Climate adaptation consultation sets the stage for managed retreat

16 May 2022

Climate adaptation consultation is kicking off in earnest, with a critical opportunity to contribute to the way New Zealand proposes to address the risks faced from climate change in the immediate future.

The Government released the much anticipated draft 2022 National Adaptation Plan 1 (draft NAP1) in late April, and is seeking feedback from the public until 3 June 2022.  The draft NAP1 is the first of six plans required by the Climate Change Response (Zero Carbon) Amendment Act 2019, and covers the period 2020–26.  At the same time, the Government released a consultation document setting out information on the “early development of a managed retreat system for Aotearoa New Zealand, emerging issues relating to residential home insurance for flood risk, and questions related to these issues”.

It is now widely accepted that New Zealand is already experiencing the impacts of climate change, including an increase in the frequency and severity of extreme weather events in some areas, marine heatwaves over the summer months, wildfires, and a gradual year on year sea level rise.  Importantly, both the draft NAP1 and its accompanying consultation package focus on adaptation to such effects, including effects which are “locked in” by emissions already present in the atmosphere.  Much of the public conversation to-date has centred on the other side of climate change; the mitigation and reduction of greenhouse gas emissions.  

It is perhaps no surprise that the draft NAP1’s release was followed closely by the publication of the results of the five-year NZ SeaRise research programme, which has made location-specific sea level rise projections out to the year 2300 for every two kilometres of the coast of Aotearoa New Zealand.  The results have been confronting, and suggest that many places will be facing the reality of sea level rise and managed retreat much sooner than previously projected.

These publications represent the beginning of New Zealand’s long term adaptation and retreat strategies, and are linked to numerous other government and Climate Commission workstreams, including the 2020 National Climate Change Risk Assessment (NCCRA) which identified and prioritised climate change risks, the Rauora framework which brings together Māori values and principles into an indigenous worldview of climate change, and the Emissions Reduction Plan (ERP) which is due to be released on 16 May 2022 ahead of the Budget 2022.

Both documents recognise the particular vulnerability of Māori communities to climate change risks and impacts, and that a bespoke response to adaptation and managed retreat could be required to ensure that the Crown meets its obligations under Te Tiriti.  For instance, where land has been offered back through Treaty settlement processes, but is at risk from sea level rise, then preventing its development or use through a managed retreat framework could undermine Treaty settlements.

Managed retreat

The process and principles of a managed retreat framework will be set out primarily within the Climate Adaptation Act (CAA) which is scheduled to be introduced to the House in 2023, as well as in the resource management planning reforms under the proposed Natural and Built Environments Act (NBA) and Strategic Planning Act (SPA). 

Although much of the discussion on managed retreat centres on the risk of coastal inundation due to sea level rise, interestingly the draft NAP1 defines the term in relation to a variety of hazards, suggesting that the Government is designing a framework that will respond to climate change risks more broadly.

It defines managed retreat as: “The purposeful, coordinated movement of people and assets (eg, buildings, infrastructure) away from risks. This may involve the movement of a person, infrastructure (eg, building or road), or community. It can occur in response to a variety of hazards such as flood, wildfire, or drought.”

Much of the high level information contained in the consultation document has been signalled in previous communications from the Ministry for the Environment.  For instance, the framework is to provide solutions that are as simple as possible, which ensure fairness and equity for and between communities and across generations.  The document also warns that the moral hazard of inappropriate incentives to continue developing in at-risk areas will be minimised, and poses questions such as whether those who have purchased a property after the risk from climate change became clear in that location should be subject to a different approach compared to those who purchased before a risk was identified. 

There are two key themes of note, which are also echoed in the draft NAP1:

  1. The Crown will not fully fund a managed retreat programme, and will act to reduce its contingent liabilities and fiscal exposure. The risks, responsibilities and costs will be “appropriately shared” across different parties, including property owners, local and central government and banking and insurance industries.  The draft NAP1 comments that adaptation could be funded through the Climate Emergency Response Fund (CERF) introduced in 2021 from cash proceeds from the Emissions Trading Scheme (ETS); and
  2. Reliable information and risk assessments on the anticipated impacts of climate change are critical, and the availability of such information is likely to be used to inform the approach to compensation. Both the managed retreat framework and the draft NAP1 will be research and data driven. 

The consultation document sets out a broad five stage process for planning for and effecting managed retreat: initiation; planning and preparation; enabling investment; active retreat; and clean-up and repurposing.

Little detail is provided as to how this process is envisaged to work.  This is somewhat startling given the stated timeframes for introducing and passing the enabling legislation. The ‘planning’ stage for managed retreat is largely to be undertaken as part of regional spatial strategies under the SPA and combined plans under the NBA.  It will be important for the mechanisms and tools in the CAA to be integrated with decisions on managed retreat made under the SPA and NBA, so communities and property and infrastructure owners understand the pathway for how managed retreat is to be achieved and implemented. Otherwise there is a risk decisions will be made in silos and without a complete understanding as to the broader implications.

The ‘enabling investment’ stage suggests mechanisms such as property transfer programmes, development of alternative land for relocation, investments in new infrastructure, and reduced investment in at-risk infrastructure, will be used.  The influence of the private insurance and banking systems, and the withdrawal of insurance cover in response to increased risk from climate change impacts is also discussed, as well as the potential role that insurance pay-outs have in either financing or potentially hindering managed retreat. 

Draft NAP1

Sitting alongside the managed retreat paper, the draft NAP1 sets three long-term goals in relation to climate change effects.  These are to reduce vulnerability to the most immediate climate risks and impacts, to enhance adaptive capacity and consider climate change in decisions at all levels, and to strengthen resilience in the long term through system-wide changes. 

To achieve these goals, the draft NAP1 identifies three main focus areas:

Reform institutions to be fit for a changing climate. 

The draft NAP1 acknowledges the critical importance of updating the legislative settings to clarify roles and responsibilities, and to better equip those who are responsible for preparing for and reducing exposure to changing climate risk.  The plan identifies the extensive reforms already underway to address these system-wide challenges, including the resource management reforms which are due to be passed in 2023, the managed retreat framework under the proposed CAA, the creation of new water entities under the proposed Three Waters reforms, the modernisation of the emergency management system in legislation expected in 2024, and the potential reform of the local government sector following recommendations from the Local Government Review Panel due in 2023.

Provide data, information, tools and guidance to allow everyone to assess and reduce their own climate risks and develop adaptation solutions.

The draft NAP1 recognises that access to up-to-date and relevant information about climate risks is needed, and will allow users to assess climate consequences in areas such as health, employment, food security, tourism, businesses, and terrestrial and freshwater ecosystems.  The emphasis under this focus area is not on perfect information, but on making decisions despite uncertainty when planning for future risk.  Long term clarity on the Government’s strategies and better data and information are expected to incentivise and unlock investment in adaptation, with the Government to consider the need for further tools or guidance, funding and investment mechanisms to “catalyse investment in resilience” once the system reforms are completed by the end of 2024.

Embed climate resilience across government strategies and policies, so that Government agencies will need to consider climate risks through these documents.

The draft NAP1 stresses that it is a whole-of-government action plan, and work programmes will be changed to embed climate risk within the public finance system (through the CERF and the Sovereign Green Bond (Green Bond) programme), and in routine updates to regulations through ‘ongoing regulatory stewardship’.

Further considerations

While much of the framework for managed retreat still hangs on the introduction of the CAA into Parliament later next year, the current opportunity for comment does have some potential to inform drafting of that legislation.

Many organisations are already underway with climate-related risk assessments. A strong understanding of how climate change will impact on a business, its property, assets and investments will become increasingly necessary. Those yet to begin will want to consider this work to inform their own adaptation to the risks faced by their individual businesses, and to plan for a programme of regulatory change which may also have flow-on impacts on the value of those assets and investments.

If you would like further details on the consultation, or assistance in making submissions, please get in touch with the contacts listed or your usual Bell Gully adviser.

Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.