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Newsroom
4 days ago
- Business
- Newsroom
Paying for the reality of climate change
The 100-year floods are rolling in on a regular basis; the rain doesn't let up; no one wants a cliff-top property anymore. Climate change is no longer just about things you can't see or touch. It's about running from rising water and bailing out the basement. 'I think there has been a lot of emphasis both in reporting and in people's understanding of climate change … and the science behind that and how it's getting worse,' says RNZ In Depth reporter Kate Newton. 'We're now starting to shift our focus because of these severe weather events that we're seeing more frequently, and at a greater level of severity, to what that actually means for us now, and the fact that climate change is no longer this far-off, distant prospect, but something that is affecting real people and real lives, at this very moment.' Today on The Detail we look at how we adapt to this new normal, and who will pay for it, after a report by an Independent Reference Group recommended essentially that the days of property buy-outs have a limited life. The reference group included economists, iwi, bankers, insurance and local government representatives and was set up by the Ministry for the Environment. Newton goes through the findings on climate mitigation and adaption, which she says are politically unpalatable, and extremely expensive. 'There's a whole lot that goes into it and every step of it is complex and every step of it is expensive. But we also need to remember that even if we do nothing, it's still expensive. 'I think the top estimates of costs involved with Cyclone Gabrielle was $14.5 billion – it's a huge amount of money. 'But you're looking at things like, even just understanding where the risk is, and how severe that risk is, and how it might change in the future – it's a huge amount of work.' The Government wants bipartisan support on decisions because future certainty is required but also, Newton points out, because of the bleak message it's likely to send – in the words of one critic: 'You are on your own'. But firm decisions are unlikely to come any time soon. 'It's something that's been a long time coming and I think [Climate Change Minister] Simon Watts is running into similar problems to his predecessor James Shaw, who tried for six years to pass a climate change adaptation act,' says Newton. The main issue with that failure was around the complexity of how we do it and who pays for it. 'This is one of those big thorny issues that if you're changing the rules and changing how people adapt every three or six or nine years, it gives nobody any certainty in the future.' Earth Sciences NZ (which is the merger of Niwa with GNS) has done a huge amount of modelling work around the country, mapping coastal inundation risks, and its next body of work due out soon is on inland inundation. Other bodies of work have pointed out that we need spatial planning to avoid destruction by weather in the future. That includes identifying areas of particular risk, and having a plan for them, whether that is creating a wetland or building a sea wall or stop banks, or if a retreat from an area should be mandated. But councils aren't required by legislation to do such work; and if the Government puts a cap on rates as it's discussing, it's likely they won't be able to. They just won't have the money. Small councils also have the issue that their planning departments might consist of one or two people, and the job is far bigger than that. As well, specialists who were doing such work have had job cuts – and those experts have gone overseas where their skills are in demand. Check out how to listen to and follow The Detail here. You can also stay up-to-date by liking us on Facebook or following us on Twitter.
Scoop
6 days ago
- Politics
- Scoop
A Warning From The Future: The Risk If NZ Gets Climate Adaptation Policy Wrong Today
New Zealand 2050: On the morning of February 27, the sea surged through the dunes south of the small town of Te Taone, riding on the back of Cyclone Harita's swollen rivers and 200mm of overnight rainfall. By mid-morning, floodwaters had engulfed entire streets. Power was out. Roads were underwater. Emergency services responded swiftly, coordinating evacuations and establishing shelters. But for many residents, the realisation came days later: the help they expected after the water receded – support to rebuild, relocate or recover – wasn't coming. 'We lost everything,' says Mere Rākete, a solo mother of three, standing outside her home, now uninhabitable. 'I rang the council, the government helpline, even the insurance company. They all said I'm not covered.' Mere lives in a suburb long identified as 'high risk' under national climate risk maps. She didn't stay there because she ignored the risk. She stayed because she had no viable alternative. 'They say we had a choice. But when houses here were $400,000 and anything safer was $700,000, what choice is that?' No more buyouts Although this story is fictitious, it describes a plausible future based on how New Zealand's draft climate adaptation framework could play out. It reflects the likely consequences of policy decisions that focus narrowly on financial exposure. Last week's recommendations from the Ministry for the Environment's Independent Reference Group rightly called for urgent and improved risk information. But they focused narrowly on direct risk to property and infrastructure. In particular, the group proposed that beyond 2045 the government should not buy out property owners after climate-related disasters (or those at high risk of future events). Responding to the recommendations last week, climate policy analyst Jonathan Boston wrote that ruling out property buyouts 'is philosophically misguided, morally questionable, administratively inept, and politically naïve'. But it appears the government shares the reference group's view. Addressing the current flooding disaster in the Tasman district, Prime Minister Christopher Luxon said, 'In principle, the government won't be able to keep bailing out people in this way.' Beyond the specifics of financial compensation, however, lie the cascading and systemic risks that follow a major weather event. In reality, the impacts do not stop at the property boundary. When a family is displaced, or even fears displacement, the consequences ripple outward: schooling is disrupted, jobs are lost, mental health declines, community networks fragment and local economies suffer. Research shows how the after-effects of a disaster domino through interconnected systems, affecting health, housing, labour markets and social cohesion. A policy decades in the making Back to the future: our fictional town of Te Taone sits in a floodplain identified decades ago. By the 2040s, insurance had become unaffordable. New development slowed but many families, especially those on lower incomes, remained, with few relocation options. The adaptation framework proposed in 2025, based on a 'beneficiary pays' model, created a 20-year transition period that ended in 2045. After that, residents in high-risk areas became ineligible for buyouts or standard recovery funding. Future government investment was limited to Crown-owned assets or projects with 'national benefit'. Restoration of local infrastructure such as roads and power lines would depend on whether councils or ratepayers could pay. Today, parts of Te Taone remain cut off. Power is still out in some areas. The school has relocated inland. Local shops have closed. Many homes are damaged, waterlogged, or destroyed, and some families are now living in tents. 'It's not that we weren't warned,' says a local community worker. 'It's just that we couldn't afford to do anything but live with the risk and hope for the best.' Te Taone's experience is now raising deeper concerns that Aotearoa New Zealand's climate adaptation framework may be entrenching a form of ' climate redlining '. Those with the means can move to escape risk, while others are left behind to bear it. Adaptation or abandonment? Māori communities are especially affected. Parts of the floodplain include ancestral land, some communally owned, some leased by whānau who cannot easily relocate. In many cases, this land was only recently returned from the Crown, after years of land court proceedings or Treaty settlements. The prospect of abandoning it again, without coordinated support, echoes earlier waves of institutional neglect. Mere Rākete is now considering joining a class action, one of several reportedly forming across the country. Residents are challenging the government or local councils over a failure in their duty of care by allowing homes to be built, sold or inhabited in known risk zones without clear and enforceable warnings or adequate alternatives. Meanwhile, adaptation experts are calling for a reset: a national compensation framework with clear eligibility rules, long-term investment in affordable housing beyond hazard-prone areas. Above all, they argue, government policy based on a climate adaptation framework developed 25 years ago has not reduced exposure to risk. Instead, it has redistributed it from those who could leave to those who couldn't. In the meantime, the remaining residents of Te Taone wait for the next cyclone and wonder whether, next time, anyone will help. Planning with people in mind Our imagined future scenario can be avoided if governments take a broader view of adaptation. Treating climate risk as an individual responsibility may reduce short-term government liability. But it will not reduce long-term social and fiscal liability. The risk of failing to act systemically is that the country pays in other ways – in fractured communities, rising inequity and preventable harm. Adaptation to climate change has to be about more than limiting the upfront costs of buyouts or infrastructure repairs. Ignoring the wider impacts will only shift the burden and increase it over time. Real economic and community resilience means planning with people in mind, investing early and making sure no one is left behind. That work must begin now. Disclosure statement Tom Logan owns shares in Urban Intelligence. He receives funding from the Ministry for Business, Innovation and Employment and the Royal Society of NZ. Paula Blackett works part time for Urban Intelligence. She receives research funding from the Ministry for Business, Innovation and Employment and undertakes consulting work regarding climate risk and adaptation.
Newsroom
14-07-2025
- Business
- Newsroom
Going it alone – how not to prepare for climate change
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.
