Central Government could do more to help councils deal with the growing threat of climate change, according to a new
The Productivity Commission's draft report on local government funding
highlights climate change as an increasing cost to councils, particularly through sea level rise and more intense rain
events threatening infrastructure.
The Commission suggests the Government should extend the NZTA's co-funding role to assist councils facing climate
change-related threats to transport infrastructure, and create a new agency and resilience fund to work with at-risk
councils to redesign - or possibly relocate - wastewater and stormwater infrastructure.
Among its 50 recommendations, the Commission also suggests councils in tourist hotspots should be allowed to cover the
costs of providing facilities through user pays or accommodation levies.
Submissions on the draft report are open until 29 August, with the final report due to be released on 30 November.
The SMC asked experts to comment on the Productivity Commission's draft report.
Professor Lisa Ellis, Director, Philosophy, Politics, and Economics Programme, University of Otago, comments:
"Every day that passes without clarity on climate change adaptation policy brings new losses: we are investing in risky
coastal development without knowing who will protect those investments or how they will be protected; we are making
decisions about existing assets without knowing our real options; in the face of increasingly frequent and extreme
natural hazards, we are hoping rather than planning for the future.
"The Productivity Commission rightly puts helping councils adapt to climate change at the top of its list of urgent
actions. Noting that councils now face a double-bind of possible legal liability for both action and inaction, the
Commission calls for central government leadership in providing a coherent legal and regulatory framework.
"We know that effects like coastal erosion and flooding are 'locked in', but we cannot know how frequent or extreme they
will be. The Commission rightly concludes that adaptation planning has to be ongoing, collaborative, and respond
dynamically to new information; it also has to be able to help communities make unpopular decisions.
"Recognising that local government resources are inadequate to respond to problems like replacing billions of dollars’
worth of at-risk infrastructure, the Commission recommends new central government co-funding for water and land
transport. They left the harder issue of compensation for losses of private property to central government to decide.
That cannot happen soon enough: every day without certainty is another day of losses for all of us."
Conflict of interest statement: Prof. Ellis receives funding from the Deep South National Science Challenge.
Associate Professor Anita Wreford, Lincoln University; Programme Lead, Impacts and Implications, Deep South National
Science Challenge, comments:
"The Productivity Commission’s report on local government funding is a comprehensive evaluation and addresses issues
that are well overdue for consideration in New Zealand. In relation to Section 8 on adapting to climate change, the
report identifies the major types of challenges local government face in this area, which are unprecedented in their
scale and complexity. Local government are the primary authorities dealing with the impacts of climate change and are
currently without sufficient direction, support, or funding from central government.
"In many cases, infrastructure is not sufficient to cope with extreme events and sea-level rise in the current climate,
let alone in the future when these will become more frequent and intense. The report identifies the need to begin
planning now for the longer term through flexible, adaptive strategies that support these complex decisions in an
uncertain future, as well as for current impacts.
"The report also highlights the challenge of funding adaptation through the current model. There is a strong case to be
made for a national adaptation fund to support local authorities, particularly in developing infrastructure that will
reduce climate risk for future generations. Refocusing the current civil defence and emergency management to concentrate
on prevention rather than responding and repairing after an event would be an important signal of a change in emphasis
No conflict of interest.
Dr Judy Lawrence, Senior Research Fellow, Climate Change Research Institute, Victoria University of Wellington,
"Acknowledgement by the Productivity Commission of the increased funding burden on local government from climate change
impacts such as sea-level rise and more frequent and extreme weather events is applauded. Shifting from a reactive mode
of decision making to weather events, to an anticipatory and flexible approach recognising the dynamic nature of the
risks, is highlighted as necessary to address the dynamic risks facing councils.
"Making additional funding conditional on use of such decision making is an excellent way forward to shift council
practice. A call for national partnership with local government in funding adaptation to climate change would help fund
the scientific support necessary and for a climate-resilience agency to help councils redesign and relocate public
services, driven by fairness and equity to minimise long-run costs. The Commission also calls for the alignment of legal
frameworks to give councils more backing to make land-use planning and infrastructure decisions that fit the changing
climate risks and support enforcement of any voluntary assumption of risk by landowners.
"The Commission report supports and extends the recommendations of the Climate Change Technical Working Group 2018 and
provides the necessary changes for funding adaptation to climate change by councils."
No conflict of interest.
Professor Ilan Noy, Chair in the Economics of Disasters, Victoria University of Wellington, comments:
"Local government is often not able to deal with the problems that climate change and extreme weather events lead to
because it often lacks the resources and knowledge required, and appears to find it more difficult to deal with local
interests (for example, by preventing development in future high-risk areas or attempting to initiate managed retreats).
"Central government needs to be involved much more heavily than it currently is in both providing resources and guidance
to local government, and in sometimes assisting it in making difficult choices. For example, while local government may
find it tempting to approve coastal developments with the caveat that future risks will be the responsibility of the
owners/developers (indeed figure 8.1 suggests this is viable), this is not really a binding commitment. Central
government should not allow that to happen.
"Managed retreats will be increasingly necessary in various locations (especially coastal). Central government needs to
develop a coherent and transparent policy of funding such retreats that appropriately incentivises early adoption but
does not create more moral hazard or ends up being regressive. The Residential Red Zone in Christchurch provides an
interesting and successful precedent whose lessons should be explored in this context.
"As the report points out, insurance is not part of the solution; at this point, there appear to be expectations that
insurance will protect homeowners in at-risk locations indefinitely. As such, these expectations exacerbate the problem
as the risk remains ‘hidden’ until the insurance companies themselves choose to retreat from providing coverage. This
gap in expectations may create pressure on the government to socialise this risk (for example, by extending EQC coverage
to all natural hazards, including full coverage for flooding).
"This is bound to create even more moral hazard, so these expectations need to be managed now, rather than later.
Current reviews of the EQC and the Insurance Law should take these concerns into consideration and formulate a long-term
strategy to deal with these conflicting aims."
No conflict of interest.