Australian cities face significant economic risk from natural disasters due to building and infrastructure damage and lost productivity, according to a new report which calls for better disaster mitigation, land-use planning and stronger building codes.

In its latest report prepared in conjunction with SGS Planning & Economics, Insurance Australia Group (IAG) has mapped each of the regions throughout Australia and each of their economic exposure to various types of natural disaster.

It found that:

• $326.6 billion (20.3 per cent of the economy) and 3.9 million people (17.3 per cent of the population) are located in areas with extreme risk to tropical cyclones
• Areas with high and extreme risk of bushfire generated $175 billion (10.8 per cent) worth of the country’s GDP and are home to 2.2 million people
• Four per cent of GDP and 24.9 per cent of the population live in areas with high to extreme risk of flood
• Storms can cost the economy around $30 million a day in lost income when impacting the Melbourne or Sydney CBDs and their 450,000 and 500,000 workers respectively.

The report found that major population areas face significant levels of exposure to natural disasters.

Parts of the Melbourne CBD, for instance, are at risk of flooding, which has impacted the transport network on several occasions during recent times.

Parts of Sydney, too, are vulnerable to transport disruption because of storms.

Meanwhile, the report found that in a number of cases, heavy areas of building activity have actually occurred in areas which are of very high risk.

Despite the areas being subject to extreme levels of tropical cyclones, storms and floods, for example, the combined population in the local government areas of Brisbane, the Gold Coast, Townsville and Moreton Bay increased by 450,000 over the period spanning 2001 to 2015.

As governments come under growing pressure to release more low-cost land in high-risk areas, the report warned that the numbers of people who are vulnerable could increase.

The report also cautioned that some communities which are at high risk may lack the economic resources needed to respond appropriately.

The communities of Moore Plains in New South Wales and Bundaberg in Queensland are at high risk of flooding but rank low on ABS indices for economic resources and economic resilience, whilst areas such as Hepburn and Central Goldfields in Victoria are low on economic resources but considered to be at high risk of bushfire.

Terry Rawnsley, national leader of economic and social analysis at SGS and lead author of the report said the nature and prevalence risk varied widely according to different regions.

“What we found was a complex patchwork of perils impacting economic activity and people’s lives across Australia,” Rawnsley said. “Tropical cyclones and flood impacts our mining industry in the north and west, bushfire is a high risk in Victoria, and storms pose a significant risk to our knowledge economy in the major CBDs of Sydney and Melbourne.”

In its report, IAG called for more funding to be directed toward mitigation as opposed to recovery, better land use planning and stronger building codes.

It also called for property owners to prepare by checking insurance coverage, preparing their property through measures such as cleaning gutters, and building more resilient housing such as through raising homes or upgrading roofing or windows.

Where the Danger Lies:

According to the report:

• Unsurprisingly, cyclone risk areas are primarily concentrated around coastlines in Queensland, the Northern Territory and the northern part of Western Australia.
• Flood risk is primarily concentrated in eastern states along with the tropical northern part of the Northern Territory. Particular hotspots occur in northern New South Wales and southern Queensland.
• Storm risk hot spots primarily occur in the northern part of the country along with a section spreading roughly along the east coast from north-east Victoria up to central Queensland.
• Bushfire risk hot spots are varied, but include most of Western Australia (esp. in the south-east and on the northern tip) as well as central Australia, many parts of Victoria and some parts of coastal Queensland and NSW.
• Earthquake risk patterns are varied, but hot spots include much of Western Australia, the central part of the Northern Territory, much of South Australia, parts of Victoria, New South Wales and south-east Queensland as well as the top of northern Queensland.