Deloitte: Australia to Lose Trillions Unless We Act on Climate Change

Guest essay by Eric Worrall

According to Deloitte, $3.4 trillion and 880,000 jobs lost if we continue business as usual, but $680 billion gained and 250,000 new jobs if we act on climate change. But some of their assumptions about business as usual appear to be unrealistically pessimistic.

Australia will lose more than $3 trillion and 880,000 jobs over 50 years if climate change is not addressed, Deloitte says

By Kathleen Calderwood
Posted 1d ago, updated Yesterday at 6:19am

The Australian economy will lose more than $3 trillion over the next 50 years if climate change is not addressed, according to a new report from Deloitte Access Economics.

The report found the economy could shrink by 6 per cent over the next 50 years and 880,000 jobs could be lost. 

Report author Pradeep Philip, who was a policy director for former prime minister Kevin Rudd, said there was also a lot to be gained if warming was kept below 1.5 degrees and Australia achieved net zero carbon emissions by 2050. 

“If we do act over the next few years then in just 50 years there is a benefit to the economy of $680 billion,” he said. 

“We’ll have an economy 2.6 per cent bigger, generating 250,000 jobs, so this tells us if you are pro-growth and pro-jobs then we need to act on climate change now.

“We know that there are new sectors around renewables, hydrogen, electric vehicles that can be created.”

…

Read more: https://www.abc.net.au/news/2020-11-02/australian-economy-lose-$3-trillion-climate-change-inaction/12837244

An example of a pessimistic assumption is the section on Agriculture on page 33 of the report;

What and how we grow

Agricultural damages from variations in crop yields

• The agricultural sector is on the front line of climate change in Australia. Australia’s vast and variable geography means that one part of the country can be suffering from the worst drought in living memory, while other parts are experiencing devastating floods.

• Climate change means rising temperatures, higher concentrations of carbon dioxide (CO2) in the atmosphere and differentregional patterns of precipitation.

• For agricultural production, this means fluctuations in growing conditions, water availability and the severity and frequency of extreme weather events; resulting in crop yield volatility and market uncertainty.

When faced with unmitigated climate change, even with adaption, there are limits to what farmers can do. Deloitte Access Economics considers damages to agriculture as variations in crop yields to be a significant impact.

Report available here (p 33)

Setting aside the obvious question of how fragile renewable energy infrastructure is supposed to survive such an uptick in superstorms, lets suspend disbelief and imagine for a moment this dire prediction comes true.

How would Australia adapt to such a future?

Australia has had a plan to substantially increase water availability on the drawing board for almost a century. The latest incarnation, proposed by the CSIRO in 2018, involves building three mega dams in the far north to tap vast tropical river systems which currently dump billions of litres of fresh water into the sea.

The CSIRO proposal is for the dams to irrigate the local area in the tropics, but if climate change made Northern agriculture impossible, that water could instead be shipped south, below the tropical storm belt, to irrigate new farms in Australia’s vast southern desert. This would turn any climate driven uptick in cyclones and severe storms into an agricultural asset, by keeping the tropical zone dams filled with enough water to feed thirsty cold climate farms in the far south.

Or take the report’s claim on lost worker productivity;

How workers work

Heat stress impacts on labour productivity

• As temperatures rise, heat stress on workers surpasses becomes a concern for the health and safety of workers and their ability to perform tasks.

• There is only so much heat stress the body can take.

• Before serious health consequences are reached (heat strain/stroke
or death), at lower levels of heat exposure workers are subject to diminished mental task ability, diminished capacity to work at their former level and are at a higherrisk of accident.

Deloitte Access Economics considers the ‘slowing down’ of workers and their ability to do their jobs results in lower labour productivity.

Report available here (p 31)

Does anyone seriously think that by 2070 anyone will have to work outdoors or even indoors in unpleasant conditions? Or is it more likely robots will do the bulk of unpleasant manual work which is currently performed by humans? Even if humans in 2070 still need to participate in outdoor work, agricultural machines are already being manufactured with air-conditioned cabs. For people who have to work outdoors, you can buy a cold suit which you can fill with ice packs. The only reason these innovations are not more widely used is most people don’t need them. Its easier for most people to drink water and sweat a little, than mess about getting the icepack suit prepared every day before work.

The other point the report makes is that demand for Australian coal will diminish. Frankly the state of the Australian coal market is not really the Australian taxpayers’ problem. If coal demand drops, investment will shift to more profitable ventures. If a demand for green hydrogen appears, investors will flock to exploit the opportunity. This is how free market capitalism works. There is no need for government intervention, if the investment opportunity is genuine.

Climate reports like Deloitte in my opinion don’t make sense even if you accept their climate predictions at face value. Even if global temperature soars the way they predict, which seems incredibly unlikely given the ongoing lack of soaring temperatures, only the most miserably pessimistic of assumptions, like assuming our descendants all forget how to innovate, can portray climate change as a significant problem.