Communities ravaged by future climate induced natural diasters will be unable to recover based on NSW budget estimates.
About $3.1 billion for disaster relief and reconstruction was set aside by Treasurer Daniel Mookhey in the state budget last month.
But it will not be enough to fund the work needed to recover from increasingly catastrophic and more frequent climate-driven events.
The latest 40-year forecast estimates natural disaster related costs will increase from $5.1 billion in 2020/21 to up to $17 billion per year by 2061.
Mr Mookhey conceded it would be a "big challenge" for the government to account for future climate impacts.
Record-breaking flooding which devastated the NSW Northern Rivers in February and March last year cost about $6 billion in recovery efforts.
The Black Summer bushfires of 2019-20 are believed to have caused about $80 billion in property damage and economic losses.
"The severity of climate events in NSW is increasing, the damage that they're creating to life and properties is rising," Mr Mookhey told a budget estimates hearing on Tuesday.
The treasurer said ensuring the government was able to assist communities in their recovery remained a policy challenge.
When directly questioned whether NSW had the money to reconstruct its cities and towns in the face of climate impacts like that of the Lismore floods, Mr Mookhey was unable to say whether the state was adequately resourced.
"It's a big challenge," he said.
"We are thinking through appropriate revenue design (that) we'll need to be across just to ensure that we can meaningfully meet these requirements."
Mr Mookhey said reform was needed "both to prevent climate crisis events and to ensure that the community can recover".
Extreme weather events and natural disasters across the nation are expected to become more frequent.
NSW has declared more than 60 natural disasters since 2019, costing the state billions in damages and relief work.
On Tuesday, the government committed $50 million for Central West communities impacted by the 2022 floods as part of a $150 million Community Restoration Flood Fund.
Funding will be used for house raising and retrofits, as well as the incorporation of designs and materials that can withstand future flooding events.
Premier Chris Minns conceded that more than one year on, the job of restoration was not done.
"We can expect more of these devastating natural disasters right across NSW will only continue in the years ahead," he said.
Australian Associated Press