A$850 billion sea level bill: insurers refuse to pay for "act of the sea," coastal local governments forced to foot the bill

According to ABC News, Australia's first national economic loss assessment of sea level rise, jointly completed by the University of Melbourne, the Australian National University and a global environmental and economic modeling research institution, shows that by the end of this century, more than 267,000 coastal properties and 2 million hectares of land nationwide will face flood damage, with projected total losses exceeding A$850 billion—of which property losses exceed A$274 billion and land-use losses approximately A$580 billion.

The study points out that all coastal states and the Northern Territory will face enormous loss bills. Queensland carries the highest risk, with about 93,000 properties in danger and projected losses of A$214 billion; the Gold Coast has become the most exposed urban area in the country, with projected economic losses of A$8.44 billion. Western Australia faces the largest total losses; property losses in northern New South Wales and the Mid Coast region are projected to exceed those in Greater Sydney. Victoria is the only jurisdiction where property losses exceed land-use losses. Study co-author Tom Kompas, professor of environmental economics and biosecurity at the University of Melbourne, described the findings as "alarming" and warned that economic losses will intensify further as fossil fuel emissions continue to push up global temperatures.

"We keep warming the planet… sea levels will continue to rise, tides will be higher, king tides and extreme high tides will be higher, and storms and storm surges will be stronger and even more frequent, triggering localised flooding," Kompas told ABC News.

The study also reveals a key mechanism: for every 10 centimetres of sea level rise, the frequency of "100-year" flood events will triple. Since 1900, global sea levels have risen more than 22 centimetres and are projected to rise another 14 centimetres by 2050—meaning coastal flooding frequency will climb significantly in just the next 25 years. Andrew Watkins, a Climate Council report author and visiting professor at Monash University, told ABC News that this combined effect is already being seen: sea level rise combines with storm surges as storms push water toward the coast, raising water levels; add waves on top of that, and if it occurs at high tide, "all the impacts manifest simultaneously."

Last year, after Tropical Cyclone Alfred passed through, storm surges and wind waves caused severe erosion from southeast Queensland to northeast New South Wales. Data released by the Insurance Council of Australia shows related claims exceeded 125,000, totalling A$1.36 billion. Johanna Nalau, associate professor of climate adaptation at Griffith University, told ABC News that electricity, transport, water supply and other infrastructure were restored within weeks to months after the storm, but coastal erosion problems persist to this day, and damage to some residents' homes remains unresolved.

The core dispute over these losses centres on who pays the bill. The study notes that insurance policies typically exclude losses caused by "act of the sea," and premiums in some coastal areas are rising sharply. Watkins stated plainly that for some local governments, adaptation and recovery expenditures have become "unaffordably high." He told ABC News: "Many local governments are in fact having to dip into their own coffers, both to support resilience building and to deal with damage from storms and sea level events. We must treat this issue as a national one, working with communities and at local, state and federal levels to chart a way forward."

It should be noted that the study's baseline scenario is based on the assumption that global carbon emissions will peak around 2040, with warming controlled to about 2.7 degrees Celsius. The United Nations warns that, even under current policies, global warming by the end of this century could reach 2.6 degrees Celsius, meaning actual losses could be higher. The over-A$1 trillion loss scenario mentioned in the report is based on warming exceeding 4 degrees Celsius with continued growth in fossil fuel use; the researchers believe that, given the spread of clean energy, this scenario is unlikely to materialise.