EDS Reports Provide Insight into Managed Retreat in New Zealand

Weather-related disasters are becoming common and will only increase over time.

New Zealand has recently witnessed massive loss and damage to life and property left by Auckland’s unprecedented floods in January and Cyclone Gabrielle that followed in mid-February this year.

More than 47,000 insurance claims that cover houses, content, cars, and businesses have been lodged, worth more than NZ$990 million, and from cyclone Gabrielle, 30,000 claims have also been lodged so far (Auckland floods, 2023).

Regarding infrastructure damage alone, like roads, bridges, water systems, and utilities, Finance Minister Grant Robertson estimated it to be at NZ$13 billion, which he said is similar to the Christchurch earthquake damage twelve years ago (Gibson, 2023).

The wake of cyclone Gabrielle left hundreds of houses destroyed and unliveable and thousands homeless (Daalder, 2023).

The term managed retreat has become the buzzword among experts and planners. In New Zealand, the largest example of managed retreat happened in Christchurch during the 2011 Earthquakes, where 8,000 properties were “red-zoned” and close to 20,000 people were relocated.

What is managed retreat, why is it needed, what are its purpose and underlying principles, and most importantly, who will fund it?

Answers to these questions and much more are discussed in New Zealand’s Environmental Defence Society (EDS) working paper, Aotearoa New Zealand’s Climate Change Adaptation Act: Building a Durable Future Project, a first in a series of three working papers and a final synthesis report.

The working paper defines managed retreat as “one of a range of possible adaptation responses in the face of known risk. Other responses include: avoiding the risk in the first place by preventing new development in risk-prone areas; reducing the risk (at least in the short term) by creating soft or hard defences; and accommodating erosion/flooding events through such measures as raising building floor levels and constructing floodwater detention facilities.”

“Managed retreat involves the purposeful, coordinated movement of people and assets out of harm’s way. Ideally, it is pre-emptive, taking place before damage occurs. Alternatively, a retreat can be ‘unmanaged’ when it is allowed to unfold in an ad hoc manner over time, with people gradually relocating in the face of increased damage and risk.”

EDS Policy Director Raewyn Peart says, “In our working paper, we review the likely impacts of climate change on homes, businesses, and infrastructure. We then explore potential responses, including moving people, buildings, and infrastructure out of harm’s way.”

Read the EDS Working Paper, Aotearoa New Zealand’s Climate Change Adaptation Act: Building a Durable Future project

The EDS also released a separate report by Professor Jonathan Boston, Funding Managed Retreat

The report explores twelve specific options for determining the level of, and eligibility for, public compensation. It also assesses various options for funding the cost of property acquisitions and enabling communities to relocate. Many of these options are mutually compatible. Hence it is possible to come up with various or numerous solution bundles.

According to Boston, managed retreat, based on international evidence, is often costly, complex, and controversial. Implementing it may take years, if not decades. Managed retreat is required for reasons other than climate change, as demonstrated during the Christchurch earthquake. However, with regards to cliamte-change related ones, it can generate unprecedented challenges from a political to economic standpoint.

Although proactive relocation or early interventions for highly vulnerable areas – those who have experienced repeated natural disasters and loss or are severely exposed to sea level rise are considered the best option as they reduce the amount of property damage, protect communities from repeated losses, prevent loss of insurance cover, and others. However, it is often challenging to implement, the report notes.

First, implementing proactive relocation risks community pushback. For example, residents become suspicious and would contest it, arguing for better protective structures instead. Another challenge that hinders proactive retreat is that private insurance does not generally cover loss arising from it.

Furthermore, as a consequence, these properties will not be available as security for home loans, leading to a loss of their market value. Therefore, this is where public financial assistance can become crucial because, without it, many of those living in high-risk areas will lack the means to move to a safe location, the report says.

Estimating the scale and cost of managed retreats in New Zealand will be partly based on the projected losses and damages from SLR.

New Zealand has one of the longest coastlines in the world at around 15,000 kilometres, so loss and damage to infrastructure and properties from the projected SLR in New Zealand will be enormous. The report estimates that the losses will amount to billions of dollars, not including planning, administrative, legal, and other costs associated with designing and implementing managed retreats.

In addition, residents will bear non-quantifiable losses such as the loss of community and identity, historical and cultural sites, and attachment to the area.

So, this leads to the question of who will pay and whether property owners receive any public compensation for the losses – which is the report’s primary focus.

There are multiple ways in which a public compensation scheme (or a ‘contribution’ regime) could be designed. The report presents the case for providing public compensation and the many ways in which a public compensation scheme (or a ‘contribution’ regime) could be designed in terms of its coverage, eligibility criteria, generosity, sources of funding, distributional impacts, institutional arrangements, and likely overall cost.

The report also presents examples and lessons from a managed retreat in other countries like Canada and the United States and some comparable cases of managed retreats in New Zealand, such as the Matatā in the Bay of Plenty which involved moving a few properties and others that involved hundreds of properties for example, the Twin Streams Project near Auckland and the RiverLink Project in the Hutt Valley. Nevertheless, the largest example to date was the ‘red-zoning’ of nearly 8,000 properties in Christchurch.

Lastly, the report notes that in addition to public compensation being made available for managed retreats, further developments in at-risk locations should be prevented to avoid future costs.

And if a compensation scheme for a managed retreat in New Zealand is to be successful, it would need broad public backing and cross-party support.

Read the complete report: Funding Managed Retreat