Warrnambool and Port Fairy face more than $3 billion in damage from rising seas by 2040

The study, Economic Impacts from Sea Level Rise and Storm Surge in Victoria, Australia over the 21st Century, led by environmental economist Tom Kompas and commissioned by the Victorian Marine and Coastal Council, was completed in 2022 but only released by the state government in late July, 2023.

It modelled the levels of inundation that would occur in coastal areas of Victoria based on the projected sea level rise by 2040, 2070 and 2100, and then calculated the economic cost of the damage such flooding would do to the low-lying land being swallowed up by the rising water.

Professor Kompas said the results were shocking, many times higher than previous estimates and running into the hundreds of billions of dollars by the end of the century.

The most stark evidence in the report for south-west residents was how large the damages were for many areas along the coast and how soon the costs would begin to mount.

For the area called Moyne West in the report, which includes the coastline from Codrington to the outskirts of Warrnambool, the economic damages by 2040 will have already passed $3 billion. Professor Kompas said the majority of the pain would centre on Port Fairy, which had hundreds of hectares of low-lying land around the Moyne River.

By 2040 South Warrnambool will also be feeling the effects of the rising sea levels, recording $453.5 million in damages over a concentrated area.

In 2070 South Warrnambool's damages will have more than tripled to nearly $1.5 billion, while Moyne West's will be approaching $4 billion. By 2100 South Warrnambool will have pushed past $2 billion in damages while Moyne West will hit $5.7 billion in a huge hit to the local real estate market and wider economy.

By 2100 other parts of the south-west will also be counting the cost of the rising seas. Moyne East, centring on the small, exposed town of Peterborough will face $2.4 billion in damages, while Corangamite South, which includes Port Campbell and Princetown, will have tallied more than $1.8 billion.

Across Victoria as a whole the damages stretch into the hundreds of billions: $122.8 billion by 2040, $237.4 billion by 2070, and $337.8 billion by 2100.

If those dollar figures sound unbelievably large, Professor Kompas said he had some bad news: they're probably underestimates.

"Generally speaking, the assumptions that we've used in the study are really conservative, so the real damages will probably be larger," he said.

It's scientifically established the climate around the world is warming at an ever growing rate. One of the effects of the rising temperatures is ice around the polar ice caps and in high mountain ranges like the Himalayas melting and running into the oceans, raising the overall sea level.

As the climate keeps warming over the coming century the ice is predicted to keep melting and re-freeze less. In the late 2000s scientists believed this process would raise average sea levels by around 0.8 metres by 2100, but in the past few years further evidence showed the earth was heating faster than previously thought and the scientists pushed the expected baseline beyond 1 metre.

In Victoria the planning benchmark for sea level rise by 2100 has sat at 0.82 metres for well over a decade and some people in and around the state government believed it needed to be reassessed. This was one of the reasons the marine and coastal council commissioned Professor Kompas' study.

Coastal council chair Anthony Boxshall said he and many of his colleagues "felt like we were saying the same thing over and over again".

Dr Boxshall said the idea of showing the financial impact of sea level rise created a metric anyone could understand.

"The idea of presenting it in a dollar value seemed to open up a completely new audience," he said. "When you say '0.82 metres' people say 'Oh OK', but when you say '$337 billion' people say 'Hang on, what do you mean?'"

Dr Boxshall said the other advantage of showing the financial damage just around the corner was it pushed businesses and governments to think about adaptation measures.

"Until now we've been quite rightly focused on mitigation, so reducing emissions and that kind of thing, and we have to keep doing that. But the reality is even if we meet the Paris targets we've got more than 72 cm of sea level rise locked in, so we have to adapt," he said.

"The (financial) metric creates the denominator for a business case for businesses or governments to invest in adaptation. This is what it's going to cost? Oh, it's going to cost us much less to adapt so we may as well spend the money."

The challenge for Professor Kompas was putting a dollar value on the damage future floods would cause.

He started with the "spacial data layers" from the then Department of Environment, Land, Water and Planning (DELWP), which showed the extent of inundation along the Victorian coastline at different sea level rise heights.

"The DELWP layers use a sea level rise of 0.82 metres by 2100, which we know is a substantial understatement," Professor Kompas said. "But even at 0.82 metres the damages are bad enough to invoke substantial action for planning and adaptation, they are really serious impacts."

He said most of the damage was done by storm surges occurring on top of the rising sea level benchmark. The modelling showed storm surges increased by 6 percent in 2040, 13 per cent in 2070 and 19 per cent in 2100.

Having established where the floodwaters were going to go, Professor Kompas overlaid 88 different land use classifications for the flooded areas to see the type of land being inundated, including various residential, commercial, industrial and agricultural land types.

"Down around Port Fairy there's damage across different land use categories. In 2040 you can see half a billion in residential damages, but farming areas get absolutely pounded and so do (nature) reserves," he said.

To estimate the value of the various kinds of land Professor Kompas used dozens of sources of data. For residential land the data on rental costs and house prices was essential, while market prices informed agricultural land costs and nature reserve land was estimated at 30 per cent of nearby residential land.

Damages were calculated at 50 per cent of the value of the land and assets inundated by flooding.

In Moyne West - the area centring on Port Fairy - the residential damages by 2040 were $544 million, while farming land took a $1.5 billion economic hit and reserves tallied $770 million in damages.

Professor Kompas said he believed the inundation coming to areas around Port Fairy was just as significant as the tens of billions in damages in store for Melbourne's Southbank and Docklands.

"These are very serious damages (in Moyne West), they may not always be big dollar amounts but they're wiping out large parts of those assets," he said.

"Those farming numbers are robust, we double checked the loss of arable land pretty carefully. The agricultural losses are spooky."

Professor Kompas said even discounting the value of future costs in present-day dollar terms, the losses were enormous and would be more than enough to trigger financial instability in coastal communities, especially in the later decades of the century.

"The big dollars wash over people sometimes, but the percentages of state income are really quite high. The economic hit in 2100 is equivalent to half a COVID shock, it's a serious loss," he said.

One of the purposes of the study was to get people thinking about adaptation, but Professor Kompas said in many cases the options were limited.

"Honestly for a lot of this the only option is retreat. It's painful," he said. "For some areas mangroves might help and in others physical barriers could help, but in the end much of it is retreat unfortunately.

"And remember erosion isn't even taken into account in this report, so combine erosion with sea level rise and storm surge and you've really got something to worry about."

Dr Boxshall said the report showed many communities faced painful decisions in the coming decades.

"It's pretty scary. Crikey, in Warrnambool there are some pretty hard choices ahead, like most coastal cities and towns," he said.

Dr Boxshall said he hoped the study would show the financial value of investing in adaptation.

"One of the really interesting findings that Tom and his team came up with was if we spend to avoid $1 of impact in 2040, it's like avoiding $4 of impact in 2070 and $10 of impact in 2100," he said.

"So it's pretty simple maths when you look at it like that. Why wouldn't you spend a dollar now instead of $10 later?"

He also hoped it would prompt prudent planning approaches by local councils and the state government.

Moyne Shire Council recently finalised its C69 planning scheme amendment, which established the areas of Port Fairy that were appropriate for development. The council and catchment management authority had pushed for 1.2 metres as the 2100 sea level rise benchmark, but a state government planning panel overruled the proposal, suggesting 0.82 metres - as the statewide baseline - was more appropriate.

Dr Boxhall said the choice to reject the catchment management authority's advice had surprised him.

"I am deeply confused by the application of the new marine and coastal policy and the role of the catchment management authority under the Marine and Coastal Act in that decision," he said.

He also said local councillors would have to think carefully about where they approve future development, especially if they rejected expert advice.

"It would be the liability of the councillors, not just organisationally but personally - thanks to changes in the Local Government Act - if they ignore that advice," he said. "They are personally liable for decisions now, just as directors are."

Warrnambool City Council city growth director Luke Coughlan said the council was aware of the risks and planning for the future.

"Planning projects such as the flood investigation in South Warrnambool identify flood risk, investigate mitigation options, and put controls in place to ensure that development is occurring in the right place, and that infrastructure is planned accordingly," Mr Coughlan said.

"This includes assumptions around sea level rise and storm surge based on the most recent data.

"In this way, we can limit the economic impact on the community."

Dr Boxshall said the 0.82 metre statewide benchmark was certain to change, perhaps as soon as this year.

"That benchmark is going to change, it's in the marine and coastal strategy to be redone this year. It's going to change and it's only going in one direction, it's not going down," he said.