When the water levels started rising around Claire O’Connor Bryant’s house near Eskdale during Cyclone Gabrielle, she knew she had to act quickly. She rounded up her son and flatmates and together they sought refuge in the rafters of the barn, the highest point of the property.
She describes several large trees – up to 15m long – being carried past her outbuildings below. “Everything on my property – the cars, the caravans and everything else – was all caught up in the trees, making a whirlpool. We were sitting in my turn-of-the-century barn. The glass windows are very old and there was one tree with a huge trunk that was bashing on them. We were just sitting there waiting for another surge to take the building down.”
The experience sounds like something from a nightmare – but for O’Connor Bryant, the nightmare isn’t over.
Eskdale is a low-lying coastal community just north of Napier. The Esk River, which burst its banks during the cyclone, runs through it. Under land categorisations devised by the Crown, O’Connor Bryant’s property was placed in category 3 by Hastings District Council, meaning it is in an area deemed too dangerous to live in due to flood risk. Although it makes her eligible for the council’s voluntary buy-out scheme, there’s little to be relieved about: rent for her temporary home and mortgage payments for the damaged property add up to more than she earns in a week as a property manager.
Nor is O’Connor Bryant confident she will be able to buy a new house: hers is one of 287 properties designated category 3 in post-cyclone Hawke’s Bay. “There just aren’t that many houses out there to buy,” she says. “There’s a huge amount of pressure on the market after the cyclone and prices are going up.”
There wasn’t a lot of damage to her house, she says, because the outbuildings diverted most of the slash and trees. But although one of her neighbours has chosen to do his own repairs and stay in his home, this isn’t an option for her.
O’Connor Bryant was also one of several hundred homeowners to receive notice from her insurer, AMI in September saying it will no longer cover properties placed in category 3. For those who choose not to engage in the voluntary buyout process offered by Hawke’s Bay, Gisborne and Auckland councils, their insurance policies will be cancelled. For homeowners in category 2 – which broadly means work on houses or their surrounding areas is needed to manage the risk – they “may see changes to their insurance to reflect the risk of damage from future severe weather events”.
These notices went to the owners of properties damaged in this year’s North Island floods and Cyclone Gabrielle who are insured within the IAG group – AMI, State and NZI. With more than a million customers, IAG is New Zealand’s largest general insurer.
The decision is known as “insurance retreat” – a term coined by leading climate-risk expert Belinda Storey. It describes situations where an insurer decides not to offer policies, or to offer policies with heavy conditions, in locations where the probability of risk is escalating because of climate change. Storey says this creates a form of managed retreat driven by the private sector.
“It allows the insurer to transfer some of the risk back to the homeowner by saying they won’t cover certain risks, or by setting very high excesses,” she says. While such a decision may be made to avoid liability for 1-in-100-year flood events, it effectively prevents homeowners from accessing insurance for everyday flood events as well.
And for homeowners like O’Connor Bryant, it makes it infeasible to stay in their homes. “[It means] the buyout offer is not voluntary,” she says. “To have a mortgage, you have to have insurance. If I lose insurance, it would put me in breach of my mortgage and liable to pay it immediately.”
Stay or go?
Eddie Roberts and his partner Trish found themselves in a similar situation. Their home, on 50ha of cropped family land, also near Eskdale, has been placed in category 3. The house sustained damage from floodwaters and silt, and will not be covered by insurance in future.
But they don’t plan to leave their land. With the insurance money for temporary accommodation running out, they will soon move into the upstairs of a commercial workshop on the property. “Dad’s been here for 60 years. I was born and bred here, and so were my kids,” Roberts says. “I’m not going anywhere even if we have to invest our money in a property somewhere else and live frugally here just to be back on the land.”
For someone so personally affected, he understands of the insurer’s situation. “I’m practical – I know there’s no simple solution.”
But he would have liked the opportunity to discuss partial coverage – for example, covering for fire or theft without flood protection. But Vero, his insurer, has been unwilling to negotiate, he says. “From our perspective we feel pretty abandoned by the whole insurance system.”
For homeowners in the category 2 band, the situation may be even trickier. They have been warned they may see changes in their policies. Storey says this could mean exclusion of certain hazards, or hikes in premium and excess costs.
Even if the owners don’t see changes immediately, insurers are under no obligation to renew their policies each year. So at any point, category 2 homeowners could find their insurance coverage is limited or premiums are increased to reflect growing risk. And when they sell their home, they might find purchasers are unable to get insurance, Storey warns.
As far as she is aware so far, insurance retreat has only been seen in response to catastrophic events. She attributes that to the reputational risk associated with stopping insurance for loyal customers. But that won’t apply to new, prospective owners, she says. “If insurers refuse to issue policies for new owners in risky locations, the buyers will struggle to get a mortgage. And that will mean the price they’re willing to pay for the property will be lower.”
Banks retreat
Emma Vitz is an actuary at Finity Consulting in Sydney. Originally from New Zealand, she specialises in climate risk or “natural perils”, as they’re called in the insurance industry. She says insurance retreat is preferable to alternatives, including using government subsidies to keep insurance affordable. That’s because an insurer’s obligation is to protect homeowners when the unexpected happens – not to facilitate people continuing to live in unsafe areas, she says.
“The solution is not to artificially provide that person with affordable insurance, it’s to actually make sure that people are living in safe areas, and in safe houses.”
Beyond the insurance industry, Storey has also coined the term “credit retreat” to describe decisions by mortgage lenders to not offer loans in certain hazardous locations.
Although she hasn’t seen it happen to date, she anticipates this will become inevitable once banks have a better understanding of climate risk. And the issue won’t be small. Last year, the Reserve Bank asked New Zealand’s five major banks to measure exposure in their residential mortgage portfolios to coastal flooding. The result was that 2.5% of the country’s 1.2 million mortgaged homes were deemed vulnerable to a 1-in-100-year storm tide event at 50cm sea level rise. New Zealand is predicted to hit that level before the turn of the century even under an optimistic climate mitigation scenario, though scientists warn we could get there much sooner (see “Incoming!”, page 20).
In Auckland, river and surface water flood risks were also assessed. The results indicated that more than a quarter of mortgaged properties could be affected by flooding in a severe climate scenario.
Kiwibank’s head of sustainable finance, Tom Williams, says the bank doesn’t yet consider climate risk in its lending decisions, although he acknowledges that failing to integrate a known risk will pose an increasing threat to the market. “The availability of data and modelling is still emerging and, as a bank, we don’t under-estimate the impact that our action can have on the property market,” he says. “But we don’t think it should be the banks setting the rules for what risk is and how homes should be impacted. That should be up to the central and local government.”
That government-led framework, says Williams, does need to include managed retreat. “I think everyone accepts that there are parts of New Zealand where people won’t be able to live in the future – and it’s not even in the long term; it’s medium term.” To him, the only way to achieve that is through a long-term, multipronged approach that supports the financial sector and homeowners.
Reactive approach
Following this year’s Auckland Anniversary Weekend floods and Cyclone Gabrielle, the local and central government response was largely reactive. Councils did not have a cohesive framework to follow when assessing and categorising properties, and the details of buy-out schemes are still unclear.
Eight months on from the disaster, Eddie Roberts has not heard how his council’s buyout process will work. “We have no details and there’s still so much speculation around,” he says, adding that the uncertainty and lack of communication have made for a traumatic process.
Like this reactive approach, managed retreat driven by the private sector is ad hoc, sudden and often harmful. It can happen quickly and without warning, and it leaves little opportunity for homeowners to negotiate their circumstances. It also comes without a back-up plan. Uninsured individuals are left in default of mortgage terms and facing significant financial risk if their property sustains more damage.
But a proactive, government-led framework could ensure communities are supported, compensated and, importantly, consulted, says Tim Grafton, chief executive of the Insurance Council. “To make it work, you need to take the community with you, in terms of explaining the options that are available and getting buy-in to the problem and the solution,” he says. Grafton acknowledges there is still a lot of dissonance surrounding whether managed retreat is necessary and some members in a community will always be resistant to moving.
But he agrees with Finity Consulting’s Vitz that there is “no point in ensuring that insurance is in place where people’s lives and safety are at risk”.
O’Connor Bryant says given the option, she would have moved from her property earlier. “I would have said, ‘Yeah, let’s get a plan together.’” She adds she would have wanted compensation for the fact she received council consent in 2012 to build as low as 750mm above sea level, but was not notified when that risk changed.
“It was a calculated risk when I bought the property. But if they had come to me and said the risk was increasing, then sure, I would have considered moving.”
Grafton envisages a process similar to that taken by past governments with the Smokefree Aotearoa scheme. After deciding that the cost of smoking to society and the health budget was unsustainable, a hard goal was set and a framework provided to get there, he says. Similarly, the government could set a goal to meet a certain level of climate resilience by some date in the future and implement a plan to achieve it. This needs to include clear expectations of what homeowners can expect if they are affected by a natural disaster, he says. It should not come as a surprise when the insurance sector deems a property too risky to cover.
Kiwibank’s Williams agrees. He says the most important things for banks and individuals alike are consistency and certainty. “The consistency part goes to what we would deem an unacceptable level of risk,” he says, adding this would allow local authorities to respond quickly and decisively after major weather events. “People should know what the rules and timings are and there should be a proper mechanism for compensation.”
The Labour government had some of this work under way. In 2022, it released New Zealand’s first National Adaptation Plan, a document that gave access to the latest data projections and strived to make natural hazard risk information more accessible to the public. The plan also promised to develop a national planning framework on adaptation and to pass legislation to support managed retreat from at-risk areas. But it did not provide answers about the level of risk required to warrant retreat, nor who should pay for it.
That work is still in progress. In August, then-Climate Change Minister James Shaw asked Parliament’s environment committee to look into community-led retreat and adaptation funding. He requested an inquiry that considers how to support high-risk communities, how costs could be met and the legislation needed. The inquiry would inform the much-anticipated Climate Adaptation Bill, one of three laws planned by the outgoing government to replace our resource management legislation.
Whether the work will continue remains to be seen. During the election campaign, National and Act placed a heavy emphasis on investing in protective infrastructure. But according to Storey, this just avoids the much-needed conversation on managed retreat.
“The thing with flood protection is that it gives a false sense of security,” she says. She prefers the term flood defence to flood protection, because it better reflects that it is an ongoing process with limits.
“Flood defences hold back water in damaging events – but they will never be able to hold back the water from catastrophic events. And climate change is creating more and more catastrophic events. We could build to protect against a 1-in-200-year event – but what happens when a 1-in-500-year event comes along?”
Given the pace and severity of climate change, the only way to guarantee the safety of people and their property is to help them move, she says.
A personal issue
But for Roberts, it’s not that simple. He isn’t sure whether his family would have moved to a safer location, given advance warning. He knew there were risks living on a floodplain, but he didn’t necessarily expect the water to come through like it did.
“It’s tough; we’ve had so many years here,” he says. “We’ve got a marae and a cemetery right beside us which have been there for hundreds of years. We all understand the position because it’s a risk to life if something happens again – but I just don’t know.”
It’s important to not underestimate the attachment people have to their property, says Williams, “particularly when you consider iwi. The actual delivery of a framework needs to include everyone involved.”
Ngairo Eruera is a member of Ngāi Tamawhariua hapū and a former chairperson of Te Rereatukāhia marae, just south of Katikati and close to Tauranga Harbour. In 2020, the hapū engaged independent body Takarangi Research to consider its climate change risk.
“We’re going to be confronted with some pretty severe challenges around climate change,” Eruera says, flagging saltwater intrusion in soil and a changing shoreline as key examples. Many whare are built on old wetlands that are particularly flood-prone.
Part of the work with Takarangi Research involved spreading the message of risk across the hapū. He says the key is laying out the facts impartially. “You don’t want people making irrational decisions based on fear. You want to provide the means to think through decisions clearly, using the best information available,” he says. “If you cajole or manipulate or bully someone into a position, the results won’t be lasting.”
In Eruera’s experience, conversations around managed retreat have been largely positive, although movement is slow. “No one actually wants to make the decision,” he says. “I’m trying to not be cynical, but it will probably take a major disaster for anything to happen.” His whānau narrowly escaped flooding after Gabrielle, which Eruera attributes to timing – they were lucky storm surges did not coincide with high tide.
The most essential part of managed retreat, he says, is relocation. “Given some of the financial strain on our whānau and building restrictions, we don’t have access to more resilient spaces right now.”
A few years ago, Ngāi Tamawhariua hapū was presented with the opportunity to buy 5ha of orchards neighbouring the marae but couldn’t source the funds. “The land would have been much safer,” Eruera says. “It’s back from the shoreline, and it’s elevated. But that just shows some of the issues we’re facing.”
Easing the way
On the cyclone-hammered East Coast, Gisborne Mayor Rehette Stoltz says local government has an important role to play in making resilient land accessible.
“As a council, we can be proactive about where we zone for people to live, and make it easy for people to move to where it’s relatively safe,” she says, adding that central government needs to lead the wider charge.
“Climate change came much faster than we expected and, while we are working to be proactive, we have to deal with the people currently living in areas that have become flood-prone.”
O’Connor Bryant isn’t holding out much hope. From her interactions since Cyclone Gabrielle, she hasn’t seen any plan taking shape. “It just seems like the government doesn’t know what to do in this scenario. They’re just shaking their heads and saying ‘sorry’. Then we go round and round and round and get nowhere.”
But she hopes the country will learn from this year. “Our cyclone is going to set the precedent for emergency response around the country,” she says. “But do New Zealanders realise that whatever their land was worth, it could be a lot less right now?”
Incoming!
The news just got worse about the height of sea level rise expected around New Zealand’s coastline this century. Modelling by British Antarctic Survey scientists has found that melting of the West Antarctic ice shelf – Antarctica’s biggest contributor to sea level rise – will accelerate regardless of climate change mitigation measures this century.
The melting of ice shelves in the Amundsen Sea is reducing their ability to “buttress” the West Antarctic ice mass, causing glacial ice sheets to slide more rapidly into the ocean.
The melting is likely “locked in” – ocean warming in the Amundsen Sea will happen regardless of the success of measures to reduce carbon emissions. Although mitigation measures should slow surface warming in the longer term, warming this century in the Amundsen Sea will be driven by deep ocean current processes.
“Even under the most ambitious mitigation scenario [warming limited to 1.5°C], the Amundsen Sea warms three times faster than in the 20th century,” says the study published in Nature Climate Change.
“A baseline of rapid 21st-century ocean warming and consequent sea-level rise appears to be committed.
“Continued ocean warming will accelerate the rate of [Antarctic] mass loss and will trigger more impacts of sea-level rise on timescales which are immediately policy-relevant.
“Adaptation should now be considered more seriously as a priority in the world’s response to sea-level rise.”
Research has shown the seas surrounding New Zealand will rise 5-10% more than the global average projected for this century by the Intergovernmental Panel on Climate Change (IPCC). Its modelling of ice sheet melting suggests New Zealand will experience at least 30cm of sea level rise by 2050 and 60cm by 2100. However, the government-backed NZ SeaRise Programme last year said land sinking could mean parts of Wellington, Auckland, Napier, the lower North Island east coast, Marlborough and Nelson could expect double the level of inundation – and a lot sooner. “Councils need to put serious plans for adaptation in place right now,” it warned.
The British study’s longer-term projections, for next century and beyond, are even scarier. “Continued trends in ice-shelf melting have the potential to cause irreversible retreat of the glaciers, which together contain enough ice to raise global mean sea level by 5.3m.”
The six West Antarctica glaciers include Thwaites, known as the “doomsday glacier” because its melting alone could cause global sea levels to rise by about 3m. But it’s these longer-term projections that scientists believe we can bring down through emission reduction measures.