The Post: Piling on the inequality no solution to climate change challenge

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The climate issue is always an inequality issue. It is through this lens that we must see the subject of buyouts for flooded homes, which reared its head again this week.

As it stands, climate change is a triple blow to the poor. First, it is caused fundamentally by the rich, whose emissions are three times that of even the average New Zealander.

Second, the damage from climate change, in houses and jobs lost, will fall hardest on the disadvantaged. And third, solutions like flat-rate carbon taxes take a bigger slice out of the most meagre budgets.

We must not perpetuate this injustice in our climate adaptation strategy, much of which involves answering this question: where do people live in a world of ever-rising floods? How sad, then, that on Thursday a government-appointed panel advocated for a largely individualist, market-driven approach to flooding, property retreat and buyouts.

Aside from vague statements about governments acting “where broader national benefits can be realised”, the report’s ideological thrust was unmistakable: make information on flooding available, let insurance premiums rise in the riskiest areas, and if individuals face calamity – well, they’re on their own, if not now then certainly in the near future.

Like any market-led approach to large social problems, this tactic would fail on two fronts: it would be neither fair nor efficient.

Taking the worst-affected first, the proposal to wind down buyouts for flood-affected homeowners, then end them by 2045, is risible. As Professor Jonathan Boston has pointed out, what about all the houses hit by newly discovered flood risks between now and then?

What about homes deemed flood-prone in 2046? As climate damage spreads rapidly, unpredictably, those hardest hit will probably need more assistance, not less.

Strategies based on individual responsibility are, moreover, inappropriate to a situation where most people bought homes well before climate change was a known risk. Even if they do not need buyouts, their insurance costs may spiral; we cannot leave them to bear that burden alone.

Ordinary people are also deeply imperfect decision-makers, affected by myopia, a poor understanding of risk, and optimism bias. If they remain in place, their house floods repeatedly and they can’t get insurance, will we really just tell them: you got it wrong, now get stuffed?

Many people, especially the poor, won’t even have good options. How can they afford to move if their house becomes uninsurable and no-one will buy it? And where would they move that is affordable and not equally flood-prone?

The individualistic approach is neither compassionate nor fair. It also wastes resources.

Instead of a managed retreat, the panel’s report seems to envisage an unmanaged one. Some residents will, haphazardly, abandon a community, while others with few options stay; councils will be left providing expensive services to dwindling numbers of people.

Poor people will remain, insurance-less, in increasingly risky areas. The expense of rescuing them will rise, their lives will be ever-more dysfunctional, homelessness will increase, and the fiscal, health-system, and economic costs will spiral.

Far from the cool, artificial world of economists’ models, where prices and individual actions neatly align, the reality of unmanaged retreat will be wasteful, inequitable and chaotic.

Because climate change is a collective problem, it requires a collective solution, as Boston advocates. That starts with clarifying who merits support.

Of course, as the panel argues, we should protect ourselves against free-riders: sooner rather than later, we must stop people building on floodplains. Or, failing that, make clear that if those homeowners are well-off and knew the risks, they can’t expect state aid.

If we prevent these unacceptable costs being imposed on the rest of us, financial headroom is freed up to support those who deserve it. We can collectively pay for the relocation of decades-old communities rendered inhabitable by climate change (or, indeed, the low-cost lifting-up of slightly less flood-prone houses).

If buyouts are restricted to first homes, and capped, the fiscal costs can be limited and the demands of fairness satisfied. In this structured and compassionate adaptation, we recognise our interdependencies, and the reality that we are all better off if blameless people are supported through unforeseeable shocks.

We may also need, Boston suggests, a beefed-up Natural Hazards Commission, its remit extended to cover both flood prevention and flood insurance. Again, when well-planned, policies work together.

If we build better stormwater systems and rain gardens to limit flood damage, and the most catastrophic risks are socialised, private insurance may remain affordable for more people, perhaps with subsidies to the poorest.

We could also abolish the bizarre cap on the levies people pay to the commission, which allows palatial home-owners to get away with paying the same amount as the dwellers of modest bungalows. That’s just one of the many inequities disfiguring our climate response system.

The only fix, in truth, is a co-ordinated and egalitarian plan. “Devil take the hindmost” has never made good policy.