Climate action key to cutting NSW cost of living

If the world gets on track for net zero by 2050, the NSW economy would be nearly $800 billion better off in total over the next 50 years. New modelling from the Net Zero Commission shows that, while some economic impact from climate change is now inevitable, accelerating action could reduce the scale of these impacts and the cost of living.

If the world stays on its current path, NSW households will feel the brunt, with modelling showing: 

• a $3,000 increase to a family of four’s annual grocery bill by 2070
• and a $3,500 loss in annual income for the average worker every year for the next 50 years

Accelerated global and local action is projected to cut this impact, saving $1,000 on annual grocery bills and boosting the average worker’s annual income by $2,000. 

Based on independent modelling from Deloitte Access Economics and UNSW’s Institute for Climate Risk & Response, the report reveals climate change has already reduced the size of the NSW economy. Modelling estimates the state’s GSP per capita approximately 18% lower than it would have been without warming. That is the equivalent of about $20,000 less annual income per person.

Lead Commissioner and Economist, Professor Frank Jotzo said, “Reducing emissions and adapting to already inevitable climate change impacts is the economically smart thing to do. Unchecked climate change would create a permanent drain on wages and productivity. Climate action isn't just an environmental goal; it is fiscally responsible government action."

The report warns that climate impacts are compounding and are economy wide. Repeated disruptions continuously reduce productivity and investment, creating a persistent, structural drag that risk progressively eroding the State’s economic base.

Because these shocks hit unevenly, leaving vulnerable groups and regional areas with fewer resources to respond, the Commission stresses the urgent need for targeted, place-based solutions.

Local adaptation and global emissions reduction is the state’s strongest economic defence. By investing in resilience today, NSW can minimise future disruptions, sustain productivity, and reduce long-term financial losses to businesses and workers.

To achieve this, the Commission advises that incorporating climate impacts into economic modelling is a baseline requirement for credible economic forecasting. 

“The climate crisis it is a direct threat to NSW household budgets," Professor Jotzo added, "It is essential that climate risk is embedded directly into core economic and fiscal decision-making today for a stronger, more secure NSW.”

Notes to Editors: 

• This release is based on the Commission's primary report The Economic Impacts of Climate Change in NSW
• The Commission's analysis is underpinned by two independent technical reports commissioned for this project:
  • Counting the costs: Economic impacts on the New South Wales economy from climate change delivered by Deloitte Access Economics. 
  • The Economic Cost of Historical Climate Change delivered by the Institute for Climate Risk & Response (ICRR), University of New South Wales.

Read and download the full report.