The challenging climate and environment have always played a central role in discussions about the development of northern Australia. High temperatures, rainfall that is highly variable from one year to the next and cyclones are often listed as significant constraints to development. However, social and economic factors are just as important because infrastructure and services supporting the north lag significantly behind the rest of Australia.

How do these factors interact in the future under both a changing climate and a rapidly evolving social and economic environment?

Climate projections for northern Australia suggest smaller changes in rainfall compared with southern regions though the effects on variability and extreme events is still very uncertain. Consistent with trends of the last couple of decades, population is projected to increase at faster rate than the rest of Australia, as are the regional economies.

Barriers to adaptation are significant in some sectors and unless they are first addressed, the limits to adaptation will not be reached. For example, there are fundamental institutional, social and economic barriers associated with the ability of indigenous communities to be appropriately engaged and heard on the issue.

Limits to adaptation are evident in a number of sectors that are central to current policy discussions on opportunities for the development of northern Australia. These limits include: agriculture - adaptation options that are economic in what is a high cost operating environment, physical limits to adaptation for some crop/horticulture and livestock farming systems; infrastructure - construction costs and associated insurance; mining - remaining operational during after extreme events; ecosystems - limits to improving resilience to existing stresses as a means of protecting ecosystems to increasing carbon dioxide concentrations and climate change.

At present in a policy environment focused on economic development opportunities, relatively little attention is being paid to developing no regrets and low regrets adaptation options or in understanding the physical, social and economic limits to adaptation.