New Zealand’s local authorities are seeking greater certainty about who will ultimately pay for the costs associated with climate adaptation, as the frequency and severity of storms, flooding, and sea level rise continue to increase.
The issue has gained prominence following the release of a report by the Ministry for the Environment’s Independent Reference Group (IRG), which calls for a clearer national framework to address the financial and operational challenges of climate resilience.
Local Government New Zealand (LGNZ) has cautioned that, without a defined approach, ratepayers could face significant financial exposure.
The IRG report, which was prepared with input from finance, local government, iwi, and insurance sector representatives, recommends a phased transition to new risk-sharing models and adaptation strategies.
Waimakariri District Council chief executive Jeff Millward said the council is in the early stages of developing a climate adaptation strategy to address the risks posed by sea level rise and more frequent severe weather.
Millward said that while the council has insurance for certain events – such as earthquakes and flooding – through the Local Authority Protection Programme, the coverage does not extend to all climate adaptation measures.
“As the risks become more severe, there may be changes to what insurance is available, or even ‘no insurance at all,’” he said, according to Local Democracy Reporting. “Does it fall back on the ratepayer or the taxpayer? It is a bit more complicated and a lot more discussion has to happen.”
Councils have already implemented planning rules to address natural hazards, such as setting minimum distances from water and requiring elevated floor levels.
However, Millward noted that many residents prefer coastal or riverside living, which increases exposure to climate-related risks. He said further modelling and new risk management tools will be needed as part of the adaptation process.
“People like living near the beaches or rivers, but it puts those properties at risk, so there is going to be a lot of modelling work done to identify the risks and develop and array of tools,” he said.
Kaikōura District Council chief executive Will Doughty said regional collaboration is underway, with councils working together on adaptation plans as part of the Canterbury Climate Partnership Plan.
“One thing is for sure – there is going to be a bill. I think we do need clarity, and it is a conversation we need to have,” he said. “I think the steps Canterbury has taken as a region to put that action plan in place has put us in a good position. It’s a much bigger issue than any one particular district, and the more joint action we can be doing, the better.”
The IRG report suggests that government-funded buy-outs of high-risk properties may not be sustainable as extreme weather becomes more common.
It recommends phasing out such buy-outs over two decades and funding adaptation measures through a “beneficiary pays” approach, where those who benefit from mitigation contribute to the cost.
Prime Minister Christopher Luxon has indicated that ongoing government bailouts for homeowners affected by major floods are not feasible.
Some councils, such as Hurunui District, have already implemented adaptation plans with local communities, including purchasing land for future relocation of residents in high-risk areas, funded by targeted rates.
