Water in the Hole: Postcard From Australia

As a follow up to last week’s post, China Lights, Global Floods, Australian Coal, I’ve helpfully received various emails, reports, and some photographs from friends and contacts in New Zealand and Australia. Below is a classic Before and After portrait of the Baralaba Mine, flooded by the Dawson River.

I also spoke with Max Keiser  this week about the floods in Australia and their impact not only on coal production, but overall global energy supply. | see: On the Edge with Max Keiser, Gregor Macdonald interview 14 January 2011. One point that I could have made a bit more clearly in my conversation with Max relates to the measurable divergence now observed between the frequency of geophysical catastrophes and weather-related disasters. This is an important, statistically meaningful trend that has caught the eye of the insurance industry and was clearly visible to me when I saw the recent Munich Re Report on catastrophe-losses to the industry. Better still, Joe Romm at Climate Progress communicated directly with Munich Re about the report:

Dr. Peter Höppe, Head of the Geo Risks Research Department at Munich Re, the co-author of Schmidt, Kemfert and Höppe, wrote me:

For me the most convincing piece of evidence that global warming has been contributing already to more and more intense weather related natural catastrophes is the fact that while we find a steep increase in the number of loss relevant weather events (about tripling in the last 30 years) we only find a slight increase in geophysical (earthquake, volcano, tsunami) events, which should not be affected by global warming. If the whole trend we find in weather related disaster should be caused by reporting bias, or socio-demographic or economic developments we would expect to find it similarly for the geophysical events. By the way the assumption that climate change is increasing the risk of extreme weather events is backed by IPCC.

As Max Keiser and I agreed during our interview, it’s no longer a political position to acknowledge global warming. The global reinsurance industry is already pricing it in as observable, measurable, and costly. I’m growing more confident that the global resource extraction industry is going to start bearing more of the cost–via the insurance mechanism–of increased weather-related risk.


Thanks: to Blair Rogers in New Zealand for these photographs, and recent reports.


  1. Anonymous writes:

    Gregor, any idea how long this mine will be offline?
    Because if it’s along time, surely that will impact the end user countries.
    How many other mines, have the same problem?

    Nice photos.

  2. Anonymous writes:

    Gregor, any idea how long this mine will be offline?
    Because if it’s along time, surely that will impact the end user countries.
    How many other mines, have the same problem?

    Nice photos.

  3. pavan writes:

    Gregor, You should stick to what you know and stop trying to promote global warming alarmism. The IPCC is a discredited organization headed by Rajendra Pachuri who has been involved in numerous scams. Further evidence of fraud comes from the Climate Research Unit emails in East Anglia, UK. Try searching on “Mann hockey stick discredited” for more. Also, note the snow and cold world wide. Out of space…

  4. gregor.us writes:

    The post is not about my views of global warming, but the supercat/reinsurance industry’s view.

    Oh wait, you didn’t actually read the post.

    Get back to me after you’ve done so.



  5. gregor.us writes:

    There has been a ton of complacency about the return of coal production in AUS, and you will notice that the timeline for restoration keeps lengthening. As one smart money manager in Sydney said, “we keep hearing about 100 year weather events here from drought to floods but perhaps we need better language–because they are coming every couple of years, not every hundred years now.”

    I think it’s going to be at least 6 months before coal production normalizes. Will update as we goin along.

  6. pavan writes:

    OK. I read it again. It still sounds like you are saying that global warming is supported by the divergence of weather related costs relative to geophysical caused costs. You use the term statistically meaningful trend to describe this. Statistically significant trends don’t necessarily imply causality. Evidently, I misinterpreted what you were saying.

  7. Andy writes:

    Munich Re and the Munich Re Foundation support the wealth transfer from high carbon emitting nations to low emitting nations and they want a big chunk of the money to be used to buy insurance in poor countries, which may not be the best use of the money. They are way offside of IPCC AR4 which is very equivocal regarding pre 2007 storm attribution and somewhat equivocal regarding future storm attribution.
    Most storms start at sea and many move over land, leading to claims. Most volcanoes and earthquakes are beneath the ocean and very few lead to insurance claims on land. You need the ocean bottom geophysical data to measure divergence.

  8. bdcs writes:

    Pardon my ignorance, perhaps someone would be kind enough to answer this following question for me:

    In an effort to turn this into an actionable idea, how should I expect these storms to effect: (1) Australian coal miners; (2) Non-Australian coal miners; (3) World coal (viz., the Stowe coal index). I would imagine it to be bad, good, and some-average-between-bad-and-good.


  9. BMR789 writes:

    Post some of those rail pics Gregor. 😉 Sections of track completely munged. The rail network that services those Oz coal fields is vast and has been seriously affected. A number of bridges completely gone – have to be completely rebuilt etc.

    Below from reports that came in last night..

    Infrastructure Australia chairman Rod Eddington yesterday said the cost of rebuilding after the Queensland floods would be “gargantuan.” Mr Eddington warned that current infrastructure projects, designed to boost Australia’s economic growth, would have to be postponed in lieu of essential works like power, water, road and rail networks. Treasurer Wayne Swan said the floods would cost “billions of dollars in Commonwealth money.”…

    …damage to railways in Victoria as a result of flooding. While grain supplies to Brisbane’s Fisherman Islands port terminal may be limited for up to three months, Graincorp reported that less than one tonne of grain from the 2010-11 grain harvest had been received in the past week….

    That infrastructure rebuilt is going to take a while to sort out.
    Pressure points everywhere.

  10. jaykimball writes:

    For more on trends in weather related disasters, see:


    I include a chart showing 100 years of disaster data from the Center for Research on Epidemiology and Disasters, along with some stunning video of the side-effects of extreme rain.

    Jay Kimball
    8020 Vision

  11. jaykimball writes:

    Also, regarding the insurance industry embracing climate change models and covering their exposure – Lloyds of London Insurance published an excellent study on Extreme Rain in London. Bottom line: Over the past 100 years, the second half of the century showed a 9 fold increase in extreme rain, over the first half of the century. For more on that, see:


    Jay Kimball
    8020 Vision

  12. Wolfie writes:

    I agree that the climate is rapidly changing. However I note that the insurance industry seems quick to pin this on the “carbon leading” theory and thus levy extra premiums on heavy carbn producing countries and industries. Personally I find this hypothesis slightly dubious.

    What if its more related to agricultural land use and this connection soon becomes apparent as even Plato acknowledged as he observed the mutating landscape of ancient Greece? What are we to do then?

  13. Francisco Bandres de Abarca writes:

    Of course, it may be quite simply that the insurance industry, in the pursuit of generating greater earnings, has roughly tripled the number of policies they have written to protect policy holders against weather related losses.

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