Deloitte put the value of Great Barrier Reef at $56 billion

The Great Barrier Reef has been given an economic value by Deloitte in their new report ‘At what price? The economic, social and icon value of the Great Barrier Reef’. Deloitte set the value of the Reef at $56 billion and have identified that the natural wonder provides Australians with 64,000 jobs.

As a result of rising seawater temperatures in the past decade and the March 2016 coral bleaching event, it is commonly agreed by scientists that the Reef is dying. Even after two years of back-to-back bleaching new economic analysis shows that in its current form, the Great Barrier Reef is critical to Australia’s economy. Meanwhile, the government subsidised coal industry continued to contribute both directly - through waste runoff and dredging - and indirectly - through climate change.

Deloitte’s ‘At what price?’ is a timely reminder of Australia’s commitment to fossil fuels and the economic damage that denying the existence of climate change will have on Australia’s ability to compete internationally in the future. The GBR itself has experienced a level of bleaching that experts have conceded defeat and no longer strive to save the Reef but merely preserve the World Heritage Site.

In 2017, scientists themselves declared 95% of the areas surveyed bleached to some degree and exclaimed at the “extraordinary rapidity” of climate change in the area. With the damage from the bleaching so severe, some experts have declared the eco-structure “dead", at 25 million years old.

Meanwhile, Australia continues to invest in the coal industry with the Adani Carmichael coal mine subsidies being just one example. This is despite global knowledge that new clean energy infrastructure and technologies are beginning to outweigh the benefits of cheap coal, a fact that has seen many nations step away from the outdated energy source.

Value of the GBR

As part of the report, Deloitte surveyed a number of Australians about their beliefs on the risks that the Great Barrier Reef is facing. Of the respondents, 44% believed that the climate change was the greatest inherent threat to the survival of the reef, followed by 23% who responded that mining was the greatest issue. 13% of respondents cited overuse of the iconic natural wonder whilst impact from farming on water quality came in at 6%.

In another section of the survey, respondents were asked about their willingness to make monetary contributions to protect the reef and if so, why?

The majority of the respondents (70%) said that the Reef should be protected inso that it can be enjoyed by future generations. Coming in second, 60% of respondents believe it is morally and ethically right to protect it and 59% said it is important to the planet.

Protecting the biodiversity in the Great Barrier Reef was cited by just under 60% of the respondents as to why it should be saved and under half (48%) of the respondents touched on economic reasons. In terms of the same question being asked globally, economic reasons were situated near the bottom of responses, at 24%, while importance to the plant and biodiversity came in at the top of the list.

The Great Barrier Reef’s value to the Australian nation however should not be underestimated. The reef is estimated to have a value of $56 billion which supports over than 64,000 jobs, both directly and indirectly. The Reef also generates over $6.4 billion in returns to the Australian economy each year – the majority of which are brought to Australia from international tourism.

The coal contradiction

The Deloitte report which exemplifies the economic value of the Reef to the Australian economy presents the Australian Government with a problem. Is invest in coal or preserving the Great Barrier Reef more economically beneficial in the long term? The long term viability of coal is in doubt especially in the aftermath of the Paris Agreement with a high likelihood of investments being stranded in assets.

One of Australia’s key arguments for increased coal exports to India as well as the Adani mine, is India’s booming steel industry. The country’s steel sector is a huge consumer of coal but India is looking towards renewables as their favoured source of energy production. If India’s steel industry shift away from importing coal and instead introduce electricity based arc furnaces there will be little to no economic gain in the future for Australia.

Keeping in mind that the new Adani mine has a 30 year lifecycle on the Carmichael site and the past 30 years have seen enormous advances in renewable technologies, investing in coal technologies seems to be risky business.

To stay afloat, the coal industry therefore has a vested interest in creating a demand for its product, especially in India. Irrespective of the negative externalities, the industry is attempting to survive the market shift but with global changing attitudes to both coal and renewables now increasingly shaping the global economy, that could prove easier said than done.

Internationally, the movement away from coal is growing in scale. China scrapping 120 coal plants which are either in the pipeline or currently being built. India has indicated it will scrap 14 GW worth of coal fired plants. A McKinsey report finds that peak coal is likely in 2020, however, given the pace of change, it may arrive before then. Increased investment and borrowing into the sector is likely to introduce considerable risks, both for natural wonders, such as the Great Barrier Reef, as well as Australia’s global brand and the national economy. This is aside from more systematic global economic risks for fossil fuel investors and creditors, as the world’s governments work increasingly quickly to meet its Paris Agreement targets.