Agriculture, health, critical infrastructure, water resources and the economy, trade and finance are among 11 priority areas at significant risk from climate change, the inaugural National Climate Risk Assessment (NCRA) has found.
The first phase of the report, released earlier this month, identified 56 nationally significant climate risks facing the country, 11 of which were regarded as priorities and would be examined in greater detail in the second phase.
The Federal Government also released a public consultation paper to inform the development of a National Adaptation Plan, which will establish a comprehensive framework for adapting to the significant climate risks identified by the NCRA.
Assistant Minister for Climate Change and Energy Jenny McAllister said the first phase of the NCRA was a key milestone on the way to a comprehensive national adaptation response.
“The (NCRA) is long overdue. It provides an evidence-based national picture of the emerging risks climate change poses to Australia’s community, assets and services,” Ms McAllister said.
“We will continue to do everything we can to reduce emissions and limit the impact of climate change. However, we must also take steps to protect Australia’s economy, society and natural environment from the changes scientists tell are already locked in.”
Comparable countries to Australia, such as Canada, Germany, New Zealand, Spain and the UK, have undertaken adaptation plans in line with legislative requirements in regular cycles with mid-cycle review points to monitor and evaluate action taken, according to the consultation or issues paper.
The countries also provided for updated climate science and risk assessments to help inform implementation of current and future measures.
The paper said significant resources would be required to adapt and build resilience in Australia, and public funding alone would be insufficient.
While governments had a leadership and coordinating role, it was generally more appropriate for businesses and individuals to understand and manage their own risks.
Investors could secure their assets, unlock new investment opportunities and safeguard the long-term financial wellbeing of their beneficiaries.
The paper said catalysing investment in adaptation and resilience at scale would require supporting data, as well as a deeper level of understanding, to address existing barriers.
Analysis by the third Climate Change Risk Assessment in the UK found that many early adaptation investments delivered high value for money and important shared benefits, including direct economic gains.
The benefit-cost ratios typically ranged from 2:1 to 10:1, so that 1 pound invested in adaptation resulted in 2-10 pounds in net economic benefits.
However, there were a range of barriers related to markets and revenue, information and the development of bankable projects.
In Australia, the issues paper said there was early feedback from some stakeholders that the Clean Energy Finance Corporation could play a role in adaptation investment.
In closer examination of the economy, trade and financial system – one of the 11 priority areas – it also said that “mainstreaming” adaptation would be underpinned by effective disclosure and management of climate risk.
Measures to be implemented would include regulators supporting participants in financial markets to manage the financial risks and opportunities associated with climate change.
The regulators would help improve understanding of the impact of climate change on the economy and financial system, and make sustainability-related information more transparent and consistent.
The next iteration of the 2022 Climate Vulnerability Assessment of banks, which measured the potential impact of physical and transition risks to the five biggest banks and the financial system, would be an examination of access and affordability issues in general insurance.
To drive investment in a sustainable economy, the government was also developing a sustainable finance strategy, with key elements including emissions reduction and adaptation.
The strategy was built on the government’s work to implement mandatory climate-related financial disclosure for large companies and financial institutions.
“Sustainable finance taxonomies provide consistent, scientifically rigorous criteria to evaluate whether economic activities are aligned with or contribute to climate and other sustainability outcomes,” the paper said.
“The government is supporting the development of an Australian sustainable finance taxonomy as a key foundation of the sustainable finance strategy, with an initial focus on climate mitigation objectives.
“Building on feedback of sustainability data challenges and priorities for financial system participants, the Treasurer will request that the Council of Financial Regulators (APRA, ASIC, the Reserve Bank and the Australian Treasury) conducts a detailed assessment of options to address key sustainability-related challenges faced by financial system participants.”
To address insurance affordability and availability issues, the issues paper said the government and insurers were examining natural hazard risk to lower risk for communities and improve the nation’s resilience.
The partnership would seek to understand how insurance risks could be reduced through risk mitigation, and support the development of a centralised data base on affordability and availability.
Submissions on the issues paper close on April 11.
