Wednesday, May 03, 2017

Climate change: But why would we want to do that?

Newsroom has a big piece on climate change and coastal property, highlighting the risks that such property could become rapidly uninsurable and turn into a toxic stranded asset:

The report points out that there are nearly 44,000 homes less than 1.5 metres above the current average spring high tide. Over 8,000 of those are less than 50cm above the spring high tide mark. With sea levels predicted to rise 30cm by 2065 and increasing storm surges and king tides expected, many of those homes are at risk of frequent inundation or being completely washed away. By 2100, global average sea levels are predicted to rise 1 metre if current carbon emissions levels continue.

If insurers pull out from providing cover for homes deemed high risk, homeowners will no longer have any protection from the risk that they may lose their major financial asset – which will, in any case, be slashed in value and potentially unmarketable.

They may look to the government to provide alternative cover (as has happened in some places overseas), or expect the government to step in should their home be destroyed or rendered uninhabitable.

But why would we want to do that? It's one thing to help people after a disaster, an unforseeable natural event. But this is both long foreseen and certain. Government insurance - effectively a bailout for wealthy property-owners who have engaged in dangerous behaviour - is not an appropriate response to such circumstances. Especially when those property owners have organised to deny the problem in order to protect their property values.