Behind the smooth blue curve of Cooks Beach, there’s a sandy road edged in rough grass, and then rows of baches. At one end, there’s a sea wall, a barricade against the waves, for now. At high tide, the water laps against the rock. Whenever Belinda Storey visits her family bach, she gazes at the sea and the sand and the low weatherboard houses and imagines how much of this Coromandel settlement will still be there in years to come.
Storey, a climate economist, studies how the value of coastal property stacks up against the risks facing it. Although it’s some of the most expensive property in the country, it’s also the most vulnerable to climate change and sea-level rise. In other words, there’s a big gap between the price of her family bach and its value.
“The dominant economic theory of our time is to say the markets always price appropriately,” says Storey. “The work I do demonstrates it doesn’t—and by how much.”
Storey’s father built their bach from macrocarpa milled from the family farm, and it still has those rich timber floors. When he asked the kids if there was anything each of them wanted in the house, a young Belinda chose a skylight, so she could lie in bed and watch the stars.
A typical farmer of his generation, he also built the house to last, sinking its concrete foundations deeper into the ground than the regulations of the time required and elevating it high enough to withstand a storm surge of up to one metre.
It was a good thing he did. A few Christmases ago, the land flooded during a storm, but the house stayed dry. The flood wasn’t caused by the sea coming in—rather, rainwater pooled and couldn’t drain out. Drainage issues are a lesser-known consequence of sea-level rise. “Water can’t drain when the sea is that much higher—and storm surges almost always happen with lots of rain.”
Storey’s research indicates that many homes that are currently low risk—specifically, those estimated to flood once every century—will likely begin losing their insurance from 2030. In a report published in December 2020, she and her team at Climate Sigma predict that at least 10,000 properties across Auckland, Wellington, Christchurch and Dunedin will completely lose their insurance by 2050.
This is a bigger deal than it sounds. In New Zealand, the loss of home insurance washes away a property’s value. Banks won’t grant mortgages on uninsurable property—which makes it difficult for buyers and sellers alike.
Despite decades of valiant effort by scientists, environmentalists, and lobby groups in pushing for action on climate change, it may not be government policy, or effective communication, or science literacy, that is the decisive factor in society making difficult decisions. It will be hitting people in their pocket, where it hurts most, via the boring, millennia-old concept of insurance.
Since the late 1880s, the sea level has been steadily rising around New Zealand, relative to land, at an average of 1.8 millimetres per year, or 18 centimetres a century. But a few centimetres doesn’t really sound like much. The current estimate, that sea levels will rise by at least 10 centimetres by 2040, doesn’t sound like much of a problem either. But many people don’t realise the impact that tidal range and storm surges have on top of that, and what will follow—water pooling, subsidence, and salinisation of groundwater.
Insurance is much more straightforward. Insurance companies work with formulas called annual exceedance probabilities—how likely a particular event is to occur—to figure out how much to charge and when to stop insuring a property. They decide this anew each year and, one year, they may decide the risk is too great.
Insurance covers the unlikely, unforeseen and accidental. But there is nothing unlikely about sea-level rise, or the more severe weather that will occur under climate change.
The year 2020 was the worst ever for weather-related claims in New Zealand, costing insurers a record $248 million to cover damage from floods, fires, tornadoes and storms.
“We’ve been on about this for years,” says Tim Grafton, the chief executive of the Insurance Council of New Zealand. “Sea-level rise is an inevitability, not up for debate, and that will continue—not just for many decades but likely for many centuries,” he says, pointing to the many NIWA modelling studies identifying the value of properties within a certain distance of the average high-tide mark. “Depending on what scenarios you look at, it comes to tens of billions of dollars of assets.”
Although, anecdotally, some areas in New Zealand are already uninsurable, there is no available data, because there isn’t a legislative requirement for insurers to report it to their regulator or to the government.
Still, it’s possible to predict which areas of land are going to become vulnerable to climate change—meaning it would be possible to prevent houses from being built there. The New Zealand Coastal Policy Statement 2010 says any development must consider the effects of climate change—but enforcing this is up to local government.
And so, since 2019, about 360 homes have been built in areas threatened by sea-level rise, wrote University of Canterbury civil systems engineering lecturer Tom Logan in a blunt Stuff column in March 2021. The properties have a combined rateable value of $300 million and are now among the estimated 30,000 homes vulnerable to sea-level rise, with a total value of more than $15 billion.
“That we have been building in exposed places in the past may be forgivable, but this ongoing investment is untenable,” he wrote.
Storey suggests the government put time limits on new developments, making it clear that locations will be safe and economic for a certain time period only.
“At the moment, a developer develops a piece of land and they move on,” says Storey. “They’re not around at the time these escalating hazards materialise. Whereas if you were to put the limit on, there will be some properties that won’t be developed, because it would be recognised that the developer won’t be able to get the economic return on their development for a property that only had a 50-year period on it. That is something the government could do today.”
Earlier this year, there was a 65-square-metre two-bedroom 1974 house for sale at 16 Banks Street, Cooks Beach, a block back from the beachfront and boat ramp.
It’s a classic Kiwi bach. Iron roof, concrete-slab foundation, lounge and kitchen in front, two rooms behind. Owned by the same family since it was built. Bathroom with laundry and separate toilet. BBQ and plastic chairs on a concrete patio, septic tank buried out the front, all on 830 square metres of scorched, sandy earth. It was up for auction with a rateable value of $1.025 million. “With huge scope to add your own personality &/or develop the landscaping, the opportunities are endless,” the real estate ad said, and suggested land-banking, too—the section is easily big enough to subdivide. The property sold for just under $1.5 million.
One day, says Storey, legal structures could change and the climate risk of this bach could be mentioned on its title. As it is today, there is nothing on the title to indicate its exposure to both sea-level rise and the fact that its new owners may not be able to insure it for long.
As the street has no kerbs, water channelling or stormwater drainage, there is a significant problem with stormwater and regular, severe flooding in the community already, according to information attached to the bach’s LIM report. The Waikato Regional Council’s coastal inundation tool clearly shows how the area will be impacted in various sea-level-rise scenarios, from 80 centimetres to five metres. The beach area will be turning into an island, flooded from behind and in front.
Some areas of Cooks Beach flood annually, and each house contains its stormwater on its property in soak pits or splash pads under water tanks. (The New Zealand building code dictates soak pit size by recent rainfall data, not projected rainfall, so it doesn’t account for future change.)
The Banks Street bach was marketed by Proppy, which sells homes via online auctions, and agent Viv Attwell says interest was “massive”. Buyers asked about sea-level rise when they viewed the property, but it didn’t seem to deter interest. “I think that they also do their homework on what areas of coastline are at risk.”
All of the coastline is at risk, but what Attwell means is that storms come, homes get flooded, dunes are eaten away, wooden staircases are left hanging in mid-air—and then repairs are made and the event is forgotten. This is our response to climate change in microcosm, the human tendency to ignore slow-moving catastrophe until it affects what’s right in front of our eyes. Out of sight, out of mind.
And yet it’s not that far out of sight. At one end of Cooks Beach is that rocky sea wall, built in 2013. Along with 25 shareholders, Captain Cook Road homeowner Christine Ellett contributed $30,000 to the sea wall and then spent more than $100,000 relocating her house seven metres back in October 2014, just before Cyclone Pam hit. Water still flowed straight across the grass and onto her deck when the sea topped the wall.
Attwell doesn’t think climate change has altered the desire for coastal property. “I think the people who can afford beachfront can probably afford the risks as well,” she says.
“People live for today, a lot of them. They don’t think about the consequences. The market is still there.”
The trouble with “being able to afford the risk” is that usually involves people trying to build their way out of trouble: raising houses, moving them back, constructing sea walls. But Storey says sea walls not only offer a false sense of security, but they also tend to transfer wave action somewhere else—meaning there’s even more severe erosion in the place where the sea wall ends.
“As our sea level continues to rise, those sea walls will eventually become overwhelmed,” she says. “And, in fact, they can actually increase the risk, because once you build a sea wall, people think, ‘I’m safe. I can build two houses on my section or an apartment block or a retirement home.’ And so, what happens is we can actually have even more people and assets in the most hazardous locations.”
Sea walls and other barriers also come up a lot when waterfront property owners complain to the council that the sea is taking away their land. They want the council to use public money to protect their properties.
“Often, homeowners who are directly in front of the sea expect sea walls to be built and paid for by the local government, but the benefit that is accrued is very much concentrated in just those people at the front,” Storey says. “And the difficulty is if you have community consultation, inevitably the people at the front are the ones who are most likely to be able to make the time to come to those events and advocate for themselves—whereas the cost is diffused across all the ratepayers.”
The bach at 16 Banks Street that was sold in February was built around the same time as the Storeys’ one. Storey’s father died five years ago, and she recalls talking to him about sea-level rise before he passed away. They discussed moving the house, pondering if they could get it over the Coromandel Range.
He had planned well when he built the bach, but he hadn’t counted on the changes his daughter would face in her lifetime. Today, he’s gone, but the house is still there, with the skylight that young Belinda wanted. Although her dad admitted the untreated macrocarpa cladding milled from their farm was a bit of an experiment, it’s still there, too, weathered silver. Storey knows what it’s like to have a family’s spirit and connection and memories infused into a place—and she still says the thing to do is to sell the house.
Yet a bach isn’t the same as an ancestral home of generations’ standing, or even a permanent home, and the question of how to protect or compensate people who have poured their entire lives into a place remains. It’s one thing to stop development on vulnerable land; it’s another to figure out what to do with what’s already there.
For many Māori communities, their urupā and other sacred sites are close to the sea or in low-lying areas. Climate change also affects mahinga kai, food-gathering sites, which are already beleaguered in some coastal areas due to factors such as land runoff.
Selai Letica (Ngāpuhi, Ngāti Porou), an expert on Māori agribusiness, is researching risk-based flood-insurance pricing for the Deep South National Science Challenge. She points out that about 30 to 35 per cent of marae are within a kilometre of significant rivers, 45 per cent of coastal marae are within 200 metres of the coastline, and about 70 per cent are less than 20 metres above sea level. That’s just marae; it doesn’t even count the economies based on Māori land. Many of these marae are also Civil Defence sites—where people go when disaster strikes.
“The trouble is, we just don’t know about insurance risks for Māori,” says Letica. “We’ve just got really crude numbers around rates of under-insurance and things like that. But we actually haven’t done the job of understanding what insurance retreat or changes in shifting to risk-based pricing mean. We don’t have any hard evidence about what that looks and feels like for Māori.”
She says although there are multiple impacts for everyone, the entry point for Māori whānau into climate change is the danger of identity eroding as the landscape does.
“We whakapapa to maunga, to awa, to the urupā. I think it goes under the radar a bit that there’s a real jeopardy of cultural identity, let alone all of these other layers on top.”
How do you request people who whakapapa to a landscape to move when that’s their identity and their right as an indigenous person?
“Because Māori whakapapa to those lands that are vulnerable, they’re not going to respond to pricing signals like the rest of New Zealand will.” That’s part of her research—what are their options? “How can we respond if we’re coming from the tangata whenua perspective? It is unique.”
On rural lands, one form of adaptation may involve reverting coastal areas to their naturally more amorphous state. Another Deep South National Science Challenge project, led by Huhana Smith (Ngāti Tukorehe, Ngāti Raukawa ki Te Tonga) looked at climate change impacts on two coastal Māori farms and a whānau trust in the Horowhenua-Kāpiti rohe, and encouraged the community to come up with solutions based on Māori knowledge.
“The biggest issue for our coastline is that in 100 years we’re going to be wet,” says Smith, of the Kuku area between the Ōhau River and Waikawa Stream. “We’re going to be in a lot closer relationship. The estuary, the groundwater, and the surface water are going to be meeting a lot more.”
Smith and her team gathered the knowledge of kaumātua, who not only remembered the land when they were young but knew what the land was like in their grandparents’ time. “They could tell us what the coast was like. They could tell us about the abundance. They could tell us about the forest that used to be down there. It’s intergenerational science: observational and evidence-based.”
The plan for adaptation includes plantings to buffer the coastline, to retreat from the water’s edge and let paddocks revert to wetland, adapt to more water, diversify farms, change infrastructure such as sheds and cow races and plant harakeke for a new fabric industry.
Letica thinks any government policy addressing the loss of insurance or the impact of storms and sea-level rise needs to focus on climate change’s unique impact on tangata whenua. And she points out that insurance is a Western way of examining risk, and monetising risk. Perhaps, she says, there’s another way. “So the question for Māori is, how did we collectivise risk? Because that’s what our response can look like.”