A case study of Exmouth, Western. Australia

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1 Economic strategies for coastal disaster riskreduction: A case study of Exmouth, Western Australia This thesis is presented for the degree of Doctor of Philosophy in the School of Environmental Science, Murdoch University 2012 Rebecca S. Roberts B.Sc (Hons) University of Peradeniya, Sri Lanka M.Sc. Mahidol University, Thailand

2 DECLARATION I declare that this thesis is my own account of my research and contains, as its main content, work that has not been previously submitted for a degree at any tertiary education institution Rebecca S. Roberts

3 ABSTRACT Recent major natural disasters in Australia have highlighted how some of the economic costs of living in risk-prone areas are borne by the rest of society. This study used the town of Exmouth, in north-western Australia, to investigate economic strategies for coastal disaster risk reduction, as it typifies expanding development in coastal areas prone to extreme weather events. Using a GIS, coastal inundation scenarios from cyclonic storm-surge were investigated relative to coastal property, infrastructure and shire planning. It showed that some areas developed in the past decade are at high risk of storm-surge inundation. There has been a loss of disastermitigating ecosystem functions as well as increased risk to previously unaffected areas. The extent to which risk perceptions of cyclonic storm-surge inundation and flooding influenced the price buyers paid for residential property in Exmouth over the period was examined using a Hedonic Price Model. This incorporated dwelling variables, proximity to the coast, cyclone Vance storm-surge and 1-in-100 year flood levels and indicated that prices did not reflect the real societal cost of risk. To internalize these costs, a mandatory private insurance scheme for high-risk properties (with a time-phased government subsidy) and penalties for local councils undertaking new high-risk developments are proposed. Further, a hybrid economic instrument aimed at correcting the market failure in coastal land which comprises an environmental offset by developers, a propertyowner tax and special disaster risk mitigation fund, is also proposed. This study is highly relevant in view of the planned revision of the Western Australian Coastal Planning Policy, the expansion of industry along the coast of northern Australia and the predicted effects of climate change on sea levels and extreme weather events. -i-

4 Table of contents Chapter 1: The nexus of economics, natural disasters and environmental 18 Disaster policy in Australia Economics of natural disaster risk in Australia Coastal disasters, economics and the environment Key concepts in environmental economics Chapter 3: Coastal disaster risk Research aims Definitions Chapter 2: policy Background on the case study site: Exmouth town Geography Climate Social and demographic attributes Town planning and development Residential property Coastal property, disaster risk and market failure at Exmouth Chapter 4: Coastal policy and planning implications of cyclonic stormsurge risk at Exmouth Approaches to assess coastal vulnerability Methods Results Discussion Chapter 5: Hedonic price analysis for properties in relation to cyclonic storm-surge inundation risk at Exmouth Theoretical background on the Hedonic Price Model Property at Exmouth Methods Results Discussion Chapter 6: Natural disaster insurance for cyclonic storm-surge inundation risk in northern Australia Theoretical background Failures of natural disaster insurance -1-

5 International experience with flood risk insurance Natural disaster insurance in Australia Cyclonic storm-surge inundation insurance in Australia Proposed approach for cyclonic storm-surge inundation insurance Implementation challenges and the political economy of government Chapter 7: The role of environmental economic instruments for the management of cyclonic storm-surge inundation risk Environmental economic instruments Environmental user charges and taxes Environmental subsidies Environmental bonds Environmental offsets Tradable environmental permits Special environmental funds Examination of the market failure at Exmouth Proposed hybrid instrument Implementation challenges and the political economy of government Chapter 8: References Appendices

6 Acknowledgements Firstly, I would like to extend special thanks to my supervisors, Professor Lynnath Beckley from the School of Environmental Science and Professor Malcolm Tull from the Murdoch Business School. I am greatly indebted to them both for their tremendous support and guidance which was instrumental in completing this thesis. Thank you for challenging me to develop my research and writing skills; this has been a growing experience. I am immensely grateful to Dr Ranald Taylor for his assistance with the Hedonic Model and the many useful suggestions. I would also like to thank Dr Halina Kobryn for help with the GIS. I would also like to acknowledge the financial support of Murdoch University for their international research and completion scholarships and the School of Environmental Sciences for PhD running costs. I am especially grateful to the staff at Landgate and the Western Australian Department of Transport in Fremantle who provided me with data and answered all my queries. I would also like to thank the Shire of Exmouth for their assistance, especially the engineer Keith Woodward. I extend huge thanks to my all my friends in Sri Lanka who have given me tremendous moral support and encouragement through it all. I am especially indebted to my friends Roshanara De Croos and Vasanthi Thevanesan whose friendship, support and guidance provided me with the courage and determination to continue with my studies even during the most challenging moments. Thanks so much to Nishan De Mel and Evangeline Ekanayake who have also given me really wonderful support. Marlene Buizer, Wendy Vance and Noraisha Oyama, the -3-

7 coffees, lunches, dinners and your friendship has got me through the long days. Thanks also to Julie Heeley and Lisa Kirby for their kindness and friendship in various ways. I would like to also acknowledge my friends, Alex and Julie Aitken, and Jodi Gratton for their flexibility, encouragement and time off work to allow me to complete the examination revisions in the final stage of my thesis. You have been such kind and generous people, thank you! I would like to thank my family, especially my uncle and aunt, David and Daphne Perera, and cousin Tania Perera for the many hot meals and support through my time in Western Australia. I would like to also thank my sister Sandra Obeyesekere and my nephews Jason and Josh for their love and support. Vivienne Cass, there are no words to say how much I appreciate everything you ve done for me, from checking my references, to having an eye on my nutrition and keeping my stress levels under control in the last few months. Your never-ending encouragement and belief in me has brought me to where I am now and I cannot express sufficiently my indebtedness to you. I am enormously thankful to my mother Neiliya who has showed her love and support to me throughout and her quiet, practical wisdom. I also remember with thanks, my late father, Ben, whose love of the ocean has lived on in me. I dedicate this thesis to them, in appreciation of all they have been to me. -4-

8 Abbreviations for Australian States and Territories ACT Australian Capital Territory NSW New South Wales NT Northern Territory VIC Victoria SA South Australia QLD Queensland TAS Tasmania WA Western Australia Acronyms ABS ACE CRC Australian Bureau of Statistics Antarctic Climate Change and Ecosystems Cooperative Research Centre ARI Average Recurrence Interval AU$ Australian Dollars BoM Bureau of Meteorology (Australian Government) BTRE Bureau of Transport Research Economics (Australian Government) COAG Council of Australian Governments CSIRO Commonwealth Scientific and Industrial Research Organisation DCCEE Department of Climate Change & Energy Efficiency DEM Digital Elevation Model DoP Department of Planning DoW Department of Water EMA Emergency Management Australia -5-

9 EPA Environmental Protection Authority (Western Australian Government) FEMA Federal Emergency Management Agency (United States Government) FESA Fire and Emergency Services (Western Australian Government) GDP Gross Domestic Product GIS Geographic Information System HPM Hedonic Price Model HSD Horizontal Setback Datum ICZM Integrated Coastal Zone Management IPCC Intergovernmental Panel on Climate Change MSL Mean Sea Level n.d. Not dated NDIR Natural Disaster Insurance Review NFIP National Flood Insurance Program NSCT National Sea Change Taskforce OECD Organisation for Economic Corporation and Development SKM Sinclair Knight Mertz SRTM Shuttle Radar Topographic Mission UK United Kingdom UNDP United Nations Development Program UNEP United Nations Environmental Program UNISDR United Nations International Strategy for Disaster Reduction US, USA United States of America US$ WANDRRA United States Dollars Western Australian Natural Disaster Relief and Recovery Arrangements -6-

Stamp Duty on Transfers of Land

Stamp Duty on Transfers of Land New South Wales NON-FIRST HOME BUYER - STAMP DUTY PAYABLE - NSW $0 - $14,000 $1.25 for every $100 or part of the dutiable value $14,001 - $30,000 $175 plus $1.50 for every