The number of record hot days in Australia has doubled in the last 60 years. And with climate change, heatwaves are becoming hotter, lasting longer and happening more frequently.

The 2009 heatwave that preceded the Black Saturday bushfires was responsible for 374 deaths in Victoria, more than double the number of deaths caused by the fires.

The real dangers of climate change are not in the average changes to temperature but in the extreme changes. Even small increases in the number and severity of extreme events such as heatwaves have big health, economic and environmental consequences.

The Victorian Government supports businesses and communities to deal with climate change through its Climate Change Adaption Plan 2017–2020. Understanding how vulnerable the Victorian economy is to heatwaves helps planners and policymakers to better prioritise and invest in strategies that help people adapt to climate extremes.

Natural Capital Economics was engaged by the Victorian Government to assess how vulnerable different sectors of the economy – agriculture, construction, electricity, health, manufacturing, mining, tourism, transport, water – are to heatwaves.

Melbourne is likely to suffer more heatwaves with climate change (Photo: Creative Commons)

Agriculture and construction sectors most vulnerable to extreme heatwaves

We measured how vulnerable the Victorian economy was to heatwaves by using the United Nations and World Bank’s Damage and Loss Assessment methodology.

We looked at the impacts of severe, extreme and very extreme heatwaves under Victoria’s current economic structure in 11 regions.

The Bureau of Meteorology defines a heatwave as being three or more continuous days of high maximum and minimum temperatures that are unusual for that location. In our study, we defined the severity of heatwaves for use in our modelling as:

  • severe, a heatwave that would typically only occur once every 2 years
  • extreme, a heatwave that would typically only occur once every 25 years
  • very extreme, a heatwave that would typically only occur once every 110 years (similar to the worst on record).

We estimated the total economic impact from the different categories of heatwaves to Victoria to be around $130 million from severe heatwaves, $290 million from extreme heatwaves, and $1 billion from very extreme heatwaves. As Figure 1 shows, heatwaves are especially likely to be detrimental to agriculture and construction, and these sectors are affected even more as the severity of heatwaves increases. Under very extreme heat waves, more than half the economic effects are to the construction sector, with about a quarter to agriculture.

Figure 1. The estimated total economic impact of heatwaves on different sectors of the Victorian economy (note: the impacts on electricity and tourism are relatively small, so not obvious in graphs)

Apples are one of the crops susceptible to sunburn during heat waves (Photo: Hortscience)

With more extreme heatwaves, the construction industry becomes even more vulnerable than agriculture, partly because Victorian workers are required to down tools when the temperature gets to 34 degrees.

Increases in deaths and disease during heatwaves put strain on the health system and raise costs. An ageing population will amplify these problems in the next 10-15 years.

Climate change escalates the economic costs from heatwaves

Given the current likelihood of each type of heatwave occurring (see Table 1), the total average annual expected economic cost of heatwaves to Victoria is estimated to be about $90 million. However, this assumes current climate and economic conditions.

When realistic climate-change scenarios are taken into account, the situation becomes bleaker. For example, construction workers currently may need to stop work for three or four days each summer. But in 30 to 40 years’ time, construction may need to be halted for two to three months every year. Over time, this risk could have a profound impact on the construction sector.

Building on existing climate-scenario modelling, we looked at how climate-change risk affects the number and severity of heatwaves in the medium term (2030) and longer term (2050), and at the subsequent economic risks. Table 1 demonstrates the economic costs of our continuing with the current high rate of greenhouse gas emissions, with the representative concentration pathway (RCP) at 8.5. This is compared with the possibility of our achieving a medium RCP of 4.5 by 2050.

Table 1. Likelihood of occurrence of different types of heatwave

However, an important message from our findings is that our future is not necessarily one of doom and gloom. We can invest now in planning and design to adapt to these changes and mitigate future damage and loss.

While agriculture is the most vulnerable sector, it can also be a big part of the solution, for example by increasing trees in the landscape, producing food and fibre by using less water, and using new technologies to recycle water.

For the construction industry, when establishing new suburbs, developers and planners could maintain what vegetation and water is already there rather than clearing and starting again. This would help cool these areas for both residents and workers.

Another possibility to cope with hotter summers is that we start to consider manufacturing homes in factories in controlled environments using lightweight materials. These would then be assembled on site in winter. Although this was not in the scope of our project, planners, policymakers and investors can nevertheless take on board what we learned, and consider these options. We need to start now in rethinking our built environment. Are our current building standards suitable for a hotter climate?

While building standards will likely need to change to cater for more extreme temperatures, there are also other, complementary solutions that we can implement now. The way we design and build our urban environments is particularly important given our rapidly expanding capital cities. There are many solutions for creating a cooler urban environment that also mean a more pleasing environment visually and greater opportunities for outdoor leisure activities. Our constant challenge is to put a value on such benefits.

The street on the left runs east to west and is exposed to the sun more throughout the day compared to a street that runs north to south. These streets should be prioritised for planting trees to shade.

Western Sydney designs new, cooler suburbs

Earlier this year (2020), Mosaic Insights was engaged by Sydney Water to model the urban heat for the new Western Parkland City development planned for the South Creek catchment.

This new city, near Sydney’s Badgerys Creek airport development, is designed to be ‘a city in its landscape’, restoring and regenerating the natural ecological and water systems. The intention is to go beyond a business-as-usual approach with innovative and flexible solutions that manage urban heat and water concerns.

Mosaic Insights reviewed the master plan for employment and residential precincts in South Creek, and quantified the cooling benefits of each. The master plan included growing more trees to create shade, retaining water to irrigate grasslands and rooftops, and reducing concrete surfaces.

Urban heat was modelled using The Air-temperature Response to Green/blue-infrastructure Evaluation Tool (TARGET), developed by the Cooperative Research Centre for Water Sensitive Cities. TARGET calculates the air temperature for a small region based on the make-up of land-surface data and meteorological data. It includes assessing map grids according to the coverage of roofs, roads, concrete, water, trees, dry grass, irrigated grass, building height and road width.

Our results showed that, over a 24-hour period, on an extreme heat day where the maximum temperature reached nearly 45˚C the planned development would be on average 1.2˚C cooler than taking the business as usual option. At the hottest time of day (4.30 pm) the temperature would be, on average, 3.4˚C cooler (see Figure 2).

Figure 2. Modelling of air temperature comparing business as usual (BAU) with a master planned development that incorporates features of urban cooling

Planning now for climate change

We modelled the projected effects of climate change into 2055, and the master plan development was even cooler at 4.30 pm (3.8˚C) during a day of extreme heat. This is because extra trees provide a shield to the increased solar radiation on such days. Clearly, blue–green infrastructure is effective at cooling urban areas on very hot days.

The New South Wales Government is using our results to develop a more detailed design for construction. This will be a case study for other new suburbs in Sydney.

We already know the principles for cooling an urban landscape – increase shading, retain water and vegetation in the landscape, promote white reflective roofs, reduce hard surfaces – and it is now up to planners, policymakers, developers and investors to include them in their designs and plans.

For more information

Jim Binney, Director, National Capital Economics,

Dr Stephanie Jacobs, Mosaic Insights,

Project report: The economic impact of heatwaves on Victoria