Unclear who pays if homeowners forced to retreat
The Government’s 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. There will be public portals where people can see the latest information on how climate change will affect their areas.
However, the plan doesn’t answer who will pay when property is lost or damaged and insurance won’t 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 hasn’t committed to doing it. Some homes could lose insurance in just over a decade, meaning they might also struggle to get mortgages.
What we’re adapting to
In New Zealand, risks to safe drinking water, farming profits, and people’s lives during heatwaves have been listed as special risks.
Climate change could also worsen the housing crisis. The Government’s first National Adaptation Plan notes about 675,000 (or one in seven) people live in areas 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.
Buyers to be made aware
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 haven’t gone through Cabinet, so Climate Change Minister James Shaw could not share details of what was involved when he announced the plan in Wellington yesterday.
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 balked at publishing climate hazards on property files and at saying no to new developments, for example on low-lying seaside properties. That’s seen billions of dollars in development go ahead in potential flood zones while 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 new plans against a future of high global heating.
Who will pay for retreat?
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.’’
Absent from the plan is a law governing what will happen when people are forced to retreat from parts of the coast. The adaptation plan says a bill covering managed retreat will be introduced to Parliament by the end of 2023.