Updating the 2001 Report: Economic Costs of Natural Disasters in Australia There is a need to update the 2001 report on the economic costs of natural disasters in Australia, as the information in that report is now 15 years old. A project is currently underway to update the 2001 report by compiling disaster cost data from 1967 to 2013 from various sources. This will provide an authoritative national analysis of disaster costs over time. Key changes in the updated analysis include the use of revised multipliers to estimate total losses beyond insured damages, inclusion of additional disaster types and loss categories like ecosystem impacts, and more detailed metadata. Gaps in data that still exist include detailed heatwave impacts and estimates of some indirect and intangible disaster consequences.

1. Updating the 2001 Report:
Economic Costs of Natural Disasters
in Australia
John Handmer
Centre for Risk & Community
Safety,
RMIT University, Melbourne
With
Monique Ladds
Liam Magee
Sandra Moye

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Need: There is a need for a current national picture of
disaster losses in Australia. This is needed for decision-
support in disaster risk reduction.
Information is needed by state, by hazard and over time.
2001 Report: The last national assessment was published in
2001, based on data up to 1999. This is now 15 years old.
2014 Update Project: The National Emergency Management
Program (NEMP) funded a project to update the 2001 Report.
The update is being undertaken by a team led by John
Handmer at RMIT University, and is due for completion in
March 2015. The work is funded by the Commonwealth
Attorney’s General through Safecom in South Australia.
The need

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Economic costs of natural disasters in Australia,
produced in 2001 by the BTE – Bureau of Transport
Economics (part of the Commonwealth Govt)
This report provided a national picture, by state, hazard, and
over time, of the costs of natural disasters in Australia from
the 1960s through to 1999.
It also set out good practice guidelines for the economic
assessment of disaster loss.
The 2001 report is widely used as the reference source for the
costs of disasters in Australia, but is now out-of-date.
The 2001 report on the costs of disaster
in Australia

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The aim of the BTE 2001 update is to have a single,
authoritative analysis of disaster costs by state and by
disaster type, over time. The purpose of the update is:
• To have a national updated picture of the costs of
disasters and trends in losses;
• To update the conceptual basis of loss assessment where
needed;
• To identify areas of data that need improving, and to
provide a roadmap on how this could be done; and
• To have the dataset in a form that allows easy regular
updating in future.
Updating BTE 2001

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• EMAtrack - a national disaster loss dataset developed by the
then national emergency management agency. This drew on
a variety of sources, but essentially used an insurance
dataset (ICA data) with multipliers to estimate the total loss
for each event. The insurance dataset runs from1967 to the
present. There is very limited metadata for the BTE 2001
dataset.
• An “ideal” approach to the economics of disaster based
on detailed disaggregated data was also set out in the 2001
Report, but not used for loss estimation due to the absence
of data.
• Note: to be counted as a disaster an event had to have at
least $10m (1998 dollars) in losses.
Data used by BTE 2001

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EMAtrack is still available, but is now unsuitable for trend
analysis and is now not comparable with the BTE analysis.
We are drawing on a variety of sources to construct datasets.
There are three existing datasets which are useful but far from
complete: EMAtrack, EM-DAT, and the ICA (insurance) data.
There are other datasets such as those from the global re-
insurers, and Risk Frontiers, but these are mostly not freely
accessible and are focused on insured losses as with the ICA.
In addition, there are many websites dedicated to disaster
impacts, as well as news reports, government reports and
research studies.
Update data:
variety of sources and approaches

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1 - ICA (insurance) database with multipliers. The
multipliers used by BTE 2001 are being revised.
2 - Reported losses dataset of Australian disasters with
more than $10m in losses. Main sources are govt reports,
research papers, and internet and news sources. Source
reliability is rated. (The $10m is not strictly comparable
with BTE 2001 as we use 2013 dollars and include the
value of fatalities.)
3 - Dataset based on good practice guidelines for
disaster loss assessment. We are attempting to compile
estimates.
Datasets being used (or developed)
for the update analysis (1967 –
2013):

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Loss assessment approaches & issues reviewed, eg:
– EMA 2002 – “Disaster loss assessment guidelines”
– IPCC 2012 – Special report on extremes, section on economics:
– Stephenson et al (2013) – Estimating the economic, social and environmental
impacts of wildfires in Australia. Environmental Hazards. 12(2)
– ECLAC 2014 – “Handbook for Disaster Assessment”
• Losses categories by direct, indirect, intangible vs Losses by sectors.
• Indirect losses use of sector multipliers.
• Metadata now there are expectations for detailed metadata.
• Expanded view of what constitutes loss, eg lives and ecosystem services
• Critical sectors highlighting changes in the economy (eg. Food logistics) – an
aspect of indirect losses.
• Normalization approaches and issues: for climate change detection; for disaster
risk reduction. These approaches do not take account of mitigation/prevention/
preparedness.
Updating: conceptual issues

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• Normalisation was weak in BTE 2001. We are using two
approaches.
• Multipliers used in BTE 2001 are being verified empirically
and other types are being developed.
• Ecosystem services now included for wildfire
• Value of a Statistical Life (VSL) – different approach & sources
• NDRRA (govt post-disaster recovery payments) data
• Metadata – now detailed and transparent.
• The assessment framework is changing to reflect these and
other issues.
Some areas of change from BTE
2001

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• The purpose of the analysis is key
• Disaster loss ~ hazard + exposure + vulnerability
• All these elements change. Typically we would want to be
using similar units when discussing different events, so
we would use an index to adjust all the dollar amounts to
a common base – eg the CPI. That tells us the dollar cost
of an event.
• We might be interested in the current impact of an historic
event today, in which case we would inflate historic
events by the increases in wealth and population.
• We might be interested in adjusting exposure and
vulnerability to detect change in the hazard – as in climate
change attribution studies.
• :
NORMALISATION

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Gaps: BTE 2001
• Heawaves;
• Limited metadata
• Estimates of some indirects and some intangibles are
unreliable.
Gaps: Update
• Detailed heatwave data including losses other than lives.
• NDRRA event data
• Estimates of indirect and intangible losses continue to be
less than ideal. .
Gaps

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• Urge governments and the private sector to make data more
accessible.
• Ensure that the rapidly growing risks to people, livelihoods
and food supplies such as heatwaves and wildfires, are
captured.
• Major gaps are much the same as 40 years ago – indirects
and intangibles, and to make substantial progress priority
effort should go into these areas.
The views expressed in this presentation are those of the
authors and do not necessarily reflect those of the funding
agencies.
Improvements