197
Table 11.13
illustrates one way by which the costs of damage under different climate scenarios may be
calculated.
Table 11.13: Example of Damage Analysis Framework
Asset:
‘XYZ’ Industry
Location:
Various Sites
Est. Current Asset Value:
$10,000,000
Discount Rate
7%
Costs of Potential Damage Under
Climate Change Scenarios
1
Climate Change Impacts
2030
2050
2070
High
Low
High
Low
High
x
Temperature / Heatwaves
Low
Moderate
Moderate
Moderate
High
x
Flooding
Low
Low
Moderate
Moderate
High
x
Storm Intensity
Low
Moderate
Moderate
High
High
x
Sea Level
Nil
Nil
Low
Moderate
Very High
Total Impact
Low
Low
Moderate
Moderate
High
Estimated Cost of Damage*
$2.5m
$2.5m
$5m
$5m
$7.5m
1
Estimated Replacement Values: Low = 0-25%; Moderate = 26-50%; High = 51-75% Very High = 76-100%
* Values are not adjusted or discounted
Estimated Cost of Damage (without discounting) = Value of Total Impact discounted out to the scenario
period. For example, Moderate Total Impact in 2050 = $10m x 50% = $5m of damages. $5m x 7% x 38
years (2050-2012) = $65.39 million. Damage is based on asset value in today’s dollars.
For the purpose of this project, no asset valuations have been obtained
32
, nor any estimations of costs of
damage based on climate change scenarios. Accessing this information will need to be revisited during
subsequent stages of the WARCCAP project. This is likely to require close engagement with individual
asset owners to facilitate release of necessary data. In addition or as an alternative, site improvement
data from state and/or local government sources could be used (subject to availability) to provide an
indication of the current value of private and public sector buildings and structures. It is important to
ensure in future adaptation planning that Government agencies are able to release this information in
order to assist all regions in their adaptation planning.
Relevant decisions makers need to be able to evaluate and determine cost effective adaptation measures
in regard to key community assets and economic infrastructure. In this regard, in order to influence policy
decisions, investment in adaptation to climate change needs to be approached from a cost recovery
perspective and built into business cases for individual adaptation investments.
It is recommended that Stage 2 of the WARCCAP project gather more exact information about the value
of key community assets and economic infrastructure and examine more closely the future costs that may
be directly associated with climate change hazards.
32
Information about valuation of site/building/structure was not available from companies due to commercial-in-confidence
restrictions. In addition, site valuation data was not available from Government bodies.
