The next generation of Australian workers will cop a $185,000 bill over their lifetimes if the country does not act more urgently to address the climate crisis, according to new modelling by a team of young economists at Deloitte.

The new report finds that global heating consistent with the current projections would cost the average millennial approximately $130,000 over the rest of their lives, increasing to $165,000 for gen Z.

A gen Z Australian’s lifetime income could be $165,000 lower by 2070 without further global action.

For generation Alpha, the eldest of whom turn 16 this year, the bill stretches to $185,000 a person by 2070.

The report estimates the damage to worker productivity, infrastructure and property, as well as increased health risks and healthcare costs. The changing climate and more frequent and extreme natural disasters would undermine tourism and destabilise agriculture.

Rhiannon Yetsenga, an associate director at Deloitte Access Economics, said the analysis, co-authored by Rhiain Powell, Will Neumann and Chern Han Mah, highlighted how “taking action on climate change is not just an environmental or moral issue, it’s really a question of intergenerational inequity”.

“For this generation, climate change is not a distant threat but an immediate, lived experience with severe consequences,” Yetsenga said.

“These compounded impacts slow growth, inflate costs, and jeopardise future wellbeing – especially for younger generations,” she said.

Alternatively, if today’s decision-makers can drive the climate action needed to reach net zero by the middle of the century, then millennials and generations Z and Alpha will avoid costs, respectively, of about $50,000, $70,000 and $80,000 over the course of their lives, the modelling shows.

The damage to generation Alpha’s prosperity from a business-as-usual approach to addressing climate change will be nearly 10 times that suffered by boomers, and more than double the costs borne by gen X Australians.

“Many of these costs are already locked in because emissions linger in our atmosphere for 30 years,” Yetsenga said.

“I think there is a lot of goodwill and people trying to do a lot of good things. But it’s fair to say that young people are frustrated.

“For many young people they feel they can’t trust the government to take action on the things that matter most to them, and the two things that came through strongly in our research were housing and climate change.”

The economists modelled two scenarios: an “insecure youth prosperity” scenario where global warming continues based on current policies, and a “secure” scenario where more aggressive action gets the world to net zero by 2050, and limits the damage.

The model then estimates the loss of GDP per capita over the coming decades in both scenarios against an imagined world of no climate change, before discounting that future impact into dollars in today’s terms for each generation.

‘Intergenerational burden’

The young economists advocate for a price on carbon as the most efficient mechanism to drive emissions reduction, but say expanding the safeguard mechanism would be a step in the right direction.

The report argues that economists and policymakers must take a more holistic view of how we measure progress as a country, and especially that “a growth model cannot be sustainable if it is not emissions-reducing”.

“The idea would be to have sustainable growth – that we are not pursuing growth at all costs, but also considering the environment and how it affects different communities,” Yetsenga said.

But Yetsenga said taking action on climate change need not come at the cost of slower growth. She said the nation should pursue new green and sustainable industries, such as green iron and critical minerals, to “future-proof” the economy.

“I think there is a big opportunity for Australia if it invests the right way and sets itself up for a green future. We are blessed as a country with an abundance of resources and land, sun and wind.

“I wouldn’t want to send the message that we have to compromise, because done right, this could be an opportunity.”

Ken Henry, a former Treasury secretary, said the Deloitte modelling showed the “shifting of the intergenerational burden”.

“We have been kicking this can down the road so future generations will have to bear more of the impact of climate change and pick up the tab for more climate action and the costs of adapting to climate change,” Henry said.

“At some point if climate change is not addressed it poses an existential risk to human survival, so it’s right up there. It’s difficult to imagine anything that could or should be ranked higher.”

In a report released on Monday, United Nations body the World Meteorological Organization confirmed 2015 to 2025 were the hottest 11 years ever measured, although the rising temperature experienced by humans on the surface was only 1% of the faster-accumulating heat in the wider Earth system.