Shelter from the storm

Towards the end of a recent Yale Environment 360 interview, following a technical discussion of hurricane formation in a changing climate, scientist Kerry Emanuelis asked a question. Given the likely increase in intensity and power of storms and sea level rises, what needs to be done now in the US to start planning for this? His answer caught my attention and set me thinking about New Zealand. Here’s what he had to say about his country:

“…we need to stop subsidizing people to live in dangerous places. The United States is one of the few places in the world that does that, and it does it heavily. So we are basically paying people to move to places where they’re at risk. And, it doesn’t make any sense…”


It’s an indirect form of subsidy whereby people living in safer places are paying perhaps 10 percent too much premium on insurance policies whereas those living in dangerous coastal regions are paying far less than the risk warrants.

He points to the irony of a so-called free market economy capping the premiums insurance companies are allowed to charge. Unsurprisingly it’s wealth and political connections which achieve regulation from legislators setting a cap. The insurance companies need premium income, so they are quietly permitted to overcharge people living inland.

“…it’s a very unfair system. It’s a net transfer of wealth from poor to rich, and the worst aspect of it is it promotes huge coastal development. And, therefore, huge damages when even ordinary storms make landfall in the United States.”

He compares this with the east coast of Taiwan, which is battered regularly by storms. There are a handful of fortresses built by wealthy people to withstand a category 5. Otherwise people build holiday plywood sea shanties which are easily replaced when they get blown away.

The subsidies provided in the US are not limited to manipulation of premiums. Emanuel adds  federal flood insurance, which pays for storm surge damage, and federal disaster relief. Yet storm damage to coastal properties is predictable disaster and risk is knowingly undertaken.

The interviewer asks what is going to happen as the century rolls on in places like Miami and the South Florida coast where development is intense and only a few feet above sea level on the beach.

“I think we know what’s going to happen. There will eventually be a hurricane there, and it will do far too much damage for the state to cover. You know, the state basically has become the insurer of property in Florida. Everybody knows that a relatively small hurricane will bankrupt the [state hurricane insurance] plan, and they will all go with hat in hand to the federal government. So the rest of us will bail them out. And so we have the situation of hard-working people in factory jobs and farmers subsidizing the landowners of Palm Beach. It’s crazy.”

I found myself thinking of what Christchurch mayor Bob Parker had to say after the earthquake when questioned as to why the City Council had permitted building on sites vulnerable to liquefaction. It was a mixed picture. Some of the building was done in the past when the phenomenon was not understood. Some more recently was done with foundations adequate to the danger. But what struck me was the fact that there were cases where the Council did not want building to go ahead but developers won out by going as far as court and winning.

It’s hopefully a reminder to us all that regulations relating to development and building should be made as tough as they need to be.  The financial costs of the damage done by the earthquake will be borne by the whole New Zealand community, and few of us would want it to be any other way. But it’s permissible to reflect that the cost and the heartbreak may have been somewhat less in newly developed areas if more stringent regulations had been in place and not vulnerable to challenge from developers.

This is an important issue for future climate change impacts in New Zealand. Coastal development is one obvious area where appropriate standards set in place now can save great expense later as the sea level rises. Local government bodies have responsibilities to avoid or manage coastal hazard risk, and the Ministry for the Environment provides guidance in the task as it relates to climate change. The document Coastal hazards and climate change: A guidance manual for local government in New Zealand is available here. It contains much useful material. It recommends a precautionary approach to new development and to changes to existing development, based on the avoidance of risk. It promotes the need to secure and promote natural coastal margins. I wrote about it in more detail here last year.

There is also a revised New Zealand Coastal Policy Statement under consideration, which includes reference to the impacts of climate change on coastal hazards. However this appears to be stalled as controversy has developed over the report of a Board of Enquiry which considered submissions on the draft document and has recommended changes to it.

It is clear that, for the present at least, much responsibility devolves on local government bodies and it’s not too difficult to imagine the pressures that they will come under. Risky new development projects will be promoted vigorously. Expensive protection will be sought for areas already developed and threatened by sea level rise and accompanying storm surge damage. It will require strong planning measures and savvy councils to ensure that the future problems from climate change facing coastal developments are not permitted to grow bigger than they already will be. One wonders whether guidance to local bodies will be sufficient. National level prohibitions may need to be brought into play, for which we would need national politicians who understand the seriousness of the risks ahead.

The impacts of climate change on New Zealand coasts may not reach the level of seriousness which confronts the US, but we would be wise to prevent the investment of financial capital and human expectations in development which will prove unsafe in the course of the century.

[Mr Zimmerman]

8 thoughts on “Shelter from the storm”

  1. So all of those USA people berating the “socialist” leanings of their president are perfectly happy for the government, the government!, to subsidise insurance for their private, personal, domestic decisions? And their business decisions, come to think of it, if they build a hotel or a shopping complex near these government subsidised homes.

    I knew about the tax deductibility of mortgages but I never knew that. This ‘land of the free’ concept looks madder and madder.

  2. Developers never seem to learn the lessons of history – especially that they should pay more attention to geologists’ reports. Remember Abbotsford? Geologists said don’t build there … the houses were built, and down they came in a massive landslip. How many years ago was that? Even in biblical times people knew it was foolish to build on sand (Matthew 7:26 & 27). And yet, all over NZ seaside building-developments are continuing. Crazy.

    1. Interesting thought, Di. Made me curious enough to investigate, and the US seems to have a longer coastline. The CIA Factbook gives NZ 15,134 km, and the the US 19,924 km. Canada has a huge coastlines at over 200,000 Km, about 4x the next country, Indonesia.

      We’re 10th on that list.

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