Markets are Moving: The Economic Costs of Australia’s Climate Inaction

13.10.21 By

We are already counting the costs from climate-driven disasters such as bushfires, droughts, cyclones, and flooding. These worsening climate impacts do not only cause physical damage to property. Economic activity is disrupted, productivity is lost, and health costs – both physical and mental – rise.  All told, these disasters are estimated to have led to global economic losses of A$272 billion in 2020, according to Munich Re research. 

Acting swiftly on climate change matters. Failing to rapidly cut emissions this decade is forecast to lead to exponential increases in the costs of climate change over multiple generations. One estimate puts global economic losses of failing to act at A$24.1 trillion per year by 2100. For Australia, the figure is A$129 billion per year. 

The Australian Government has failed to recognise the costs of climate change, and similarly, the significant economic opportunities in acting swiftly and early on climate change. In contrast, carbon border tariffs are now inevitable with Australia in the firing line due to our slow and weak national progress in cutting greenhouse gas emissions. The question isn’t whether we should act on climate change, but rather, when will we choose to do so? Every day we delay, we pay a heavier price. 

This report looks at the economic impact that carbon border tariffs could have on Australia’s economy if we do not take appropriate measures to act on climate change now in line with our key trading allies.

Key Findings:

1. The world is moving to respond to the climate crisis with carbon border tariffs now inevitable. Australians will pay a price due to our slow and weak national progress in cutting greenhouse gas emissions. 

2. Economic modelling shows that carbon border tariffs will reduce demand for Australian exports, lower economic growth and put thousands of Australian jobs at risk.

3. Every day that the Australian Government delays climate action it is hurting households and businesses in missed economic opportunities and rising costs.

The cover of the Climate Council report, 'Markets are moving: the economic costs pf Australia's climate inaction'. With an image of a shipping container.

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