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Australia: Dominant middle class feels extreme weather impact

Source: Asia Insurance Review | Feb 2016

Scott Haslem
Australia’s middle-income urban society feels the impact of extreme weather (be that drought, persistent heat, extreme storms or flooding) in three key areas: economic, health and property damage, according to Mr Scott Haslem, Chief Economist and Head of Macro Research at UBS Australasia. 
 
   A recent report stated that 66% of Australia’s adult population is considered middle class. Australia is also a highly urbanised society. According to UN data, over 75% of Australians live in urban settings. This concentrated urbanisation reflects, in part, that Australia is the hottest, driest inhabited continent on the earth, with drought a key aspect of its climate. 
 
   The economic impact of extreme weather is largely a reflection of the impact of the increased incidence of drought, but also extreme storms, given Australia’s relatively significant agricultural sector (2.5% of GDP, 20% of exports). This rising incidence has significant economic impacts on Australia’s (often middle class) farmers, via reduced yields and income, and urban middle class who can face temporary periods of significantly elevated food costs.
 
Health impacts
The health impacts from increased incidence of extreme weather are broad. They can include negative impacts on nutrition and infectious diseases; problems with food supply; loss of livelihoods; and conflict provoked by displacement and migration. Research has also shown that rising incidence of drought and associated difficult farming conditions can exacerbate mental health issues, with increases in the risk of suicide for rural males aged 30 to 49.5. 
 
   In addition, bushfires cause an increase in respiratory admissions to hospital while extreme storms in rural New South Wales are responsible for concentrating grass pollens in the air which may be responsible for up to 50% of asthma exacerbations. 
 
Property damage
Property damage can be seen in extreme heat damaging infrastructure, such as transport systems and electrical distribution, while bushfires and floods that encroach urban areas can cause significant damage, especially to housing property.
 
   The impact of climate change through rising sea levels and coastal inundation has also been a focus given the high value of middle-income property and infrastructure located on Australia’s coast line.
 
   Mr Haslem’s comments are in a section of the “Climate change: A risk to the global middle class” report, which is UBS’s first report measuring the impact of climate change and its effects on the global middle class. The UBS report includes a study of middle-class populations in 15 countries.
 
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