Risk assessment and economic viability of climate adaptation measures for Australian housing subject to extreme wind events

Australia is a continent subject to climatic extremes, and its losses from tropical cyclones and thunderstorms are significantly higher than other natural hazards. The number of severe tropical cyclones is likely to increase due to climate change. Brisbane and the northeast coast of Queensland are regions where design wind specifications may be inadequate under future climate conditions. For example, the Australia Building Codes Board is considering a shift in the boundary to cyclone Region C to extend it south on the Queensland coast to 27 o S to include areas in the Sunshine Coast. Hence, there is an urgent need to assess the risks and economic viability of these climate adaptation measures. An appropriate adaptation strategy may be one that increases design wind speeds for new houses leading to reduced vulnerability of new construction. The present paper will assess the damage risks, adaptation costs and cost-effectiveness of this adaptation measure for residential construction in the Queensland cities of Cairns, Townsville, Rockhampton and Brisbane assuming time-dependent changes in frequency and intensity of cyclonic and non-cyclonic winds to 2100. Advanced spatial and temporal stochastic simulation methods will be used to include uncertainty and variability of climate and building vulnerability on damage risks. The criteria for cost-effectiveness are reduction in present value measured by Net Present Value (NPV) and probability that NPV exceeds zero. The simulation analysis found that increasing the wind classification for design of new housing (at a cost of $3,700 per house) for all cities can produce a mean NPV that exceeds $8.3 billion by 2100 assuming a 4% discount rate (see Figure 1). The benefits are highest for Brisbane due to its high exposure (large population) and relatively high vulnerability of existing residential construction. Retrofitting older houses is a more costly adaptation strategy which mostly resulted in a net loss. We also showed that the benefits of adaptation strategies are maximised if they are implemented promptly, but deferral to 2020 or 2030 will still result in a net benefit.