Climate change: Still unclear who'll pay when homeowners have to move
The Governments first plan for coping with climate hazards signals sweeping changes to how the country assesses risk. Home buyers will get more climate information on LIM reports and councils will have to stress-test city plans against a hotter future. Therell be public portals where people can see the latest information on how climate change will affect their areas. However, the plan doesnt answer who will pay when property is lost or damaged and insurance wont cover it, or when whole communities have to move. Although the Government is scoping out the option of taxpayers covering losses when private insurers back away from covering flood risks , it hasnt committed to doing it. Some homes could lose insurance in just over a decade , meaning they might also struggle to get mortgages. READ MORE: * Thousands of properties at risk of flooding or erosion due to sea level rise * Council endeavour to map coastal hazards on Kapiti Coast riles residents group * Homes to start losing access to insurance within 15 years report * 'People have lived there 30 years' Breaking bad news about rising tides * Time for Government to step up on sea level rise - new research * Erosion at Port Waikato will be 75m for every 1m of sea level rise - report The worlds top climate science body has warned that even wealthy countries should start planning for worsening floods, fires, droughts, heat waves and other disasters, or they will end up costing more in the long run. In New Zealand, risks to safe drinking water, farming profits, and peoples lives during heatwaves (especially in concrete cities) have been listed as special risks. 2021 was the countrys warmest year on record . Climate change could also worsen the housing crisis. The Governments first National Adaptation Plan notes about 675,000 (or one in seven) people across Aotearoa live in areas that are prone to flooding, which amounts to over $100 billion worth of residential buildings. More than 72,000 people live in areas at risk of storm surges, and the number of people exposed to these hazards will rise as rainfall increases, storms become more frequent and sea levels rise. By 2100, median sea-level rise in Aotearoa is projected to increase by a further 0.44 metres under a low-emissions scenario and 0.83 metres under a high-emissions scenario. But thats not the whole story: projections from the Searise project in April found many communities have half as much time as expected to prepare for sea level rise, because much of the coastline is gradually sinking. Alongside extra information on LIM reports, prospective buyers could receive an information sheet warning them that insurance premiums could skyrocket in coming years. Details of what will go in LIMs havent gone through Cabinet, so Climate Change Minister James Shaw could not share details of what was involved when he announced the plan at a windswept beach in Wellington. Shaw noted 2017 guidance on preparing for coastal hazards had been unevenly applied by councils. Both costly new developments and prices of existing houses have proven remarkably resilient to warnings about rising risks , with values bouncing back even after disasters. Fear of being sued and lack of expertise has meant many councils have baulked at publishing climate hazards on property files and at saying no to new developments, for example on low-lying seaside properties. Thats seen billions of dollars in development go ahead in potential flood zones while at-risk properties have changed hands without full disclosure. Better funding and support for councils is on the cards as part of a local government review related to the climate plan. The plan also includes interim rules requiring councils to stress-test major new plans against a future of high global heating. Researchers have found that as long as there is an assumption that the Government will bail people out, but no details of how it will work, developers have an incentive to play chicken over flood risks . Shaw said the Government was taking a hardship approach to compensation, recognising that some people were less-equipped to defend themselves. We will not cover every loss, and we cannot cover every loss. Yet absent from the plan is a law governing what will happen when people are forced to retreat from parts of the coast. A major 2020 stocktake of planning laws, the Randerson review, recommended the government pass a law governing managed retreat . Shaw said in September 2020 that if a Labour/Green government was re-elected, a managed retreat law would be passed within 12-24 months. However, Labour won a majority at the election without needing the Greens. The climate adaptation plan says a bill covering managed retreat will be introduced to Parliament by the end of 2023. The plan includes provisions for the Reserve Bank, Treasury, Waka Kotahi, electricity companies and others to build climate hazards into their planning. The goal is to avoid dry years and storms leading to road and rail outages, power blackouts or financial instability. However, many of the actions and decisions in the plan remain years in the future. For example, while about 200 large companies will soon be required to report on climate risks to their operations, public entities arent required to (with a few exceptions, including ACC and the NZ Super Fund). The Government wont decide whether to require this kind of public entity risk reporting until 2024 . There is no discussion in the plan of including unlisted companies, which include some of the countrys biggest and most vulnerable entities . At todays announcement, Shaw acknowledged immense frustration at the slow pace of government response to the crisis. Plans to prepare for these hazards announced in the first adaptation plan include: