Stop playing ‘whack-a-mole’ with natural hazards - Bryce Davies

Damage caused by Cyclone Gabrielle in February last year. Photo / Mike Scott

OPINION

A year ago, the country was responding to the devastating effects of the January floods and cyclones Hale and Gabrielle. We still are. While much has been done to help those affected to recover, for some it is by no means over and for many the emotional and financial impacts will be long-lasting.

The scale of the damage, trauma and expense of these events is enormous and shows why natural hazards are rightly considered a nationally significant risk.

For IAG, these events generated over 52,000 claims, six times as many claims as the same period the year before, and insurance payouts topping $1 billion, a number second only to the Canterbury earthquakes.

When events such as this occur, I often hear the adage “never let a good crisis go to waste”, meaning we should take the opportunity to build back better and make the affected communities safer and more resilient.

I certainly agree with that. But at the same time, I think we need to do more than that.

We can’t just play ‘whack-a-mole’ and continuously respond to the latest disaster. We need to improve the safety and resilience of our hazard-prone communities before disaster strikes. There is a lot at stake.

Looking at the past 20 years, the insurance industry (including the EQC) has paid out over $44 billion in claims for natural disasters. The wider economic and social costs of these disasters are not something that appears to be routinely or rigorously tracked, but research suggests that the total cost over that period can be estimated at $200b or about 4.3 per cent of GDP a year.

To put that into perspective, in Budget 2023 that is almost as much as we will spend on education, superannuation or purchasing health services.

More worryingly, the cost of these events is growing in absolute terms and as a percentage of GDP.

Choosing to develop in hazard prone locations puts more in harm’s way and the warming climate is increasing the frequency and impacts of weather-related events.

Of course, there is a lot that we already do across central and local government to reduce the impacts of natural disasters, with the help of many skilled and dedicated people. Yet, many practical changes are needed in the areas of infrastructure, land-use, our building code, science and more to improve our approach.

Recognising this, IAG has been active in promoting ways to reduce risk, including our three-step plan for growing flood risk, and will always put its hand up to help.

However, despite all the work and new initiatives underway, I’m not sure it is enough to keep pace with our growing risk.

I worry that while everyone agrees that managing natural hazards is important, it’s never quite important enough to deliver the change we need.

We rightly look to protect lives, but less so the functioning of our communities and economy, and therefore our ability to recover and become more resilient.

We rally to support people and protect affected communities after disaster strikes but lose focus and momentum as the urgency of the response fades, leaving us repeatedly chasing rather than getting ahead of the next disaster.

It seems that on the one hand we often underestimate the likelihood and impact of disasters, are shocked by the loss and damage they create, and can mistakenly see them as exceptional. On the other, we assume natural hazards are unavoidable and that there is only so much that can be done in dealing with them.

What emerges from this is often a fatalistic attitude toward natural hazards, which leads us to emphasise response and recovery ahead of avoiding, reducing or building resilience to their impacts.

We need to change that attitude and have a much more targeted approach to our natural hazards. We need to increase accountability for risk reduction, improve how we measure and target it, increase our investment in infrastructure, invest in the science to understand and act on our natural hazards and evolve how we build back after disaster strikes. We also need to see through important reforms in land-use planning, managed retreat and the building code.

We need to heed the lesson of these latest crises. As well as helping people to recover, we have to reset our thinking and approach to natural hazards so that all of the communities who are exposed to their impacts can be safe and resilient.

- IAG’s Bryce Davies will be speaking at the 2024 NZ Economics Forum at Waikato University, Friday 16th February.