Aquanomics says climate change losses doubled

Droughts, floods and storms could result in a total loss of AUD$452 billion to Australia’s GDP between 2022 and 2050, according to new GHD research called Aquanomics.

Droughts, floods and storms could result in a total loss of AUD$452 billion to Australia’s GDP between 2022 and 2050, according to new GHD research called Aquanomics.

Global professional services company GHD publishes the economics of water risk and future resilience reports. It revealed Australia will suffer an average annual GDP loss of 0.6% due to water risks.

The research places Australia in the third most vulnerable position when projecting the future economic impact of these events in seven countries.

It also highlights that Australia’s agricultural and retail sectors could be particularly hard hit. These rising threats need to be tackled now. There needs to be a greater focus on solutions like water recycling, desalination, and smarter irrigation.

Lindsey Brown, Australian Water Market Leader at GHD, said “To create resilience to the increasing risks from extreme weather events, we need to adapt how we build water infrastructure, optimise the performance of existing infrastructure and prioritise nature-based solutions to water management across industries.”

Storms are expected to have the greatest direct impact on the Australian economy (AUD$102 billion). They were followed by floods (AUD$64 billion) and droughts (AUD$41 billion).

This is the first time these three types of events’ economic impact have been calculated at a GDP and sector level. The Aquanomics report builds on concerns highlighted recently by the Intergovernmental Panel on Climate Change (IPCC). The IPCC report revealed that over half of all natural disasters worldwide since the 1970s have involved water.

In 2021, the Emergency Event Database (EM-DAT) stated that drought, flood and storm disasters affected close to 100 million people globally through displacement, economic damage, food insecurity and injury.

Aquanomics focuses on where the damage will hit hardest

Aquanomics highlights the potential impact of extreme weather events on five critical economic sectors in Australia. Those sectors were agriculture, banking and insurance, energy and utilities, fast-moving consumer goods (FMCG) and retail, and manufacturing and distribution.

It reveals that Australia’s agricultural sector is particularly vulnerable. The projected annual output losses are over 5% by 2030 and 8% by 2050.

“With a growing population and increasing demand for water, embracing the circular economy is a key part of creating climate resilience in Australia,” said Brown.

The circular economy involves eliminating waste and pollution, circulating products and materials to extend their lives as long as possible through recycling and reuse, and the regeneration of nature.

“A circular economy approach to water management includes designing out waste and pollution and regenerate natural systems,” said Brown. “Increasing supplies of manufactured water through water reuse and recycling also offers a reliable source of water. They are not climate-dependent and can contribute to economy-wide decarbonisation efforts through energy production of green hydrogen.

“For Australia’s coastal cities – where 80% of the country’s population is concentrated – desalination will be crucial in easing water stress. Inland, wastewater treatment and recycling will become more important. These processes make purified recycled water available for drinking and use by power stations, industry and agriculture.

“The government has a key role in managing the transition to new water management methods. Investment programs like the National Water Grid Fund are the first step. However, the infrastructure can only be part of the solution.”

A new relationship needed for water

Australia needs to reorient its relationship with water. We must emphasise the importance of tackling the future potential threats posed by droughts, floods and storms across the country, said Brown.

“Focusing on the economic impacts of extreme weather events in our Aquanomics report, we aim to help identify and unlock the social and environmental benefits of tackling water risk head-on.

“It’s time to move away from viewing water as a commodity to be controlled. We need to instead recognises its intrinsic value. Water is part of a natural cycle, the balance of which must be restored and maintained if we live sustainably to prosper.

“We are also responsible for collaborating with traditional owners and exploring water’s deep connection to the country. And it’s important to remember that many Indigenous communities are vulnerable to water risk, especially drought.”

Read more about the research here

How Aquanomics undertook its study

The economics of water risk and future resilience utilised a three-phased methodology. It estimated the direct losses, sector losses and GDP losses attributed to water risk (droughts, floods and storms) between 2022 and 2050. The study focuses on seven key countries across GHD’s footprint – Australia, Canada, China, the Philippines, the UAE, the UK and the US. They also examined three US regions – Northeastern US, Southeastern US and Southwestern US. For further details, please refer to the full report and methodology.

Cambridge Econometrics constructed the modelling. It is an independent organisation of economists specialising in data. They provide credible and robust evidence across a broad spectrum of complex 21st-century challenges facing our economies, societies and the natural environment.

About GHD

GHD is a global professional services company that leads through engineering and architectural skills and experience. GHD is committed to solving the world’s biggest water, energy, and urbanisation challenges. Our forward-looking, innovative approaches deliver extraordinary social and economic outcomes for communities worldwide.

Effective water use is part of all business, industry, and community life. GHD has a powerful global network of water skills and experience that we can apply to local scenarios. We offer a broad range of services covering feasibility studies, planning, design, project management, construction and asset management services, and operational optimisation.

To find out more about GHD, please visit

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