Over $5 billion in local government infrastructure is at risk of damage as a result of a 1m sea level rise, according to a new report from Local Government NZ (LGNZ). The report has called for central government to develop a strong adaptation framework, and says that mitigation efforts alone “will not meaningfully move the dial” on carbon emissions.
The Insurance Council of New Zealand (ICNZ) says the report “doesn’t even tell half the story,” and that the country’s full exposure is significantly higher – likely in the tens of billions of dollars.
“LGNZ’s report identifies local government assets that are exposed to sea level rise, the cost of which is expected to be in the billions of dollars,” ICNZ chief executive Tim Grafton told Insurance Business.
“We see this as just the tip of the iceberg as it does not include the exposure of houses, businesses or central government assets. The full exposure for a 1m rise in sea level is probably closer to $40 billion. But it is still an excellent report, and it’s one that everyone should be sitting up and paying attention to.”
Grafton says ICNZ has been advocating for risk reduction and adaptation to climate change effects for a number of years. It has previously published a policy framework aimed at protecting New Zealand from natural hazards, and has worked with councils around informing communities of the need for adaptation, a strong framework, and which approach they should take.
Grafton says that insurers will be vital in bringing their expertise to the assessment of climate change risks. Their price shifts will signal where the risks are higher, and where issues need to be urgently addressed.
“The importance of investing a dollar now to save many more dollars after a disastrous event is very compelling,” he stated.
“While sea level rises themselves are not an unforeseen event, we’re concerned about the combination of sea level rise with high tides, extreme weather and flooding. Those combinations are what will cause damage to property, and that is what’s insurable.
“Adaptation reduces risk and keeps insurance accessible and affordable, so we want to avoid the situation where the risk gets too high that it makes insurance as an option unaffordable or unavailable.”
