Retreat, reform or risk it: the future of climate adaptation in Aotearoa

By Kelly Flatz, Senior Sustainability Consultant

The Ministry for the Environment has published a new report on managed retreat in Aotearoa New Zealand, developed by an independent reference group to inform the country’s evolving climate adaptation framework. Although brief, the report puts forward several important recommendations, some of which signal a major shift in how we approach climate risk. Most notably, the report proposes a 20-year transition period after which government-funded buyouts of at-risk residential properties would no longer be available. This is the first time a clear boundary has been suggested in the public conversation around managed retreat.

Key recommendations in the report include:

·         The need to provide New Zealanders with fair warning about the way natural hazards could impact them, so they can make informed decisions;

·         Taking the broadest interpretation of a ‘beneficiary pays’ approach to funding the increased investment in risk reduction because of climate change;

·         Empowering people to be responsible for knowing their risks and making their own decisions on whether to stay in a high-risk area or move away, unless there is risk to life;

·         A suggested 20-year transition period to provide New Zealanders the time to build up and share information about exposure to natural hazards, and plan for change;

We applaud the panel for being the first to take a bold position on adaptation, including that people should not expect government buyouts of residential housing following a transition period of 20 years. While we anticipate (and have observed) that this approach won’t be favoured by all, this would (in theory) incentivise adaptation action now, and, at the very least, establishes a pathway forward.

While the report covers some of the barriers to adaptation in the current context, there are additional areas that could be addressed in the proposed adaptation framework:

1. Intergenerational equity

Avoiding buyouts after a period of 20 years doesn’t balance intergenerational equity and fairness and assumes that the residual risk in twenty years is negligible. This approach would favour older generations who would benefit from the protection of the taxpayer for the next 20 years. Despite the risks they face now, they would know that whatever happens, a buyout is there if needed. Therefore, they are not incentivised to the same degree to pay for adaptation action now. At the same time, insurance is more affordable and accessible for these generations than it will be for future generations; we know that the cost of insurance will only increase as weather events driving loss become more frequent and severe, and indeed, may not be available in some areas that are just too risky. One of the report’s authors Belinda Storey, a climate economist, noted back in 2022 that a house worth $1 million sitting on the Petone foreshore currently costs around $1,500 a year to insure. She predicted that this number would start to double every two to three years, with a potential for that property to be cost $100,000 per year to insure in as early as twenty years from now. This was following new data that showed land in Wellington’s Petone foreshore is sinking.

It's difficult to argue that this is fair, given that outside of rising insurance costs, the increasing cost to mop up or improve the future resilience of property and infrastructure is likely to be worn by younger and future generations, one way or another, whether that be through insurance, rates, or individually.

The recommendations could be improved by giving greater explanation as to how costs will be distributed over generations, and how proposed adaptation activities will reduce New Zealand’s risk profile over the next 20 years, ensuring that future generations can face a financial burden that is comparable to that of today.

2. The time horizons of the climate crisis and nature of climate data

It’s interesting to consider the implications of cutting off government buyouts in 20 years given the anticipated timelines of the climate crisis, which extend far beyond 2045. For example, we know that the realities of sea level rise are only expected to hit by the end of the century. 2100 is 75 years away. What we also know is the impacts of sea level rise are dependent on the rate of GHG emissions. While historical warming is locked in and we can anticipate some sea level rise with confidence now, the reality cannot be known now. There will always be uncertainty. What happens when New Zealanders are told to prepare for and adapt to 2m of sea level rise to avoid losing your home for example, but it ends up being 3m?

Having spent the best part of two years supporting companies to understand what risk climate change presents to them, we know that all of the models show that the frequency and severity of storms, sea level rise and floods will really start to ramp up from about 2050 if minimal efforts are taken now to halt planetary warming. The plausibility of even the most optimistic scenario, which aims to limit global warming to 1.5°C above pre-industrial levels and assumes weather patterns remain consistent with today, is now increasingly doubtful, given that 2024 was the first year in which the average global temperature exceeded 1.5°C.

The adaptation framework needs to carefully consider these implications and take a conservative approach when considering the resilience requirements that need to put in place today for that uncertain future.

None of these decisions are easy. Understandably, managed (or unmanaged) retreat and adaptation in general is a complex and difficult problem to face given the scale of the problem we're dealing with. We urgently need to rethink how climate risk is priced, shared, and managed and shift from reactive recovery to proactive resilience. It’s hard, it’s complex, and that’s all the more reason why we need to start tackling it now. If we don’t start adapting today fairly, equitably, and with future generations in mind, what kind of future are we really building? The decisions we make now on funding, adaptation, and equity will define the next century.