Insurance agencies have a lot more flexibility than banks (or councils) when it comes to adapting to climate change. That's because they can adjust their products on an annual basis to manage risks that increase over time. In contrast, when a bank agrees to a mortgage they're generally in it for the long haul.
The stocktake report (page 71) states: "To reduce some of this exposure, insurance is a requirement for residential mortgages in New Zealand, and failing to maintain insurance can trigger default. However, there is a general absence of compliance checks and lack of understanding of how well properties are insured. These leave a risk that many homes may be underinsured which increases banks' exposure to losses."
On first reading this sentence in the briefing from Ministry for the Environment to the new Ministers for the Environment and for Climate Change I thought it mainly related to changing the Resource Management Act away from its current effects-based approach to more of an outcomes focus.
However, the advice recommends complementing regulatory changes with a strong emphasis on non-regulatory actions such as codes of practice, sharing of information, financial incentives and working alongside businesses, sectors or communities to achieve shared outcomes.
This upcoming report could be a really valuable input into NZ's future reductions in greenhouse gas emissions. The purpose of the Biological Emissions Reference Group is "to collaboratively build a robust and agreed evidence base on the opportunities available now and in future to reduce biological greenhouse gas emissions (methane and nitrous oxide) in New Zealand’s primary industries, and what the costs, benefits, and barriers to doing so are."
The threat of nuclear war was a very real fear for me when I was a teenager in the 1980s, and I can imagine climate change (even though a very different type of risk) could also be a very significant fear for today's teenagers. Seeing that things are being done to prepare for the changes ahead will make a big difference to our mental health.
I hope the upcoming report progresses these options for immediate action (listed in the ministerial briefing on page 13):
It won't always be up to councils to be the bearer of bad news to property owners affected by climate change. I learnt last week that a homeowner in an area increasingly affected by coastal hazards has been told that insurance will cover their recent damage from Cyclone Gita, and only one more event in future. Then they will be unable to make further claims.
That means anyone buying that property in future is unlikely to be able to get insurance, and will therefore be unable to gain a mortgage associated with that property.
The quote above fits squarely into the 'easier said than done' category, but MfE guidance is now available for councils to take action at a local level. Debate is also happening on whether the upcoming Climate Commission will cover mitigation and adaptation, or just mitigation.
While the Environmental Defence Society welcomed the Parliamentary Commissioner for the Environment's report on A Zero Carbon Act for New Zealand, Gary Taylor also made the following comments: “One issue that we find a little underwhelming is his open-ended attitude to adaptation. He agrees there’s a need for a national strategy but not sure who should do it.
“Given New Zealand’s vulnerability to the effects of climate change – increased floods, droughts, storm surges and other extreme weather events – we think that a national strategy is enormously important and should rest firmly with the proposed Commission."
While the MfE guidance for councils on adapting to climate change highlights quality technical data and community engagement as essential elements in developing successful adaptation plans, that doesn't mean every plan needs to have a huge consultancy budget or include an extensive series of public meetings.
Individual staff members in district and unitary councils who need to plan for climate change adaptation related to stormwater, flood risk, land drainage or another specific issue have the option of adopting the lower cost approaches to coastal hazard assessments (such as reviews of existing reports and problems, and discussions with experienced staff), and less resource-intensive options for community engagement (such as interviews with key people).
This is a really difficult one. Irrigation may initially be provided to help communities become more resilient to drought. However, land use in areas supplied by irrigation will almost certainly become more intensive in order to pay for the costs of the irrigation.
The climate change stocktake report (page 18) likens this risk to structural protection works which "may also build a false sense of security and further demands for protection thus locking in exposure to risk over the long term."
These are the posts I have shared on social media, all in one place for easy access.