As calls are being made for New Zealand to make urgent and critical changes when it comes to managing climate change and natural hazards, there are questions around who will pay for these climate adaptation measures.
The conversation has emerged again after the Independent Reference Group (IRG - a group put together by the Ministry for the Environment shared its recommendations for the country’s adaptation framework on Wednesday.
This framework is something the Government has been working on to prepare people and sectors for natural hazards and other climate impacts.
In the document, the group recommended:
- New Zealanders need to have fair warning about the way natural hazards could impact them, so they can make informed decisions
- New Zealand should take the broadest interpretation of ‘beneficiary pays’ approach to funding the increased investment in risk reduction because of climate change
- People and markets should adjust over time to a changing climate
The recommendation includes putting the onus on people to know the risks that come with their properties and to make their own decisions.
‘Financial bomb for the country’
While Local Government New Zealand and Insurance Council New Zealand are supportive of the urgency behind the recommendations, both groups were wondering the same thing: who pays?
The report was quite silent in respect to where the costs will fall, Local Government New Zealand (LGNZ) vice president Campbell Barry says.
“We know that this will be a financial bomb for the country if we start to grapple with it properly and local government’s funding and financing options simply can’t handle that.”
It was frustrating that since the IRG was formed, there was still no clarity on where those costs will sit, Barry, who is also the mayor of Lower Hutt, says.
“If the expectation was that councils would be funding climate adaptation managed retreat buyouts, then you will very quickly see, in my mind, councils go bankrupt.”
"That’s how dire already the financial position of councils are with their debt caps and also the pressure current ratepayers are already seeing with rates increases in recent times to try and deal with things like backlogs of water infrastructure,” Barry says.
This report also comes days after discussions about capping rates with Cabinet set to look at ways to control rate rises later this year.
“If you put this type of additional responsibility on councils around buyouts and the likes, then you are really hamstringing them if you then also introduce a rates cap,” Barry says.
Speaking to RNZ, Insurance Council New Zealand’s chief executive Kris Faafoi said the question of who would actually pay for adaptation measures still needs to be answered.
“In the report itself, there was an expectation that councils will do a lot of the heavy lifting and where some communities might find it a challenge to be able to pay for some of the protections … then investment from the Crown might be necessary,” Faafoi told RNZ.
Going forward, Barry says LGNZ wants to sit down with the Government to talk about where the responsibilities sit and what cost-sharing mechanisms are available.
“I think it’s a good report but the number one question is still quite silent and still has uncertainty there so that does need to be addressed.”
‘The report is not government policy’
In a statement, Climate Change Minister Simon Watts said he welcomed the independent recommendations for how New Zealand can adapt to the impacts of climate change.
“The report is not government policy, however the Government is considering the group's recommendations, alongside the findings of last year's cross-party climate adaptation inquiry and other advice, as it works to put in place the building blocks for a national adaptation framework.”
The Government will review the recommendations and will announce decisions in due course, Watts said.
12 Comments
My guess is that most of the political parties major and minor will dodge the question until a future government in power faces an impossible to pay restoration cost, and even then probably will not face up as fits the decades long demonstrated pattern of failure to act on global warming.... just let the damage to private and public infrastructure continue to grow. If one does front up saying that private citizens are responsible for their own repair and restoration costs they are unlikely to be reelected ... so best to do nothing and let the insurance industry pull the rug on highest risk customers and gradually reduce the number of insured customers so as to maintain insurance industry profitability.
Seems about right. Also, government investments will generally be directed to richer areas with political influence or that have the ability to organise and lobby. Their bit of beachfront or riverside will be "iconic" and others will have to retreat
Just tonight on the news was an item on the road through the Marlborough Sounds. That type of repair will likely be necessary time and time again going forward. Should residents be asked to contribute on a 'beneficiary pays' basis to retain their access - or should we toll the road (perhaps a more accurate reflection of beneficiary pays). If they didn't get around to at least posing these questions - it was a pretty useless exercise.
We have similar examples of very low use but high maintenance roads all over NZ.
Maintaining access to private properties under risk is the biggest cost issue for councils - as they pay for the maintenance/upkeep of those roads. The properties themselves can insure themselves, as it is a private interest they are responsible for.
They other thing that needs clarification is laws around seawalls. Presently it is near impossible to get a permit to build a seawall. Unless private property owners are able to exercise their right to protect their property - then the question of payment for forced retreat would to my mind be necessary/fair, but unaffordable for tax/ratepayers to foot the bill for these buy-outs.
Sort of, I pay over $5k for rates, i get no water no sewage and at the moment have to pay for rubbish collection....
Hard to justify what someone at the end of a road should pay if the council is not willing to maintain their connection with the services they say they provide back in the city?
My property is no even under threat, i live high above most flooding... agree re sea walls build away at locals cost.
$22m for this one, but I wonder how long it's gonna last.
It's mostly just protecting a park.
https://www.aucklandcouncil.govt.nz/plans-projects-policies-reports-byl…
And many of these back country roads have few residents as the forestry takes over.
Thus the road is being maintained for a select few who will log and leave.
Just tonight on the news was an item on the road through the Marlborough Sounds.
The sounds are a real pickle Kate. I know folk who live a couple of hours drive out there and after the 2022 weather event, they offered to take a digger out and clear the landslips to help the community. Their response from the council was that they are not allowed to touch it, as it has to be assessed properly by contracted providers and then planned and work done by contracted providers, which, low and behold were inundated with work form so many slips. The result was a barge and everyone had to chip in and take turns taking trailers an cars over to havelock and picton in order to stock up on groceries. The road could have been cleared in days otherwise. Interesting dynamic around liability and official process when the cost starts mounting up though.
They made the mistake of asking. Of course council would say no, they have no choice.
Next time, grab the digger, keep your trap shut and get on with. But don't ask.
Or be a good citizen and car pool.
I am aware of some rural folk getting out repairing their roads, mainly potholes etc as they become a danger to school buses and or trucks and the likes. We have cleared trees off roads when living rurally. Some remote roads we travel we always carry a chainsaw if there has, or will be rain, in case we come across a tree down.
Maybe in the far off future we will see a return to grader drivers living in rural areas so we have proactive maintenance rather than reactive maintenance.
Public asserts, roads and bridges etc, will be the tax payer. Perso al property...buying close to a river or the sea or cliff views is a choice. Shouldn't the owner who enjoys the amenity for free pay?
My latest theory is that insurance costs or potential loss of insurance will be the tipping point for voters to force governments to ramp up electrification.
I don't think it's far away. Until then I just tell people who complain about insurance costs that
a) every economy shares in the cost of every global flood event through the reinsurance market
b) every degree of warming increases moisture in the air by 7%
c) our infrastructure can not cope with today's moisture level because we add more housing
d) so expect their insurance and rates to double again within 5 years.
They can draw their own conclusions.
At our annual insurance review with our broker I mentioned about a situation I'm aware of, where one person in a street can't get house insurance, liquification risk being the reason given, and yet another person in the same street who with more than one house in the area can. The difference being one uses a broker and the other didn't. Our broker replied that he has a client that for the first time in 30years a client was refused insurance due to property being shown as subject to liquification/flooding. They have been in the same house all that time. When I asked what the the client did in that case, the broker said they can always find someone to insure it, it just then becomes about cost to insure.
A few years ago we were looking at buy a coastal house. I checked the city council rising sea level map to see what the rating was for the section, as insurance company was required to be informed. Part of it was designated liquification risk and part wasn't. I phoned council for further explanation, and was referred to the company who wrote the report. On speaking to the writer, they were horrified that the report was being used for that purpose as it was never intended to be done so. Makes me wonder at times if they were writing a report for insurance purposes, how that report would differ from the one they wrote. I understand that the sea level change maps available show the extreme case of sea level? Is this the right level for insurance to use currently given the level of sea rise predicted over say a 5year term? After all as that level gets higher insurance can always adjust accordingly rather than charging for the most extreme case?
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