Up in smoke: Australia’s bushfires darken economic outlook

In addition to the catastrophic human and environmental costs, Australia’s fires will have a heavy economic toll.

Australia is counting the cost of climate change, as “unprecedented” wildfires (known locally as “bushfires”) wreak havoc not only on humans and animals, but also on the economy.

As of Sunday local time, 28 people had been killed and over 2,000 houses destroyed in the record-breaking bushfires that have burned more than 20 million acres (8.4 million hectares) – an area equivalent to the size of South Carolina or Scotland. More than a billion animals are estimated to have been killed too, including threatened native species as well as thousands of livestock.

Yet in addition to the human and animal tragedy, the economic impact is also set to be significant and long lasting.

Moody’s Analytics has estimated the economic damage will exceed the record A$4.4 billion (US$3 billion) set by the 2009 “Black Saturday” blazes in the state of Victoria, which killed 173 people as they tore through rural areas north of Melbourne.

More than A$1 billion of insurance claims have already been lodged as a result of the fires, with claims expected to further rise as the bushfire season continues.

While previous bushfires have tended only to hurt those local economies directly affected, the economic impact will be broader this time, according to Moody’s economist Katrina Ell.

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