Justin Delaney

Zurich Financial Services Australia (Zurich) and Mandala Partners (Mandala) has released Australia’s first Climate Risk Index for the Australian tourism sector.

Utilising Zurich’s global exposure analysis capability, the report analyses the impact of climate change on Australia’s top tourism sites – including major airports, national parks, beaches and museums – under different Intergovernmental Panel on Climate Change (IPCC) scenarios.

The Index – the first comprehensive, quantitative climate assessment of its kind for Australian tourism – finds that currently, half of Australia’s tourism assets are in an elevated risk category, facing considerable climate and natural peril risk.

This is set to rise to between 55 and 68 per cent of Australian tourism sites by 2050 under either an intermediate (two degrees Celsius of warming by 2041-2060) or extreme (three degrees) IPCC future climate scenario respectively. Under the more extreme scenario, 80 per cent of tourism sites will experience an increase in risk between 2025 and 2050.

Australia’s tourism industry plays an important role in the nation’s economy, contributing more than $170 billion in annual expenditure and over 620,000 jobs.

In terms of economic impact, around 30 per cent (up to 176,000) of these jobs nationally could be jeopardised – 65 per cent of which are outside our capital cities – in the event of a disaster scenario similar to that experienced following the bushfires of 2019-20.

The analysis also reveals that climate risk varies significantly by geography and site type (natural or man-made).

Queensland has both the highest number of sites facing elevated risks (79 per cent) and the most sites in the highest risk category (52 per cent) compared to any other jurisdiction. After Queensland, Western Australia and the Northern Territory have 69 per cent and 63 per cent of sites in the highest risk categories, respectively. Across the southern states, the risks were relatively lower.

By site category, the Index finds that all 31 of the busiest airports in Australia fall into the highest climate risk categories, including 94 per cent in the most extreme category, due to their geographic location and susceptibility to perils such as wind and storms.

Similarly, all of the analysed wine growing regions, botanic gardens, scenic roads & rail, and rainforests & national parks were found to be in the highest climate risk categories. Natural geological formations, museums, galleries and stadia face relatively lower risk.

Justin Delaney, Chief Executive Officer, Zurich Australia & New Zealand, said: “Australia’s tourism assets not only play a significant role in an increasingly diverse visitor economy but are collectively central to our national identity.”

“This analysis, conducted in partnership with Mandala, serves to highlight the critical importance of improving resilience across our tourism assets, both to ensure the sustainability and longevity of these sites and to minimise downstream economic impacts – particularly in regional areas – on employment, business formation, consumption and investment.”

“More broadly, it also serves to highlight the quantum of data and insights that are available to understand the prevailing risk environment in order to shape and prepare our collective response,” Mr Delaney said.

Adam Triggs, Partner, Mandala Partners, said: “In Australia, we have focused a lot on how to reduce carbon emissions but have focused less on how to prepare for the physical impacts of climate change that we are already seeing: tourist attractions destroyed by bushfires, tourism sites made inaccessible by floods, man-made attractions damaged by hail and airports closed because of extreme winds”.

“A key reason for Australia’s more limited focus on the physical impacts of climate change is a lack of data, and this is exactly the gap that our partnership with Zurich seeks to fill,” Dr Triggs said. 

The release of the Climate Risk Index for the tourism sector builds upon and follows a similar analysis by Zurich and Mandala on the climate risk facing the Australian energy generation sector in November 2023, the first assessment of its kind for an entire critical infrastructure asset class.

Read the report. 

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Justin Delaney

Zurich Financial Services Australia (Zurich) and Mandala Partners (Mandala) has released Australia’s first Climate Risk Index for the national energy generation sector.

Utilising Zurich’s global exposure analysis capabilities, the report analyses the location of every energy generation asset across the country to form insights on the impact of climate to the grid under different Intergovernmental Panel on Climate Change (IPCC) scenarios.

The index – the first comprehensive, quantitative climate assessment of its kind for an entire critical infrastructure asset class – found that under a likely intermediate climate scenario that assumes two degrees Celsius of warming by 2041-2060:

• currently more than a quarter of Australian energy generation is in the three highest climate risk categories
• this is set to rise to around 35 per cent of generation capacity by 2050, and
• nearly 40 per cent of generation assets will experience increased climate risk over this period.

Under a more extreme climate scenario that assumes four degrees Celsius of warming over the same period, 43 per cent of Australia’s generation capacity will fall in the three highest risk categories by 2050, including 11 per cent of generation in the highest risk category.

The analysis also reveals that risk varies significantly by geography and generation type.

Western Australia and the Northern Territory, whose electricity grids run separately from the National Electricity Market, are particularly vulnerable. Based on the Index, 96 per cent of generation in the NT is in the three highest risk categories, including 85 per cent of generation in risk category four. Similarly, WA and Tasmania were found to have 70 per cent and 52 per cent in the three highest risk categories, respectively. Across the eastern and southern States, the risks were relatively lower.

By generation type, solar power and natural gas face significantly higher climate risks than other generators. The index found that 95 per cent of dedicated solar generation sites – due to their susceptibility to perils such as storms and hail – and 54 per cent of natural gas plants were in one of the three highest risk categories. Other forms of renewable energy like wind and biogas/biomass sat alongside coal with relatively low risk.

Justin Delaney, Chief Executive Officer, Zurich Australia & New Zealand, said: “Australia’s energy generation assets underpin almost every aspect of economic and social interaction in the 21^st century, however, much of the focus to date has centered on the risk of the energy grid to climate change, rather than on the risk of climate change to the grid.”

“Insurers are on the front line of risks relating to climate change, including natural disasters and extreme weather events. Undoubtedly therefore, the planet’s sustainability and actions to transition to renewable energy sources remain a critical priority.”

“This analysis hopefully represents a constructive input into achieving an appropriate and resilient energy transition. More broadly, it also serves to highlight the quantum of data and quality of insights that are now available to understand the prevailing risk environment so we can shape and prepare our collective response,” Mr Delaney said.

Adam Triggs, Partner, Mandala Partners, said: “This report reminds us that there is no part of our economy or society not impacted by the effects of climate change. Successfully navigating the energy transition is essential for our economy and our environment, but it will also be complex and uncomfortable.”

“As our report shows, our energy grid needs to be more resilient to climate events. Proper site selection and planning for new generation is critical given variability in hazard type and severity is significantly impacted by geography and topography. Beyond this, adaptation measures are also important for building resilience, particularly for existing sites.”

“Mandala is proud to have partnered with Zurich to produce this report, in what we see as an important contribution to the growing evidence base in how to support the energy transition and ensure it is as effective and efficient as possible,” Mr Triggs said.

Read the full report.

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