Zurich Financial Services Australia and Mandala Partners have introduced the Climate Risk Index, providing a detailed assessment of how climate change is affecting Australia’s tourism sector.
The new report, released as extreme weather costs and related insurance claims continue to rise, evaluated the vulnerability of key tourism assets across the country.
Drawing on Zurich’s global climate risk analysis, the report assessed tourism sites such as national parks, airports, beaches, and museums, using future climate scenarios developed by the Intergovernmental Panel on Climate Change (IPCC).
The findings revealed that half of Australia’s tourism assets are currently in a high-risk category due to potential climate-related hazards.
By 2050, this number could increase to between 55% and 68%, depending on whether global temperatures rise by 2°C or 3°C. If the more extreme scenario unfolds, 80% of these sites could see heightened risks by 2050.
The report underscored the importance of tourism to Australia’s economy, with the sector contributing more than $170 billion annually and supporting over 620,000 jobs.
Climate-related disasters, such as the 2019-20 bushfires, could endanger up to 176,000 jobs, with a significant share of these in regional areas.
Queensland is identified as the state most exposed to climate risks, with 79% of its tourism locations in elevated risk categories.
Following closely behind are Western Australia and the Northern Territory, where 69% and 63% of sites, respectively, are in high-risk areas.
Airports are particularly vulnerable, with all of Australia’s 31 busiest airports falling into the highest climate risk categories due to exposure to wind and storm events.
Natural attractions, such as wine regions and national parks, are similarly at risk, while man-made sites like museums and sports venues are at comparatively lower risk levels.
Justin Delaney, CEO of Zurich Australia & New Zealand, emphasised the need for bolstering resilience.
“Australia’s tourism assets not only play a significant role in an increasingly diverse visitor economy but are collectively central to our national identity,” he said.
Adam Triggs, partner at Mandala Partners, pointed out the lack of data on climate preparedness.
“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,” he said.
This release follows a similar analysis by Zurich and Mandala on the risks climate change poses to Australia’s energy generation infrastructure, published in November 2023.
The introduction of the Climate Risk Index for tourism has occurred alongside increasing concerns over the economic costs of extreme weather events in Australia.
Recent data from the Insurance Council of Australia (ICA) showed that the financial impact of climate-related events on the economy has tripled over the past 30 years. It revealed that insured losses from declared catastrophes have grown from 0.2% of gross domestic product (GDP) between 1995 and 2000 to 0.7% of GDP in the past five years.
Australian insurers are now paying out an average of $4.5 billion annually for extreme weather claims, more than double the average of $2.1 billion paid out in the previous three decades. While total premiums collected by insurers have grown, from $50 billion in 2012 to $86 billion in 2023, rising claims costs have kept profitability largely flat.
In the 2023-24 period, insurance claims related to extreme weather amounted to $2.19 billion, consistent with the prior year, though the volume of claims surged to nearly 157,000 – an increase of 66,000 from the previous year.
To improve resilience, the ICA report recommended several policy actions, including enhanced land-use planning, stronger building codes, and greater investment in infrastructure like flood defences.
