A sobering summing-up of climate change's potential impacts on New Zealand has been released this week by the national science academy, the Royal Society. It is a high-level document but extensively footnoted for those who want to delve into the empirical credentials of its assertions. Residents of Kohimarama and Mission Bay, for example, might want to look into the provenance of a map it contains, showing how much of those affluent suburbs is at risk of inundation at various rates of sea level rise. Coastal inundation is one of the key risks the paper highlights, as rising sea levels combine with more frequent and powerful storms. Under the "high carbon" scenario the scientists consider - essentially, business as usual for emissions growth - they expect sea levels around the New Zealand coast to rise by between 60cm and 1.1m by 2100 - and not stop there. "A 0.8m rise in sea level would mean that the current 1-in-100-year high-tide level will be exceeded by more than 90 per cent of high tides, i.e. almost daily," it says. Flooding is a hazard not only for those who live close to the sea, but also for those in river floodplains, given the changing distribution of rainfall and the fact that warmer air can contain more moisture. The Royal Society paper is about physical impacts. It does not venture, at least not very far, into the economic channels by which those physical changes are liable to affect people's finances. But some are obvious. Insurance, for one thing. About half the cost of rebuilding Christchurch has fallen to foreign reinsurers, that is, to people willing to accept a fee for putting their capital at risk underwriting such risks.
There will also be difficult questions about the extent to which it is reasonable to socialise the cost of engineering works to protect the value of private property.It is not hard to envisage a world in which that capacity has been overwhelmed by the frequency and severity of climate-related disasters. What would the inability to lay off some of the risks of flooding to reinsurers do to the availability and cost of insurance? And in the absence of insurance cover, banks are unlikely to be willing to lend on the security of a property. What would that do to the market value of the property? Where this leads to is a messy situation where local authorities, armed with what can only be probabilistic and uncertain information, face difficult and politically toxic decisions about what areas to designate as being at risk of coastal or riverine flooding. But what choice would they have? Would it be good enough to leave it to market forces and caveat emptor? There will also be difficult questions about the extent to which it is reasonable to socialise the cost of engineering works to protect the value of private property. In any case, councils will face mounting bills to mitigate climate risks to infrastructure they are responsible for, like roads and drains. The Royal Society paper warns gently against the "levee effect", where stopbanks create a false sense of security and when overtopped do more harm than good (as the people of New Orleans can attest). Another key area of risk the scientists identify is pressure on freshwater resources. While wet areas get wetter, dry areas get drier and more drought-prone. Benign-sounding changes in national or annual averages can mask wide variations regionally and seasonally, and mask increased frequency of extreme events. Areas where decreasing rainfall is expected - the north and east of the North Island and northeast of the South Island - already tend to be relatively dry. And the effect of less rainfall will be compounded by warmer temperatures, increasing loss of moisture through evapotranspiration.
How long, then, can policymakers cling to the current doctrine that no one owns water and that rights to use it can be allocated on a first-come, first-served basis?This portends an increasingly quarrelsome environment, where there are competing claims on freshwater resources. And it clearly has implications for farming which, even in a period of depressed commodity prices, accounts for half the country's exports of goods. The report says that existing studies of the implications of climate change for agriculture indicate only moderate productivity changes of a few per cent. But it sounds a cautionary note, saying it is unclear whether that reflects the inherent resilience of the sector or a failure by existing studies to explore all the implications of simultaneous changes in climate, CO2 levels and the prevalence of pests and diseases, along with changes to public attitudes to water and landscape management and changes to global markets. In any case, it seems inevitable we will hear an ever-louder clamour from farmers for dams and for rights to draw on aquifers. How long, then, can policymakers cling to the current doctrine that no one owns water and that rights to use it can be allocated on a first-come, first-served basis? Economists are likely to argue for the power of markets to allocate increasingly scarce water resources in a way that sees them flow to those who value them most. But the experience of allocating rights to what was previously free - like fishing quota or rights to emit greenhouse gases - suggests it involves pretty rough justice at the outset. The report also points to risks to tourism, if it comes to be seen as antisocial for people to travel long distances by air merely for a holiday, and to aquaculture from ocean acidification. Even from these perfunctory reflections, it should be obvious that adapting to the impacts of climate change raises thorny and challenging issues. A pity, then, that when we need statesmanship from our political leaders all we get is self-serving myopia. The debates need to proceed without them.