Our secret climate dilemma
The Government is secretly grappling with the dilemma of paying out climate change compensation to beachfront property owners.
And one of the options on the table is buying up homes that are at risk of being swamped by sealevel rises.
Stuff can reveal Government officials have been quietly working with the insurance industry, banks and local government in the past year. They are in hushhush discussions to avoid moral and economic panic.
The Government will soon begin a nationwide risk assessment to understand how climate change will affect different regions. And with that will come inevitable questions about the impact on property values.
‘‘We’re going to start talking to the country about sea-level rise and risk next year,’’ a government source told Stuff, on condition of anonymity. ‘‘The first thing that people ask is: well, who pays? If we don’t have any kind of answer to the compensation question, it just creates panic.’’
The Government is ‘‘hyperaware’’ of the implications of such a discussion, the source said. ‘‘If [we say] people’s houses are going to go under water . . . people’s property prices will tank . . . they would stop shopping – and the economy will tank.
‘‘If [the Government indicates] there is compensation, people will keep doing what they are already doing. If there won’t be compensation, there’ll be riots in the streets and people wearing yellow vests.’’
Countries like New Zealand with a lot of coastline are grappling with the same problem but the Government here has made no firm decisions.
One option tentatively under discussion is buying up coastal homes that will eventually become uninsurable and allowing the owners to continue to live there, at their own risk.
‘‘People could live in those properties for a couple of decades.
‘‘They may not be able to be privately insured but [the owner] takes an element of risk and and lives there . . . but knows that at some point the house will basically become unusable,’’ the source said. ‘‘The question is, do you recover your money in the meantime?’’
But such a compensation scheme is likely to be politically unpalatable and controversial.
‘‘Some exposed properties are $12 million oligarch-owned on Omaha Beach and some of them are $200,000 shanties in South Dunedin. [Does the Government] buy up both at their market value? Because the person who will get $200,000 for their leaky shanty in Dunedin cannot buy another house anywhere in New Zealand for that money. And at the same time we’re handing out $12m to Viktor from Moscow?
‘‘There isn’t going to be a one-size-fits all solution.’’
Academics are also alive to the moral and legal questions around climate change compensation.
Philosopher Elisabeth Ellis’ working paper investigates how the risks of sea-level rise should be shared and says we are facing ‘‘an ongoing, accelerating moral disaster’’. She describes an effective policy of ‘‘the rich get sea walls and the poor get moved’’ which violate ethical norms about equality.
But Otago University law lecturer Ben France-Hudson says he doesn’t see compensation as a moral issue.
‘‘Yes, there are lots of people who own property on the coast in the Coromandel which on paper look that they are quite wealthy.
‘‘But, I query whether the person who has a $1m mortgage over a second home ... is necessarily any less vulnerable than someone for whom it’s their only property.
‘‘It depends on what metric you want to assess vulnerability.
‘‘The consequences for the person who no longer has the second home but still has the mortgage could be severe. In terms of financial implications, they could be quite profound.
‘‘And, if the community itself is dependent on those people who come down for summer and spend a lot of money, and they are not coming any more, then that can have a consequence too.’’
France-Hudson and colleague Benjamin Dudley Tombs recently published an article on the issue in Victoria University’s Policy Quarterly. ‘‘Climate change will cause significant loss and damage throughout New Zealand. This will affect everyone. When considering the options for responding, compensation will inevitably be raised, as either a requirement or a policy choice,’’ they wrote.
‘‘Many people, however, appear reticent to engage with ‘compensation’ either as a word or as a concept; preferring to avoid it altogether.’’
Climate Change Minister James Shaw wouldn’t be drawn on whether the Government was weighing up a compensation scheme. But he said ministers are not avoiding the issue.
‘‘The Government took on board the recommendations of the Climate Change Adaptation Technical Working Group as a set – we are not cherry picking which ones we are interested in and which ones we aren’t.’’