consider the impact of climate change and not just in the wake of disasters.
Rapidly escalating impacts and risks across sectors require us to take mitigation and adaptation measures at the same time, urgently and on a large scale. This means reducing emissions to negative levels – not just reaching net zero and transitioning our energy sector, but also actively removing greenhouse gases from the atmosphere.
We also need to address climate change risks already locked in the system. We need to make substantial changes in the way we think about, treat, value and act on these risks.
Read more: How insurers can better respond to natural disasters
As the climate changes, so does our coastal dream
The consequences of a warming climate, including reaching and crossing tipping points in Earth’s weather systems, are occurring earlier than anticipated. The behavioral, institutional and structural changes required are vast and challenging.
People are often attached to places based on historical knowledge of them. These lived experiences, while important, inform a worldview based on an understanding of our environment before the rapid onset of climate change. This may skew our responses to climate risk, but worsening climate impacts are outpacing our ability to adapt as we might have in the past.
Institutional signaling, such as Reserve Bank warnings, supports greater public awareness of climate impacts and risks.
When buying a property, people need to consider these factors more seriously than, say, having an extra bathroom. Mandatory disclosure of regional climate change impacts could inform buyers’ decision-making. The data and models used should be clear about the validity and limitations of their scenarios.
Read more: “Building too close to water. It’s ridiculous!’ Discussions about procurement after the floods show that climate adaptation needs to be taken seriously
Fair and nature-based solutions
In recent years, it has increasingly focused on nature-based solutions. This approach uses natural systems and tools to address societal problems, such as the enormous and complex risks posed by climate change. Indeed, many indigenous peoples, communities and ways of knowing have long recognized the fundamental role of nature in making good and secure lives possible for people.
Nature-based solutions offer a suite of valuable tools for fixing the problems we already face on our coasts. For example, in many contexts, building hard levees is often a temporary solution that instills a false sense of security. Planting soft barriers such as mangroves and dense, deep-rooted vegetation can provide a more sustainable solution. It also restores fish habitat, purifies water and alleviates flooding.
Recognizing the well-being of people and nature as interconnected has important implications for decisions about relocating people from high-risk areas. Effective planned withdrawal strategies must not only move people out of harm’s way, but also consider where they will move and how precious ecosystems will be protected as demand for land supply changes. Nature-based solutions should also be included in withdrawal policies.
As the Australian Academy of Science’s Just Adaptation Strategy explains, effective adaptation also incorporates equity and justice into the process. Research on historical retreat strategies has shown that failure to properly consider and respect people’s choices, resources, and histories can further entrench inequities. Giving people moving into a new home as many options as possible helps navigate an emotional and highly political process.
Read more: After the floods, the troublesome but necessary case for managed withdrawal
We all need to find the courage to have difficult conversations, seek information to make wise choices, and do what we can to address the growing climate risks we face. As climate change activist Greta Thunburg says:
“Hope is not passive. Hope is not blah blah blah. Hope tells the truth. Hope takes action. And hope always comes from people.”
Acting on this kind of hope can set us on an entirely different and more positive path.
This article is republished from The Conversation is the world’s leading publisher of research-based news and analysis. A unique collaboration between academics and journalists. It was written by: Tayanah O’Donnell, Australian National University and Eleanor Robson, University of Western Sydney.
Tayanah O’Donnell has previously received research funding from the AMP Foundation, the BHP Foundation, the Lord Mayor’s Charitable Trust, the Institute of Australian Geographers, the University of Western Sydney, the University of Canberra and state and federal governments. These grants have supported over 13 years of research in climate change adaptation and sustainable development, including managed retirement, climate policy and climate risk obligations and disclosures. He is Deloitte Australia’s climate and sustainability partner, where he leads the climate practice in Canberra. She is also an Honorary Associate Professor at the Australian National University.
Eleanor Robson is a PhD student at the University of Western Sydney and a manager in Deloitte’s risk advisory practice. Eleanor previously worked for an Australian Labor Party MP.