Going it alone – how not to prepare for climate change

Newsroom

14-07-2025

Comment: The Report of the Independent Reference Group on Climate Adaptation was published on Wednesday. Mercifully, the report is short. But it is certainly not sweet.
Indeed, it constitutes one of the most philosophically misguided, morally questionable, administratively inept, and politically naïve documents I have read in many years. This is a great pity, because the relevant policy issues are vitally important and require robust, serious, principled analysis.
Confronted with the growing impacts and unprecedented long-term risks of climate change, not least accelerating sea level rise and more severe flooding, the group has a simple policy remedy: beyond 2045, the central government, and presumably also local authorities, should stop all property buyouts for climate-related disasters.
This approach would apply not only to those negatively affected by such disasters but also to those at high risk of future damaging events.
In effect, the report recommends that the government should inform all those with properties at risk from climate-related disasters: From 2045, you are on your own. There will be no financial assistance for you to relocate your home or business to a safer location, let alone to relocate your community, town or suburb, regardless of the seriousness of the risk you face and irrespective of your financial circumstances. If you cannot afford to move, well, sorry, bad luck. You will need to face the consequences on your own. But you can apply to MSD for a hardship grant.
In the meantime, over the next 20 years, the report recommends government provide property owners with reliable and consistent risk information, improve land-use planning to minimise future risks, and gradually reduce financial assistance for property buy-outs. The manner and rate at which such assistance should be reduced is not discussed.
Equally, the report ignores the issue of whether the same approach should apply to all natural disaster risks, including seismic events. But politically, it would be hard for a government to justify buying out properties negatively impacted by a major earthquake, as in Christchurch during 2011-12, but then refuse to purchase the same properties impacted by coastal inundation. If so, then after 2045, there would be no repeat anywhere in the country of red-zone buyouts.
The group's advice raises numerous issues – moral, administrative, legal, political, economic, and much else. Here, only a few can be considered.
Three reasons appear to underpin the group's proposal to end all disaster-related property buyouts: first, faced with rising climate-related risks, they will become unaffordable; second, buyouts are unfair; and third, the prospect of a buyout can encourage risky decisions and bad investments. But each of these arguments is problematic.
To start with, the Report provides no evidence that New Zealand will reach a point in the future beyond which moving people and their properties out of harm's way will be unaffordable, regardless of who pays. Hence, the core policy issue is not whether relocations are affordable, but who pays. Essentially, that is a moral or political issue, not an economic or technical one.
Regarding the possible fiscal cost of buyouts: fundamentally, this will depend on the compensatory framework – that is, who is eligible and for how much. The Expert Working Group on Managed Retreat, of which I was a member, recommended to the government in 2023 that any compensation for homeowners should be capped and restricted to principal places of residence. Holiday cottages and other second or third homes should not be eligible. Such arrangements would significantly reduce the fiscal costs of planned relocation.
But there is another critical point: in an interdependent world, not providing buyouts will impose fiscal costs. Those lacking the resources to move their homes and businesses out of harm's way will face ever more disrupted lives, with adverse health-related and employment-related impacts. Also, more people will need to be rescued more often – assuming the country continues to value and protect human life.
Moreover, if all relocations forced by climate change or seismic events are unplanned and haphazard, then any kind of sensible land-use planning or infrastructure investment will be much harder. All these things will impose fiscal costs – and costs on ratepayers.
Regarding fairness or equity: this week's Independent Reference Group report prioritises the so-called 'beneficiary-pays principle': those who benefit most from something should pay the most.
Unfortunately, the report largely ignores other morally relevant principles of fairness, such as meeting basic human needs, protecting individual rights or applying the polluter pays principle and the ability-to-pay principle. Similarly, the report overlooks the critical role of risk pooling or risk solidarity in the face of unprecedented and often uninsurable risks. Proper consideration of the full range of ethical principles would point to different conclusions from those advocated by the Independent Reference Group.
Aside from this, the beneficiary-pays principle is often irrelevant or hard to apply. When a town like Westport needs to be relocated because it cannot feasibly or cost-effectively be protected from sea level rise, who are the beneficiaries? Most of those forced to relocate will doubtless regard themselves as victims, not beneficiaries. And politicians who suggest otherwise are unlikely to receive much support.
To be sure, the prospect of buyouts in the context of natural disasters might encourage unwise investments. That is why any compensatory framework to assist with climate change adaptation must be part of an integrated policy framework, one that is well designed to reduce future risks and minimise moral hazard.
Finally, this week's report ignores time inconsistency and policy credibility. Suppose a government at some point endorses the idea that beyond 2045 there will be no buyouts in response to natural disasters. Would that be a credible policy in a parliamentary democracy – or even in a dictatorship? Would citizens believe it?
And what happens at the 2044 general election when tens of thousands of property owners, if not more, are faced, in the context of ever-increasing climate-related impacts, with the prospect of potentially uninsurable and worthless homes in 2045 or sometime later? And which political parties will campaign on the slogan: 'Next year you will be on your own'?
Viewed from 2044, the Independent Reference Group's recommendations in 2025 will look breathtakingly naïve. That means they also lack political wisdom today.
We need a long-term policy framework for climate change adaptation that is credible, cost-effective and tolerably fair to all citizens. Above all, it must recognise the state's fundamental moral duty to protect the public interest and enable effective risk solidarity in the face of unpredictable, unwanted and unprecedented disasters.