Who should pick up the tab for the costs of climate change in north Queensland? | Richard Denniss

As climate risks continue to rise, the government is considering the idea of subsidising north Queensland homeowners

Is it fair that young men pay more for car insurance than older women, or that we make young healthy people buy private health insurance to keep the price of health insurance low for older customers? How about the fact that those who live in far-north Queensland are paying far more for home and contents insurance than those in the southern states?

While there’s no right answer to those questions, there is a wrong person to ask: namely, an economist.

Related: Dangerous flooding in wake of Cyclone Imogen for north Queensland as heavy rains lash Victoria and NSW

Related: Townsville homes may become ‘uninsurable’ due to flooding from climate change

Homeowners pay: Let insurers do their job and assess the risk of each property. If insurance for some properties is “too expensive”, then the price of those properties will fall as new buyers factor in expensive insurance to what seems like a “cheap house”.

Taxpayers pay: Let the general public pay for the risks in north Queensland. While the costs will be small when spread across 25 million Australians, there will be no price signal to discourage people from building ever more expensive houses in ever more cyclone-prone regions. There’s also the question of whether non-homeowners in southern cities should fund the lifestyle choices of hom owners in north Queensland.

Disaster levy: If we don’t want homeowners or the general public to pay, we could simply put a levy on the companies that profit from causing climate change. Such a levy could help not just homeowners, but local councils and other groups that will inevitably bear the costs that come with other people’s decisions to buy and sell coal.

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