Flash floods hit Australia

Reuters is reporting that flash floods have hit Australia with thousands of people trapped and thousands more evacuated due to prolonged rainfall. So far there are no reports of casualties although the situation is still ongoing and catching the headlines across Australia.

Where have the flash floods hit?

So far Queensland has been hardest hit by the floods with 11,000 people trapped in isolation and many more evacuated by the emergency services. It seems as though the town of Moree has been hardest hit having literally been “cut in half” by the record flood waters which have taken everybody by surprise. Various evacuation centres have been created and these are filling up very quickly with helicopters making regular visits to pick up those stranded by the high waters.

Emergency services

Thankfully the emergency services have significant experience of such flash flooding across Australia and while thousands upon thousands of people are involved there is no doubt they are in the safest hands. Helicopters and other modes of transport have been quickly mobilised and the situation seems to be as under control as you could hope for.

This is not the first time that flash floods have hit Australia with 35 people killed and over 30,000 homes wiped out across Queensland and New South Wales in early 2011. However, while it is imperative that people are plucked to safety as soon as possible there are also other issues to consider specific to this area.

Four coal mines closed down in Queensland

Whitehaven Coal has reported the closure of four mines in the area due to the heavy rainfall although so far it seems as though the mines themselves, and the equipment, have escaped any damage. These are obviously precautionary measures and it is hoped that once the waters begin to recede the potential danger will also reduce. However, it has highlighted a potential problem for not only the Australian mining industry but also the worldwide industry.

It is not commonly known but Australia accounts for around two thirds of the global trade in coking coal which is a vital element in the production of steel. The floods of 2011 highlighted this particular problem as there was an immediate increase in the price of coal in Australia and around the world purely and simply because of the loss of production and damage to the mines in Australia. It is common knowledge that Australia has an abundance of natural resources and in many ways the economy is heavily reliant upon these particular materials. So what can be done to reduce the risk not only to Australia but the worldwide economy?

Contingency plans kick in

The very fact that the four mines in question have been closed down temporarily, although they remain undamaged at this moment in time, illustrates that the industry is well aware of potential issues and has contingency plans in place. However, in reality there is very little that the industry can do as a whole if the natural resources required are in specific areas which have in recent times attracted more than their fair share of flash floods.

In reality, the industry needs to go where the natural resources are, no matter what potential impact the local climate and the local weather may have. They can put in place contingency plans to ensure as much of the industry is protected in these specific circumstances but the longer the floods go on the less access to the mines which will create a shortage of particular types of coal both in Australia and around the world.

I awoke with wallabies, kangaroos and koala bears sitting in my trees!

Peter Birch, who runs a substantial cotton farm on the outskirts of Moree, told the Australian Broadcasting Corporation that he awoke in the morning with wallabies, kangaroos and koala bears sitting in his trees. It seems that every animal in the flood hit area was making for higher ground in order to escape the ever rising floodwaters. But what impact will this have on cotton production in Australia?

At this stage it is unclear exactly what kind of impact the flood water will have upon the cotton industry in Australia but Peter Birch, as an individual, believes it will cost him anywhere up to AU$750,000. This is a massive loss of earnings which could be replicated by others in the area the longer the floodwaters remain and the more damage they do to the cotton crop. It has also been reported that sugarcane, soya beans and corn crops have also been affected by the flash flooding which could lead to a raft of insurance claims in the short term.

Floodwaters to hit economic growth?

While it is unclear at this moment in time exactly what impact the floodwaters will have upon the Australian economy as a whole we can look back to 2010/11, which saw a large number of flash floods across the country, for guidance. It is estimated that around AU$20 billion, or 1.5% of gross domestic product, was shaved off economic growth purely and simply because of problems which arose because of the flood damage and closure of businesses.

It seems unlikely at this moment in time that the ongoing floodwater issues will impact as heavily upon the Australian economy as those in 2010/11 but it is yet another wake-up call as to the effect the environment can have upon economies. Unfortunately, there is no way to avoid flash floods but thankfully we have seen an increase in avoidance and protection measures in recent times.

Conclusion

We can invest billions upon billions of dollars in safety measures, new procedures and emergency services but when it all comes down to it we are all at the beck and call of mother nature. The very fact that the 2010/11 financial year was impacted to the tune of AU$20 billion due to flood water issues is a stark reminder. It is unclear exactly what kind of impact the ongoing issues will have but at this moment in time it seems unlikely to have a material impact upon current economic growth.

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