The high cost of inaction: why climate adaptation can’t wait

As climate change continues to impact our world, the need for adaptation measures has become increasingly urgent. More frequent and severe weather events in recent years highlight the impacts that can be experienced by communities when critical infrastructure, transport routes, economic supply chains, important social infrastructure and private assets are damaged or services disrupted.

Failing to act on climate adaptation not only risks the safety and reliability of essential services, but also incurs significant economic costs. In a tight economic environment where many are fiscally constrained, it can feel all-to-easy to push climate adaptation down the ‘to do’ list. However, this would be the exact wrong thing to do, and instead, we need to focus on collaboration, partnership, and coming together to respond with the seriousness that climate change presents - to avoid making problems worse for future generations.

The rising costs of inaction

One of the key reasons adaptation planning is often delayed is the apparent ‘cost savings’ achieved by not expending capital needed to implement adaptation planning measures (many of which can be expensive). These costs are tangible and can be easily quantified. However, identifying the costs of inaction is harder to determine as it involves many uncertainties such as the scale and timing of damaging climate events, what is at risk and what the economic losses may be if those risks are realised.

The World Economic Forum has estimated that for every $1 spent on adaptation action now, there is avoided costs of $2 - $10 in the future. Acting now can therefore be viewed as an investment for the future. It’s similar to the adage; “the cheapest time to buy a property was 20 years ago, and the second-best time to buy is now”.

The costs of inaction on climate adaptation in the public infrastructure sector are multifaceted and substantial. Firstly, there are direct costs associated with damages and repairs caused by extreme weather events. Flooding, landslides, and other climate-related incidents can lead to disruptions in service, infrastructure damage, and increased maintenance expenses. These costs not only strain the financial resources of asset owners but also impact the economy through reduced productivity and increased service provision costs. For example, a report commissioned in 2021 by the Australian Business Roundtable for Disaster Resilience and Safer Communities estimates that over the next 40 years, the cost of natural disasters to the Australian economy is expected to be at least AU$1.2tn in present value terms.

Moreover, the indirect costs of inaction can be far-reaching. A decrease in the reliability and accessibility of public infrastructure affects businesses and individuals who rely on these services for commuting, freight transportation, and tourism. Disruptions in supply chains and increased congestion on alternative routes lead to higher operating costs for businesses and reduced competitiveness in the global market, and many of these costs will be passed on to the consumer. We saw this in New Zealand following Cyclone Gabrielle, when prices of some fresh vegetables doubled (problematic when we are currently in a cost of living crisis). Following the damage caused by the cyclone, the closure of the Brynderwyn Hills for repairs were estimated to add costs up to $250,000 per day for freight, with more than 1000 trucks per day having to take a detour of up to 71km, for a closure expected to be for two months. And these are the financial costs. There are also a multitude of intangible non-financial costs such as health and safety impacts, loss of social connectivity, inability to observe cultural practices, and so on.

There is also an intergenerational equity consideration. By deferring adaptation measures we are passing on more significant and costly problems to future generations to deal with.

Collaborative resource sharing

To address these challenges, collaboration among stakeholders is crucial. Local councils, infrastructure providers, and service providers can pool their efforts to develop robust climate adaptation strategies. They can share resources, knowledge, and expertise while limiting the financial burden on any one organisation.

Beyond the financial benefits of collaboration, an integrated systems approach to adaptation planning results in a coherent, aligned strategy across large asset owners, councils and communities rather than disparate plans which eventually must be connected and streamlined. Collaboration should also include indigenous people as the knowledge and resources that can be shared will add a richness to the outcome that would not be able to be achieved otherwise (and especially noting that indigenous people are often also the most vulnerable to climate impacts).

This cooperative approach can help overcome the tight fiscal conditions faced by individual entities and ensure the efficient allocation of limited resources. Some ideas on what this may look like are described below:

1. Resource sharing for resilient infrastructure: By combining expertise and financial resources, stakeholders can leverage economies of scale to build and maintain infrastructure that is better prepared for climate impacts. For example, councils can collaborate with national rail and transport providers to invest in climate-proofing measures, such as raising tracks above projected flood levels, upgrading culverts and strengthening embankments, and using advanced weather monitoring systems.

2. Collaborative research and planning:Councils, infrastructure and service providers can jointly fund studies to assess risks and vulnerabilities, identify innovative technologies and practices, and share best practices for climate resilience. We are already seeing this amongst local government, for example the Wellington Regional Impact Assessment in New Zealand was a collaborative study funded by the nine councils in the Wellington region. For collaborations like this, it is important to establish solid governance structures, including documenting a clear understanding of the different funding approval processes of each organisation, the relevant stakeholders and the differing needs of the research. Done right, this collective effort fosters knowledge exchange, accelerates adaptation planning, and reduces duplication of efforts, ultimately leading to more cost-effective solutions.

3. Coordinated risk management: By collaborating, stakeholders can develop coordinated risk management strategies that address shared vulnerabilities and interdependencies where they exist. This may include establishing early warning systems, coordinating emergency response plans, combined adaptation strategies and implementing climate adaptation training programmes for staff members.

4. Information sharing: Many organisations have undertaken extensive hazard studies and hold climate risk information that is likely to be beneficial for interlinked and adjacent services and infrastructure. This is particularly the case where risks may arise indirectly such as through the supply chain (as was evident during the Covid pandemic). If we are to raise the resilience of our communities and provide for economic prosperity in the face of increasing climate risks, we need to avoid competitive behaviours that may have hindered the sharing of information in the past. The New Zealand National Adaptation Plan and the issues paper for the Australia National Climate Resilience and Adaptation Strategy both signal that central governments are focused on making data sharing and resources more freely available to assist organisations with adaptation planning, which will help reduce the costs at a community or organisational level.

Conclusion

The costs of inaction on climate adaptation for infrastructure, service providers and communities are substantial and cannot be ignored.

Adaptation planning projects should not be deferred until a later date to avoid up-front costs as this will only pass more significant problems and costs onto future generations – and beyond just the financial impacts, will also likely result in many intangible and indirect costs.

By embracing collaborative resource sharing among stakeholders, such as councils and infrastructure providers, we can overcome tight fiscal conditions and collectively work towards building resilient communities.