At the base of Mount Field, 73 kilometres outside of Hobart, tourism operator Rachel Power is counting the costs of record flooding across the Derwent Valley.

Her business, Waterfalls Cafe and Gallery, is located in Tasmania’s oldest National Park – a UNESCO heritage site that’s home to some of the world’s most ancient Eucalyptus trees.

Flooding has ravaged the area, forcing residents to evacuate and costing Power thousands of dollars in income and stock.

But what she really dreads is her next insurance renewal notice.

“Insurance is increasingly becoming unviable,” Power said.

“Either it’s becoming too expensive or we aren’t getting cover at all.”

Economies at risk

The local economies maintaining access to Australia’s tourism landmarks are being put at risk as scientists warn climate change is already driving more frequent and severe natural disasters.

A report this week found almost 68 per cent of Australia’s tourist hotspots face “peril” in coming decades under a two-degree global heating scenario that assumes “middle-of-the-road” emissions.

Tasmanian business owner Rachel Power says climate change is already affecting tourism.

It paints a picture of South Australia’s Barossa Valley covered in bushfire smoke, huge storms stranding tourists at major airports and rural economies that struggle to cope with the chaos.

But while the modelling forecasts risks out to 2050, those Australians living and working around some of the country’s most recognisable landmarks say the situation is already critical.

Climate change sparks uninsurability crisis

For Power, the economics are simple: The risk of more frequent and severe natural disasters is making insurance unaffordable, which means businesses can’t even get loans from banks.

The bottom line is that without insurance there are no businesses. Without employers there are no jobs, and without workers there’s not even anyone around to fund the local council.

“It erodes how many people have the ability to live and work in the regions that are making those towns viable,” Power said.

“Communities like ours don’t have money, so there are a lot of people who don’t even have insurance because they can’t afford it any more.

“What does that mean when we have a major event like we’ve just had?”

Natural disaster costs rise

An uninsurability crisis is where the rubber hits the road on climate change for tourism globally.

Huge bushfires are already threatening the viability of Californian national parks in the US and warmer winters are sparking OECD warnings about the future of the European Alps.

In Australia, where the cost of natural disasters is estimated to hit $73 billion annually by 2060, governments are funding resilience efforts to limit environmental damage and insurance blowouts.

But critics say funding is inadequate and other Australians feel the plight of their tourism-reliant communities are being largely ignored.

‘When, not if’ for Great Ocean Road bushfires

Matthew Vincent, a horticulturalist and business owner in Lorne on Victoria’s Great Ocean Road, tells TND that governments are failing to prevent the next catastrophic bushfire on the peninsula.

“There’s absolutely no decent preparation whatsoever for the bushfire that is coming,” he said.

“It’s a matter of when, not if.”

Vincent drives a community school bus up and down the great ocean road – perhaps Victoria’s most recognisable tourist destination – which he describes as one of the best jobs in the world.

But he’s increasingly dismayed by the view.

Coastal erosion is worsening on the shore line and on the other side of his bus the unchecked spread of flammable weeds stares him in the face.

Vincent explains that higher temperatures are worsening the spread of invasive species that evidence shows thrived after past bushfires, with far too little investment in trying to slow it down.

“More money is being spent cleaning toilets in Lorne than there is spent on the eradication of weeds on the Great Ocean Road,” Vincent continued.

“People don’t get their pictures taken by toilet blocks.”

Access to landmarks under threat

A political debate has emerged about how to address the insurance crisis, with some warning that mass relocations will be needed in areas exposed to disasters.

What’s often missed, however, is the resulting financial devastation for communities who maintain Australia’s most popular tourism destinations, contributing billions to economic growth.

Economist Nicki Hutley said access to Australia’s tourism landmarks is predicated on viable rural communities and that insurance costs are creating a “no win” situation for businesses.

“It’s all very well to say you can’t live here because your house is at risk of flooding,” Hutley said.

“But you can’t just say to a tourist business that we’ll just set up on a different river and just won’t go trekking through the native rainforest.”

Mitigation fund under fire

The $1 billion Disaster Ready Fund has formed the cornerstone of initial federal government efforts to help rural communities, funding hundreds of mitigation projects recently.

The policy has drawn criticism, however, including from experts like the Australian National University’s head of disaster solutions Roslyn Prinsley, who compared it to the AUKUS deal.

“Why is it that Australia has the strategic foresight to commit $368 billion to acquiring submarines to be delivered in the 2050s, but not to commit more than $1 billion over five years for disaster prevention?” Prinsley has written.

Josie Kelman at the Derwent Catchment Project says federal money has helped land managers clear willow trees from the Lachlan River, which lessened the severity of Tasmania’s latest floods.

But more funding is desperately needed to protect communities from the next flood, she said.

“You can make quite a substantial landmark scale difference that would benefit all of the communities,” Kelman said.

“We rely on grant funding, and it’s quite often short term – you go from one thing to the next.”

Clear cost of inaction

Hutley explained that mitigation funding is a difficult calculus for governments, which must commit far more funding without guarantees it will keep communities economically viable.

But the cost of inaction is clear; some of Australia’s favourite tourist destinations will be lost.

“Re-insurance costs are rising because of what’s happening right around the world – it’s not just Australia – everywhere is being affected by all of these things,” Hutley explained.

“We’re stuck with this problem.”

Minister for emergency management Jenny McAllister said the government recognised that climate change is going to mean more frequent and intense disasters in the regions.

“The Albanese Government has been working closely with the insurance sector to address rising risk in communities vulnerable to natural disasters and put downward pressure  on insurance premiums,” McAllister said in a statement.

“We are investing in community mitigation and resilience projects, as well as rating tools that bring down premiums, and have established the Hazard Insurance Partnership  to work with insurers on disaster risk reduction and hazard insurance.”