How should NZ prepare for expected challenges of climate change?

The Ministry for the Environment has now released the report on climate adaptation from its Independent Reference Group, commissioned to test policy ideas and explore how we can prepare for the challenges of adapting for climate change.

If the Government follows the advice of the report we all need to prepare to take personal responsibility for the consequences of any home-wrecking weather, because local and central government aren’t going to bail us out with a buy-out.

One of the central tenets of the report is that homeowners should know the risks of how climate change might affect their homes and on that basis make their own decisions on whether to stay in a high-risk area or not.

But how might this work in the real world? What information is available for people to evaluate risk? How well can homeowners assess risk in an uncertain climate environment? How easy is it for home owners to adapt or mitigate or both in the face of climate-change-related weather?

Evidence from the property market is clear. Market prices reflect many attributes of a property – school zone, proximity to parks, beach and shopping centres, its aspect, landscape and view. So too for houses in flood plains – the market value of these houses are lower than houses that aren’t in flood plains. The extent to which values and house insurance premiums account for this will depend on the information provided to the market.

As the report says, measures need to be in place to better inform and educate people about known hazard risks. Auckland Council is updating Land Information Memoranda (Lims) to include detailed landslide and land stability information for properties affected by natural hazards, with a new landslide mapping to be included from October.

But how good is the science around risk assessment? Data on flood plains and soil stability will improve the ability of property owners to assess their exposure to risk. But science has yet to accurately predict the likelihood of extreme weather events such as Cyclone Gabrielle and the Auckland anniversary floods in 2023.

A one in 100 year flood describes flood risk based on probability but doesn’t mean it will happen every 100 years. It could happen next year and the year after. Attaching probabilities to land stability will be a major challenge. Of course over time we will learn more about the stability of land forms. In the meantime our capacity to measure risk is limited.

Underpinning the report is the desire to avoid what economists call ‘moral hazard’. The idea is that the deep pockets of local and central government reduce the incentive for people to manage their own risk. This has led to expectations that if a severe weather event damages a property then local or central government or both will come to the rescue with a buy-out or by footing the repair bill.

The reckless behaviour of financial institutions, believing they were protected from the full consequences of their actions, led to the 2008 Great Recession.

But property owners rely on councils to provide information on hazards and central government to provide legislative framework for climate adaptation. Each has a duty of care to provide the best possible information for homeowners.

Yes, homeowners share the responsibility for climate adaptation. Just as many second-hand car buyers get an independent assessment, it is reasonable to expect prospective home owners to check the Lim report and possibly get the site checked.

But if a homeowner has done due diligence and the property gets red stickered after an extreme weather event – then what? Stranded assets? Turning it over to individual responsibility would be disingenuous. The report suggests a 20-year phase out of central and local government liability – but there is no analysis to support this time frame.

Let’s run the numbers before tackling the policy challenge. Records show NZ has experienced at least one extreme weather event every year over the last 20 years. Extreme flooding has wreaked havoc in the Marlborough-Tasman District. There have been seven violent cyclones since 2018. Cyclone Gabrielle was NZ’s costliest non-earthquake disaster; the total cost to the economy was estimated at over $3 billion, without accounting for the adverse impact on people’s wellbeing.

The data underscores the economic significance of regular extreme weather events and the need for policy makers to step up to the challenge. We need policy based on the best available science that fully captures the role of government and realistic assessments of our capacity to manage risk. This report does little to instil confidence in the formulation of policy and does not adequately address the challenges ahead.