Coastal erosion could cause an estimated 10,000 coastal properties across Auckland, Wellington, Christchurch, and Dunedin to become uninsurable in the next 25 years.
And the hardest hit will be those “already struggling,” according to a new joint report out of the Helen Clark Foundation and environmental consultancy WSP.
The report’s author Kali Mercier, who is a WSP Fellow and Deputy Director at the Helen Clark Foundation, says New Zealand holds much of its wealth in residential property, making it “especially vulnerable” to sea-level rise and climate-related weather events.
Without intervention, the report which was released over the weekend, found residential insurance premiums for flood prone properties in NZ will continue to “rise steeply”, eventually becoming unaffordable.
The report also expects insurers to withdraw from flood coverage altogether for most at-risk properties.
“Maintaining high residential insurance coverage, especially for floods, is critical to safeguard the country’s economic and social resilience in the face of climate change, and to keep people in vulnerable locations from falling into poverty when weather-related disasters strike,” Mercier says.
“Insurance helps individuals, communities, and the country as a whole bounce back from climate-related shocks.”
The report found an estimated 10,000 coastal properties across Auckland, Wellington, Christchurch, and Dunedin could become uninsurable by 2050.
There are also currently around 10,000 properties around the country that are exposed to all three types of flooding – river, coastal, and surface water.
Climate change has the potential to increase all three types of flooding, the report said.
The report has advised that NZ needs to invest in risk mitigation in order to keep insurance premiums for residential properties lower for longer.
It also called for the Government to start developing a public residential flood insurance scheme like Britain’s Flood Re Scheme or France’s ‘catastrophe naturelles’ insurance scheme.
The Insurance Council of New Zealand (ICNZ) told interest.co.nz recently that it opposes a flood reinsurance scheme similar to Flood Re.
Risk zones
Mercier says the future of residential insurance under climate change is uncertain.
One thing remains clear though – homeowners with properties in a natural hazard risk zone will be paying higher insurance premiums in the future as risk-based pricing becomes more common.
“But many homeowners in such a position bought their properties without knowing or fully understanding the risks, or were unable to afford a more expensive property in a less risky area,” the report says.
According to Mercier, NZ needs to “urgently decide” on how it’s going to keep insurance accessible and affordable.
This could range from including subsidies for those who can’t afford insurance, the standardisation of insurance policies so people know what they’re covered for, to making pricing criteria more transparent.
“We also need to ensure that the insurance market remains as competitive as possible,” Mercier says.
Earlier this year, Parliament’s Finance and Expenditure Committee (FEC) was tasked by Climate Change Minister Simon Watts to undertake a climate adaptation inquiry. The cross-party committee looked at how NZ could mitigate the risks and costs of severe weather events and develop objectives and principles for a climate adaptation framework.
The FEC’s report, published in October, found NZ’s current system of managing natural hazards and climate risks “under stress”.
The potential costs associated with climate adaptation were described as “seriously uncertain” and the committee was clear that the Government’s framework would need to clarify what parties paid for investment into climate adaptation.
28 Comments
Indeed. If you have a) been underwater already, or b) have watched grass/sand frontage disappear, or c) you are tagged as flood/erosion/sea rise you should not be surprised at all. Stop paying stupid money for low lying coastal property or flood tracks. That said there is one born every day.
It continues to surprise me how well prices for high-risk coastal properties are holding up.
They should be valued like leasehold properties; i.e, you are buying the right to live there for a few decades and that's it. You don't have a perpetual stake in the land.
I guess if there are enough climate deniers in your target market it doesn't matter?
Not necessarily have to be climate deniers when there's multitudes seeking to socialise their personal choices & risks - a moral hazard with Aunty Helen's blessing.
Having said that, without wading through the reports source references it may all be based on the gift that keeps on giving ie RCP8.5. I'd be delighted to be corrected.
NPDC managed RCP6.5 for inundation of a subdivided section in a well established suburb. Its below the nearby road level. Based on a NIWA report it's likely to inundate in 2080. For that to happen the two roads that more or less encompass the section would have water running about 150-200mm above the road level. A requirement for a BC was to build the floor level about 150mm above the predicted flood level, about 750mm above natural ground level. In this case not too onerous. I felt too conservative and RCP4.5 would be adequate. The majority of councillors here of course would know nothing about this and I suspect in most other local and regional councils as well. All left to officials.
"...Over the past 30 + years, we show that there have been clear changes in waves and storm surge at global scale. The data, however, does not show an unequivocal linkage between trends in wave and storm surge climate and sandy shoreline recession/progradation. We conclude that these long-term changes in oceanographic parameters may still be too small to have a measurable impact on shoreline recession/progradation and that primary drivers such as ambient imbalances in the coastal sediment budget may be masking any such linkages.
...We find no obvious linkages between regions where there are strong trends in wave and/or surge quantities and the large-scale dynamics of these coastlines. For instance, west coasts of continents in the southern hemisphere show stronger positive trends in wave conditions than east coasts, largely driven by changes in Southern Ocean swell. However, there is no clear evidence that the sandy coastlines along these west coasts are more dynamic than those along the east coasts. This lack of correlation also extends to wave direction (a primary driver of longshore sediment transport), where the changes in deepwater wave direction appear uncorrelated with the shoreline recession/progradation."
https://www.nature.com/articles/s41598-023-38729-y
"The climate system is a coupled non-linear chaotic system, and therefore the long-term prediction of future climate states is not possible."
https://archive.ipcc.ch/ipccreports/tar/wg1/index.php?idp=501
Here's an interesting report that has potential to be costly for council and rate payers in the future. By the time the costs are payable, the decision makers, policy makers, council members are no longer on the scene to be held accountable for their decision. The consequences of these decisions will be felt by those in the future.
'Catastrophe in the making?': Fast-tracked housing on flood-prone land sparks concern
https://www.rnz.co.nz/news/national/531808/catastrophe-in-the-making-fa…
It is important to distinguish "coastal erosion" as being "inundation by the sea" vs coastal properties at risk. Coastal properties at risk, as we have seen in recent inundation events related primarily to homes either subject to land instability (slipping) as a result of heavy rain; inland properties subject to either storm water failure and/or river flash flooding due to heavy rainfall and rivers flooding. Dunedin South's problems being different again, as the area has a high water table that floods - not with each high tide - but rather with high tides combined with heavy rainfall.
Inundation by the sea (i.e., "coastal erosion") has traditionally been mitigated via seawalls (for example Eastbourne in Wellington and Wellington's south coast) and those have either been upgraded or replaced like-for-like in some cases. More easily mitigated, but the question remains - at what expense to the natural environment?
All thorny issues but important not to forget about the folks inland and those perched on steep slopes (not necessarily beach front) who are far greater in number and also at risk. Sea level rise is a slow, creeping hazard (and in certain areas of NZ, slow-slip earthquakes and larger magnitude events lift coastlines, thus cancelling out rises in sea level) - whereas the flash floods we've seen due to more intense and longer duration rainfall - are those who need immediate relief.
Lucky Obama healed the ocean.
Tour Barack and Michelle Obama’s Martha's Vineyard home – a coastal retreat on the beautiful Massachusetts island
https://www.homesandgardens.com/news/president-obama-new-house-marthas-…
"You don't have to get the economics precisely right to know there's something very wrong with recommending managed retreat this century."
Wait until a large weather event or further erosion happens. Those same people protesting will be crying foul that the council didn't do enough and had all the knowledge but didn't act...
This article in several places, calls for government intervention to "Keep insurance affordable". Why?
Insurance is a private business focused on profits, and has often been demonstrated to be largely a rip off for their customers. In addition individuals need to be responsible for the consequences of their own choices, and not be able to perpetually turn to government to be bailed out when they make dumb choices over property.
True, but most mortgages require you to have insurance as a condition of retaining it, therefore what will be the consequences large scale i there are suddenly no loner insurance companies willing to insure specific areas. Would some brave insurance company come in and take the risk for high cost? Or would those with mortgages in these areas have to sell up and take the hit on the home and land value since nobody can really live there afterwards unless they're mortgage free, and wish to go on their own if the worst happens.
Absolutely. About 0.2Ha of my property is flagged as flood prone on council maps, but that's because it's a seasonal drain that is designed to hold excess water to prevent my paddocks from flooding. If my insurer decides this means my entire property is flood prone (most of the Heretaunga Plains will be underwater before any of my buildings are) without visiting the site I'm going to have words with them.
The share prices and profitability of the largest insurance companies in the world are at all time highs and they seem to go higher every time a fearmongering report about the distant future is published by some think tank. The smartest long term investors in the world, like Berkshire Hathaway, are massively into insurance and show no signs of exiting the industry. And little wonder because the public has been conditioned to believe that fast rising insurance premiums are the way of the future and these large corporations are milking those revenues for all its worth to their shareholders.
If you look at the hazard maps for a lot of our cites near water (and which aren't?), they make daunting viewing.
The ORC hazard mapping is here: tick a few boxes and it gets quite widespread - and I'm bloody glad I looked in to it when I bought my home, 15 years ago. But god knows what South Dunedin is going to do.
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