Cost of Australian Heat Waves

Posted on Wed, 2020-04-15 16:53 by matt


What are the costs of heatwaves?

Increased exposure to heatwaves amplifies the adverse economic impacts on industries that are reliant on the health of their outdoor workers. This is in addition to the extreme heat-related fatalities and health-care costs of heatwave-related medical emergencies. As a PwC report to the Commonwealth on extreme heat events stated:

Heatwaves kill more Australians than any other natural disaster. They have received far less public attention than cyclones, floods or bushfires — they are private, silent deaths, which only hit the media when morgues reach capacity or infrastructure fails.


Heat also has direct impacts on economic production. A 2010 study found a 1°C increase resulted in a 2.4% reduction in non-agricultural production and a 0.1% reduction in agricultural production in 28 Caribbean-basin countries. Another study in 2012 found an 8% weekly loss of production when the temperature exceeded 32°C for six days in a row.

The 2017 Farm performance and climate report by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) states:

The recent changes in climate have had a significant negative effect on the productivity of Australian cropping farms, particularly in southwestern Australia and southeastern Australia.


Average climate effect on productivity of cropping farms in southwestern and southeastern Australia since 2000–01 (relative to average conditions from 1914–15 to 2014–15). Farm performance and climate, ABARES, CC BY

It’s not just farming that is vulnerable. A Victorian government report report this year estimated an extreme heatwave event costs the state’s construction sector A$103 million. The impact of heatwaves on the city of Melbourne’s economy is estimated at A$52.9 million a year on average.


Impacts of heatwaves on Victoria’s main economic sectors. State of Victoria Department of Environment, Land, Water and Planning, CC BY

According to this report, economic costs increase exponentially as the severity of heatwaves increases. This has obvious implications for cities in tropical regions.