The economic cost of bushfires on Sydney revealed: up to $50 million a day and rising
Source: Sydney Morning Herald
Author: Jessica Irvine
Date: 12 December 2019
Each day that bushfire smoke descends on Sydney and workers down tools while shoppers stay at home, estimates by SGS Economics and Planning show the city’s economy bleeds up to $50 million.
As firefighters battle to contain blazes, economists are beginning to tally the cost of lost worker output, transport interruptions and reduced spending.
Sydney is Australia’s most concentrated area of economic activity and shutdowns and disruptions caused by smoke are having “a real impact”, said Terry Rawnsley, an expert in regional economics at the consultancy SGS Economics and Planning.
“Sydney generates around $1.2 billion dollars of income every day,” Mr Rawnsley said. “Based on the nature of the these extraordinary events, Sydney’s gross domestic product was probably reduced by around $12-$50 million each day.”
Mr Rawnsley’s estimate is based on previous detailed analysis of the economic costs associated with major city transport disruptions and economic impact of natural disasters.
Costs tallied include lost production, as workers take more sick days, and reduced spending, as locals and tourists spend less on dining out or after-work drinks.
There would also be a long-term impact on Sydney’s “global brand as a place to work or visit”, Mr Rawnsley said.
The chief executive of the Committee for Sydney, Gabriel Metcalf, also predicted lingering damage to the economy.
Apocalyptic images of a smoke-shrouded harbour would also do long-term damage to Sydney and Australia’s tourism sector, Mr Metcalf predicted.
“The brand damage from the fires to Australia is immense, because it reinforces the biggest negative perception the rest of the world has about Australia, which is that it is not pulling its weight on fighting climate change,” he said.
Globally, rising levels of outdoor pollution are expected to slice economic output by 1 per cent by 2060, up from 0.3 per cent in 2015, according to a 2016 study by the Organisation for Economic Co-ordination and Development.
The costs of air pollution, according to this study, include reduced productivity, increased health expenditure and lower crop yields.
Longer term, the study predicts more rapidly escalating “indirect costs” from “disrupted capital accumulation”, including children being unable to attend school.
The number of premature deaths due to air pollution is also projected to increase from 3 million people globally to between 6 and 9 million in 2060.
More broadly, Deloitte Access Economics partner Kathryn Matthews said Australia would face mounting costs from the increasing prevalence of natural disasters.
“Our 2017 report found that the total economic cost of natural disasters, and not just bushfires, is growing and will reach $39 billion per year by 2050,” she said.
“These costs include significant, and often long-term, social impacts including death and injury and impacts on employment, education, community networks, health and wellbeing.”