Climate adaptation – a multi-billion-dollar problem invisible in election 2025

As Australia enters the final stage of the 2025 federal election campaign, there has been no discussion about how the major parties will deal with the impacts of climate change on people, their assets, our infrastructure and environment: neither dramatic extreme events such as bushfires, floods and cyclones, nor slow-moving impacts such as sea level rise and heat impacts on productivity and health.

On the eve of the campaign, independent senator David Pocock described both parties as negligent for not sharing risk assessments on “terrifying” threats from climate change to Australia’s national security.

“We’re woefully underprepared for what’s coming”, he told the Saturday Paper after a confidential briefing, “It’s no surprise that the government has been sitting on this”.

These alarm bells are not just in secret reports. Treasury’s 2023 Intergenerational Report highlighted “profound impacts” on the economy that would reshape Australia’s industry mix. Sustained action was needed on adaptation and mitigation to maintain productivity and financial sustainability. Investment in adaptation was cost effective; “Effective investments in resilience will … reduce costs to the economy in the long run,” it read.

Treasury says a temperature rise of 3°C or more than 4°C by 2063 will have significant economic cost, potentially reducing output by between $135 billion and $423 billion in the absence of adaptation measures. Over the same period, crop yields from agriculture could be 4% lower without adaptation. Tourism could be affected by higher temperature, natural disasters and loss of sandy coastline due to erosion.

Increasing frequency, intensity and duration of natural disasters will reduce physical capital (including infrastructure), decrease productivity, disrupt economic activity and supply chains. Natural disasters are expected to add $130 billion to the budget for disaster relief over 40 years. Insured losses from natural disasters have shown a steady increase over this century in addition to health, social and environmental impacts.

None of these threats and challenges have been canvassed in the campaign. Early in its first term, Labor promised a national climate risk assessment and a climate adaptation plan. Both were due to be delivered before the end of 2024. The deadline passed and nothing appeared beyond the discussion documents released earlier in the year. There is no promise or commitment either will be released after the election.

While many commentators have dubbed this a ‘cost of living’ election, there has been no discussion of how climate is driving up insurance costs and insurance costs are, in turn, a major driver in the rise of the consumer price index. Labor and Liberal campaigns devote extensive policies to cost of living, but neither side mentions climate as a driver – be it due to insurance costs, construction costs or disrupted food supply chains.

The Liberal and National parties have released a policy to “make communities safer” but this does not include safer from climate impacts because there is no mention of climate impacts Their promise to freeze changes to the National Construction Code could block efforts to make homes safer and more climate resilient.

The National Party has a “grow a stronger regional Australia” policy but it does not mention one of the major threats to many regional centres; the inability to obtain affordable insurance. Mid-campaign (19 April), the ABC reported the case of Melinda Byrne of flood-hit Thargomindah (Qld) who had only recently been forced to cancel flood insurance due to escalating costs; most of the town was in the same position.

On the eve of the election, The Townsville Chamber of Commerce released a report on impacts and remedies for the insurance cover in Northern Australia. Hit by a string of extreme events, insurance was becoming unaffordable and unattainable across northern Australia from Townsville to Broome leaving businesses exposed and vulnerable; without insurance investment funds and loans are virtually impossible.

During the campaign, the Climate Council updated its climate risk analysis (15 April) identifying more than 652,000 properties (4.4% of all properties) at high risk from climate hazards and likely facing insurance stress.

The report, “At our front door” identified the ten most at-risk federal electorates based on the number of properties at high risk; five were ALP-held electorates and three were held by the National Party.

The Greens, hoping to snatch the most high-risk seat in the Climate Council’s analysis, the seat of Richmond in northern NSW, is the only party to have produced a set of adaptation and resilience policies. Sadly, the policies are piecemeal and, in the manner of so much of the approach to adaptation, simply reactive to the flooding disaster seen in the seat of Richmond particularly around Lismore.

It is not just in the north that the ability to manage climate risks is failing.

Victoria’s recent draft 30-year infrastructure strategy said government has not set aside any funds for adaptation.

“Infrastructure managers are not confident the government will fund adaptation projects. Managers are reluctant to use limited resources to look at climate risks and adaptation actions for no result.” (p.94)

This is in a state embarking on a major review of hydrological modelling to better understand and take account of extreme weather events. In the few areas where modelling has already been reviewed, it has caused anxiety among residents who did not expect to be in a flood zone. The City of Yarra found that an additional 22,000 homes were in areas that could be subject to floods after its review.

The challenges facing infrastructure were also highlighted recently in a report by Hong Kong-based CWR on the proposed sale by CK Hutchinson of its network of 43 global ports. It found 84% of these ports, including Sydney, were vulnerable to a one-meter sea level rise which, based on current emissions, could happen within three to four decades. Adaptation costs are likely to be hundreds of millions for each port.

With the change in administration in the U.S., we can expect to see previously pessimistic scenarios about climate become mainstream. Not only is the administration working to increase production and consumption of fossil fuels, but it is also poking the eyes out of science agencies that monitor impacts. This change in direction will likely influence other world leaders wavering on climate commitments.

Climate adaptation faces not only political constraints but institutional constraints from agencies that are themselves maladapted for the challenges of climate change. Difficult decisions such as “managed retreat”, prioritising actions due to uncertain risk and unknown timeframes and problems that are systemic with multiple dimensions are not suited to existing government and governance structures.

In a recent submission to the Victorian Government review of its climate strategy, I argued that new agencies and governance arrangements would be required. This view has been reinforced through our Green Lab adaptation roundtables. In the next series of roundtables, we will look more specifically at institutional constraints to adaptation.

The tools needed to manage climate adaptation are not new. They exist. What is lacking is political leadership. What is needed are new institutions that are not constrained by disciplinary silos and institutional lock-in. What is most needed is an ability to engage communities and relevant actors in adaptation and to support local adaptation priorities with finance, scientific and technical support.