Climatic Threats to NZ’s Coastal Properties

According to Tom Logan’s article on The Conversation, “With seas rising and storms surging, who will pay for New Zealand’s most vulnerable coastal properties?” there are 30,000 coastal residential properties in New Zealand worth NZ$17 billion affected in the following decades.

The NZ SeaRise published a sobering report about New Zealand’s Sea levels rising twice as fast.

The news of sea-level rise is not entirely a surprise to Kiwis. In 2020, the Deep South National Science Challenge’s research found that within 15 years, homes in some parts of New Zealand’s coast will be losing access to affordable insurance. By 2050, ten thousand homes in the country’s biggest cities like Wellington and Christchurch will be effectively uninsurable.

The report estimates that a 12 cm sea-level rise in Wellington could increase insurance premiums up to four times for around 1,700 homes if insurers price the heightened risk.

With the NZ SeaRise report showing that sea levels are rising twice the rate, coastal property owners could see their properties uninsurable earlier than expected. Who will bear the cost then if insurers refuse to cover these properties?

The Deep South’s report, “Insurance retreat in New Zealand“, presents that coastal properties will lose insurance cover within the next ten years or sooner. Less than 25 years away, these coastal properties will lose all private insurance cover when sea-level damage reaches 5%. This percentage represents more than 30,000 residential properties currently valued at NZ$17 billion. But with polar ice melts and land subsidence entering the equation, sea levels could be rising faster.

With the imminent threats from sea level rise on New Zealand’s coastal properties, what solutions can governments and homeowners take to finance the associated cost from damage, coastal protection plans, or managed retreat as the last recourse?

Logan (2022) says that New Zealand coastal property compensation laws follow the UK’s “Flood Re”, which only covers homes built before 2009. This data means that for houses built after 2009, governments and property owners will likely foot all the bills.

Below are more excerpts from Tom Logan’s article:

• But even with current modelling pointing to some areas exposed to coastal hazards, this does not stop developers from building like what is going on in Christchurch’s New Brighton area, where the city approved the construction of 65 homes.
• The article mentions government policies in New Zealand that can help local governments and homeowners deal with the problem.
• First is the Ministry for the Environment guidance, which lays out how councils, communities, and investors navigate and manage risks suggesting a risk-informed approach to land-use planning for investors and property owners to know the future cost associated with their investment decisions.
• The second piece of legislation is the new Strategic Planning Act, one of the three legislations to replace the Resource Management Act, which aims to end developments in high-risk places.
• The article says that there are also other options that councils can take to protect properties from sea level rise impacts, such as asking vulnerable communities to fund coastal defence or managed retreat fund, the creation of a government-managed coastal bond or insurance scheme, converting exposed property form freehold to leasehold ownership, and applying a revolving loan program similar in California, where councils buy out the property from the owners then renting or leasing them to pay off the property and associated cost when it gets damaged in the future.
• Nevertheless, the ongoing impacts of the climate crisis are reasons why governments need more explicit guidance and support, which the proposed Climate Change Adaptation Act will hopefully provide, the article notes.

The facts and arguments that Logan presented are something that climate adaptation planners and practitioners can consider when dealing with similar situations in their respective areas.