9 September 2024

Zurich Financial Services Australia (Zurich) and Mandala Partners (Mandala) today 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.

A full version of the report is available here.

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