Australia is promising $2 billion for the fires. I estimate recovery will cost $100 billion

That’s the self-explanatory headline for a piece I wrote for CNN Business in the US. Major contributors to this number, beyond the direct loss of property include

  • damage to the tourist industry (I estimate up to $20 billion)
  • health effects, including 1000 or more premature deaths from smoke (up to $10 billion)
  • need for massive expenditure to deal with future disasters
  • ecosystem destruction and wildlife deaths (impossible to value, but catastrophic)

27 thoughts on “Australia is promising $2 billion for the fires. I estimate recovery will cost $100 billion

  1. This means the postponement of the second airport for Sydney. There will be no money left for about three years for this essential infrastructure project. Also the Sydney Metro extension will have to be mothballed.

  2. There is no need for panic if the government accepts the principles of MMT. Can you imagine that happening?

  3. This $100 billion estimate is very significant and at least ball-park accurate in my lay opinion. The itemization of estimates and reference to costing standards give it full credence. Then J.Q.’s reputation and standing only add to the credibility of these estimates as he is a top Australian economist and has extensive qualifications in agricultural and environmental economics.

    The fact that, “The need to rebuild to a higher standard in preparation for future disasters will add greatly to the cost,” is a key point. We need to build fire-proof and/or fire-resistant houses, structures, infrastructures, towns and cities. Smoke-proofing domiciles, offices, warehouses and factories as far as possible may also become an issue.

    Australia’s GDP was estimated at A$1.89 trillion as of 2019. That’s A$1,890,000,000. Our annual GDP growth is 2% in a good year. That’s a fairly generous estimate these days. That’s $94.5 billion. So spring bush-fires and one half of a summer of bushfire disasters has already more than wiped out our economic growth. If these and similar disasters become an annual event, Australia’s days of economic growth are over, permanently.

    If the world goes over 1.5 degrees C warming and especially if it goes over 2.0 degrees C warming then such bush-fires and/or other events equally as damaging (droughts, floods, cyclones, severe storms) will very likely become near annual events happening in wide regions of Australia every year. This is the climate change future.

    It was always a lay down misère that growth would cease in Australia and in the world due to limits to growth, limits to resources and limits to the biosphere’s capacity to absorb wastes and provide bioservices. However, instead of setting ourselves for a steady state economy, we tried to grow endlessly and have thus ensured long-term de-growth and even possible collapse due to overshoot. The best we can hope for is a managed decline to a lower sustainable base.

    Clearly, Australia must end net immigration, end coal mining, and greatly reduce reliance on fossil fuels for private transport. At the same time it must increase spending on fire-resistant infrastructure and set up a national fire service. Albanese’s call for usual business to be suspended at the start of Parliament to recognize and mourn losses and to honor firefighters is completely pointless symbolism. If he wanted to do something real he would announce a policy for the ALP to refuse all fossil fuel industry political donations and to phase out coal mines, coal export, and even eventually most fossil fueled private transport.

    But just like the LNP, the ALP intend to do absolutely nothing on climate change issues. The LNP (some of them) say climate change is real (maybe) but it’s business as usual anyway. The ALP say climate change is real, we will pay it lip-service, do a little window-dressing and do nothing substantial. This generation of old fools will have to pass away. And they will, fairly quickly. Old lungs and old hearts don’t handle smoke very well. Poetic justice.

  4. One could add in ongoing agricultural losses. Grain production is down around a quarter due to the drought. The fires will exacerbate and prolong that (loss of buildings and machinery, loss of tree cover – hence topsoil loss, loss of livestock and much more).

    The central human concern about climate change ought to be ‘at what point do we break agriculture?’ – not in the sense that it becomes impossible but that food surpluses disappear. I thought 3 degrees, but looks like 1.5 will do it.

  5. The celebrities have pledged $200 million, including $1 million for Warnie’s cap. Only $99,800,000,000 to go.

  6. It is heart warming to see our military doing something good, I’m not sue I can remember the last time they did. Morrison stayed in the background for so long ,unable to lead. This has made a bad ,and probably lasting, impression on average people who dont follow politics much. Normally it is a public relations bonanza for a PM to jump up and play national grief counselor but Morrison just ducked ,weaved, deflected ,ran, and hid.

  7. Peter T at 1:20 pm – “One could add in ongoing agricultural losses. Grain production is down around a quarter due to the drought. The fires will exacerbate and prolong that (loss of buildings and machinery, loss of tree cover – hence topsoil loss, loss of livestock and much more).”

    Not mentioned by Peter, but tied in with the loss of trees is the multiplier of loss of future rainfall.

    Forests make it rain.

    Forest tree cover re-establishment and agricultural/silvicultural production will decline with lowered rainfall. But wait, there’s more…

    The reduced rainfall will adversely affect a wider area than that of the forests destroyed this time, so overall next time the forests that burn will likely be even more susceptible to extreme fires and be affected worse than if these forests being obliterated by fire now had not burned.

    Rinse and repeat, or more like blow-dry and repeat! More forests than otherwise shall likely burn lowering rainfall further causing yet more forest to burn, and so on, and agricultural production on a wider scale including dry land, irrigated and pastoral well outside the spreading area of formerly rainmaking forests shall likely continuously decline in concert…

    Big Australia has BIG PROBLEMS looming just around the corner. Just as life may sometimes imitate fiction we may heed the Lorax, or let the real hunger games begin.

  8. The problem with all the long-term solutions, from reducing emissions to planting forests, is that they vastly exceed the time frames of human planning. Well, Australian government planning, but let’s be generous and assume they’re human. I’ve had this explicitly on TheConversation, where someone is arguing that we should focus all our efforts on finding better ways to put fires out rather than making them less likely to start.

    If you had sat down 500 years ago, or even 200, and said “we need a warmer climate and I have a cunning plan” you would have been doomed to failure. It’s even possible that someone did that. We just don’t plan at those scales, not even in the general sense of “please trend more or less this way”. As any economist will tell you if you frame the question as “how do we keep the economy growing”.

  9. Moz,

    You are right. We were given full warning in the 1960s, 1970s and 1980s from Silent Spring to Limits to Growth to multiple climate change warnings.However, we did almost next to nothing except to accelerate growth, consumption and environmental destruction.

    Our planning was wrong. We planned to grow forever and we planned to ignore environmental signals forever. Why was our planning wrong? At the human political economy systems level, capitalism is the wrong system for long term planning with an eye to the climate and environment concerns. However, it goes deeper than that as you hint. Planning that far ahead (the full 200 year example) requires more foreknowledge, even scientific foreknowledge, than we have. The first person to consider burning a lump of coal could not know or say, “I better not do this. It will lead the industrial revolution and climate change.”

    However, we did have about 20 years of usable climate change warning from say 1970 to 1990. But we did not act. The system (capitalism) was incapable of acting as outlined above but at the geopolitical level great nations were also incapable of acting. No great nation was going to deliberately de-grow its economy and become weaker than its rivals. Great power rivalry ensured attempted endless growth was the only geostrategic choice. At an even deeper level humans are evolutionarily fitted to seek proximal and near term gains and we do not have the senses (without science and tech) to detect long horizon problems. Most humans on the planet, even in developed nations are still science illiterates. We discount future impacts with our biological self-interest instincts and general heuristics. We are short-sighted and only quasi-rational.

    We need a political economy system which incorporates scientific look-ahead routines not market value look-ahead routines. Anyone who understands even the basics of computer AI for array games (chess, go, real-time-strategy) will understand what I mean here. Scientific look-ahead routines like climate system models (which are really array simulations if you look at them in fine detail) can better predict what will happen and what we need to do. They use real scientific international units to measure real things. They do not use a formal numéraire (e.g. dollars) to measure non-real subjective values. Money does not measure anything real. Hence it is unusable to look ahead (via markets) and make sensible decisions about real quantities, real physical forces and real futures as opposed to market futures. Using markets to decide the real future is like a person making a computer chess game but giving the pieces values based on how much he likes the aesthetics of their carving. Such values do not give unit values which match the values implicit and generated by movement rules governed by the array tables of differences.

    This mandates that we regulate (via laws and regulation) what is permitted and what is not permitted and only use markets to trade in what is permitted. It’s a clear proof that markets cannot be permitted to value everything but only to value what is ethically permitted and provably scientifically safe.

  10. > This mandates that we regulate (via laws and regulation) what is permitted and what is not permitted

    One optimistic sign would be the various governments in Australia getting together and deciding that certain areas are too prone to bushfires to contain people, then acting to make people not live there. Hopefully there are bureaucrats squirrelled away somewhere beavering away on plans for the fire areas (ie, everything above the low tide line).

    More likely I think we will see instead is a great refuelling so that next fire season there are a whole lot of shiny new things to go up in flames.

  11. Also the Department of Genuine Satire has started saying “Governmunted”. Or perhaps I have just started noticing. Either way it seems like a sadly accurate description of the state of our political leadership.

  12. I was going to donate as much as I could afford to help recovery efforts. Then I realised that it would be less than 1.3% of the total needed so I thought I wouldn’t bother and would just keep my money for myself. My wife pointed out: “what if everybody thought like that?”, and with apologies to Joseph Heller, my reply was: “well I’d be crazy to think any other way wouldn’t I?”

  13. Dave – I’m going to stop paying 1.3% tax. Thisbargument will be folklore now .

    Subtle but disasterous change for NZ glaciers…

    “Before and after satellite imagery show soot has visibly darkened New Zealand’s glaciers near Mount Edward. (Gif: NASA Earth Observatory)

    “What’s happening in Australia—and now a 7,000-mile stretch of the Southern Hemisphere—is the climate crisis in action. Rising temperatures have pushed Australia into an unsteady state, one that’s hotter, drier, and more flammable (and these fires will end up fuelling the crisis to even worse extremes).

    “There’s been a lot of talk about treating the climate crisis like a war. And it feels like the destruction in Australia and smoky fallout are starting to make that analogy more apt.”

    Gif and links to Nasa / noaa.

  14. Thanks for doing this work, John. It’s very useful to have a number to shout back at people shouting about the cost of action to reduce carbon emissions.

  15. Moz has hit the nail on the head. We need much stronger national laws, over-ruling state and local laws. banning building on flood plains and in fire prone areas. Basically, fire prone areas are the bush, all bush, everywhere in Australia. Where towns, suburbs and infrastructure including main roads and highways are adjacent to bush, the bush needs to be cleared to a distance of at least 100 meters.

    In addition, just as we have building codes for cyclone rated houses in tropical areas and severe storm ratings in other areas, we need fire-rated houses. Any new house within 1 kilometer of bush will need a steel frame, fire resistant cladding, fire shutters, no standard gutter system (gutters collect leaves). It will need a roof sprinkler system and a fire cellar for survival. Either that or build underground. If the costs are too great then don’t build in such areas.

    Instead, nothing will change. Lots of new fire-fodder infrastructure will be built, people will forget because they have 5 week memories (except for those who actually went through catastrophic fires) and this will all happen again.

    If you interpret Scott Morrison’s interview on the ABC into plain talk, he is saying, “We are not going to change anything. Jobs are more important than the environment.” Of course, when the environment is completely wrecked there will be no jobs at all, probably because there will be no people. But Morrison and his supporters are too ignorant to realize that or too mendacious to admit it.

    The greatest irony is that Australia will return to the hunter-gatherers in the long term. The descendants of the indigenous people of Arnhem Land probably have more chance of still being around in a 1,000 years times than is the case for any other groups on this continent.

  16. Peter T asks; “The central human concern about climate change ought to be ‘at what point do we break agriculture?’”. One of “the” questions, which I would like answered “soon”.

    “Global food production at risk of simultaneous heat waves across breadbasket regions

    “A twenty-fold increase”

    “We found an underexplored vulnerability in the food system: when these global scale wind patterns are in place, we see a twenty-fold increase in the risk of simultaneous heatwaves in major crop producing regions,” said Kornhuber, who is also a guest scientist at the Potsdam Institute for Climate Impact Research (PIK). “During these events there actually is a global structure in the otherwise quite chaotic circulation.”

  17. Ikon…. good analogy;
    “Using markets to decide the real future is like a person making a computer chess game but giving the pieces values based on how much he likes the aesthetics of their carving.”.

    Or deciding by perception of your avatars ‘skin’ for a character in a digital game.

  18. One hard limit is about 60°C when chlorophyll decomposes. After that you don’t really have plants any more.

    My lawn turned brown the day we hit 50°C out here, and it’s take a few cooler days (30-35° {cough}) for some of the plants to recover. I suspect that most of the root systems are still alive, but you can’t really grow crops in those conditions. So as our summers more reliably have 50° days we’re going to lose a lot of grass cover, which means fewer ruminants (less methane, a win-win?)

  19. Ikonoclast- “The descendants of the indigenous people of Arnhem Land probably have more chance of still being around in a 1,000 years times than is the case for any other groups on this continent.”

    Climate destruction models predict the top end will be impossible for sustained human life… ages and ages on end of +50°C… maybe sooner rather than later. OTOH, ‘out back’ well further south and situated upon a large artesian basin, housed underground, with virtually still unlimited renewables powered irrigation and sprinkler/mister cooling above ground, permaculture under shade as necessary, and with trusty home made ball-shot, powder, and long long arms, who can say? Maybe 2000 years?

  20. JQ or someone – how much can these companies afford please? Or do we just say 51% of shares are now the Commonwealth of Australia’s, until equibrium reached that WE choose?

    “…Fossil fuel companies should foot the bill for the fires, not ordinary taxpayers. … ”

    [ 4 mining companies] racked up $54 billion in total income over the past five years and paid zero income tax in Australia, according to Tax Office corporate tax data.

    . .. They are behaving better than ever on the tax front, to pay them their due. Bear in mind however the enormity of this enterprise; its 16 coal mines, 18,000 workforce and $75.5 billion in revenue, and years of paying nothing, and the tax take is tiny.

    “Some suggestions:Introduce a fossil fuel levy at one per cent of total income.Cap the timeframe to use tax losses at five years (rather than infinity) to prevent the likes of Exxon paying zero tax on $42 billion of income over five years.Ban political donations to ensure politicians don’t kow-tow to corporations.”

  21. Moz. Dont say where you live. What area are you to get 50!? I am in central west nsw.

    I haven’t watered front lawn. Brown to dirt. Back lawn I water for kids. But still… I got an electric mower… and I have mowed once this year – usually 4-8x. It just does not want to grow. Large part of lawn – kikuya – soon to be natives. Vege garden – I gave up watering – sad.

    Verge – I left it as natural. Never water or mow. Nice little native orchids. My neighbors and real estate agents prompt me to “clean up”.

    Cost to cease kikuyu & natives – $100 max + elbow grease. Bargin. Now x that by 9m houses = $900,000,000. JQ may need to revise his estimate up.

    Svante – Alice Springs residents have been suggested as first “climate refugees” as 50 days over 40 in 2019.

  22. Last summer +50C ground temp near Bourke. At those ground temps trees die, they call it hydraulic fracture.

    Around my place, hunter valley NSW, I’m seeing a lot of sudden plant death but not of species indigenous to the area. This is a slower process, they weaken and then get taken out by insects or disease. Hillsides of scrubby deformed trees with hardly a leaf just hanging in there.

    With climate change plants less able to handle the stresses will just die and this is a global phenomenon.

  23. KT2, with respect indigenous tech belongs to environmental conditions that are radically different to those soon to come. If a low humidity climate and water is available (aquifer/artesian) and renewable power, with appropriate building and ag/hort tech as givens, as they are, then life ongoing and horticulture are certainly possibilities. Human/animal habitations may be underground, or earth covered, evaporative cooled or conventionally air-conditioned, etc.

    If you read your link you”ll note Alice Springs residents aren’t in fear of being climate refugees themselves, but some are concerned about such an influx into the town from various places spread over a large distance outside their town. The supply of water from their aquifer apparently can cope, but that of numerous other far flung settlements won’t.

    Appropriate crops may be grown using appropriate structures/plantings to slow airspeed, provide shelter/shade, humidity and cooling, etc. It aint as simple as just planting “native” food plants. There won’t be the native conditions for many of those locally even if there ever was “locally”. It’s a bit simpler than colonising Mars, but not without difficulties of course. Much of the necesaries required are old school and proven, some will be mixed in new ways, plant breeders can deliver futher adaptive improvements too. The main difference will be in things like added extensive shade structures and piping systems formerly unecessary but newly needed to grow suitable horticultural crops sustainably in hot arid/desert conditions. It’ll take a bit more capital than just drilling a well, running a pipe, and placing a sprinkler in the centre of a vege patch.

    It’s going to get incredibly hot and dry in southern Australia too, and there the aquifers will mostly run dry. Recharge dams will no doubt be built in a panic for when the rain rarely falls in a climate no longer called drought prone, for droughts are intermittent things that occasionally occur amongst mostly predictable reliable seasonal rainfall. What’s the new word for such places? Arid? Desert? Bloody hot and dry and hopeless, whatever.

    With wind there are old school windmills and newer turbines for water and power provision. With sun there is solar power. With those and a bit else, BUT ONLY WITH ADEQUATE WATER there is the possibility of a GOOD LIFE, and that far from the madening, hungry thirsty formerly coastal hugging refugee crowds.

    Take a contrary look out near the western Qld border country, for instance. A devastaing flood that quickly dried out early last year. 45°C daily maximums lately with almost 0% RH. No grass for stock, but virtually unlimited Great Artesian Basin water below. The road down and from Winton then across to the Alice was set to be fully bitumined soon, but now I would expect those funds like much other will be diverted for the mexicans post this summer of catastrophic fire mainly down south. I hope the road isn’t done up. I hope much of that country remains “out back”, a secret as much as the hidden abundance of water thereunder. Chinese employed as vege gardeners could famously do it on arid lands stations during droughts a century and more ago. It will be done in future, but I think that will be done by minimilist pioneering prepper types, and the small settlements already there, more than by large scale mass producing industrial farmers – or I hope that is the case if I find myself there. With water and dirt and with manageable temperature ranges and with a bit of shrewd tech and capital application anything is possible – maybe even life for generations to come.

    Here’s an example of small tech but adequate living from the North American deserts on which future survivalists may wish to build and adapt. David Omick’s “Living outside the Box – A Few Simple Technologies for Daily Living”

    I’ve looked on at David and Pearl’s instructive admirable adventures for years, however with the way things went, and at my stage of life, or better put, how much life I have left, it looks like I’ll be skipping straight to the catamaran venture.

  24. The Top End at the frontline of Australia’s most severe climate change, scientists warn | ABC News
    Published on Oct 14, 2019
    Scientists warn the Top End will be on the frontline of Australia’s most severe climate changes | ABC News
    Scientists are warning the Top End is on the frontline of some of the most severe climate changes being faced by Australia.
    Sea level rise in particular is happening faster there, compared to other parts of the continent.
    They’ve also found they had underestimated the rate of change, meaning their predictions have been too conservative.

  25. Is linking youtube videos in comments now problematic on wordpress? For wordpress or youtube? The changes to the reply field since the new year has other annoyances as well.

    The Top End at the frontline of Australia’s most severe climate change, scientists warn | ABC News

  26. Svante, WordPress comment moderation is a mysterious mixture of arcane rules and numerous bugs. Comments vanish for no reason, because they’re obviously garbage, get put into the spam queue, get put into a moderation queue, or appear after a delay. Some even appear instantly! I regularly have comments that don’t appear for days, except that if I paste them in again WordPress says “you already said that”… so it obviously has a record of it. Commonly links have to be approved by the blog owner, but posts with links also seem more likely to simply vanish.
    FWIW I’ve never had a message from Prof Quiggin about any of my vanished comments, they either appear or not for reasons that I can’t understand.
    Oooh, a new one “sorry this comment could not be posted”… WordPress as always refusing to explain anything or suggest actions… just “computer says no”.

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