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Funding Managed Retreat, Designing a Public Compensation Scheme for Private Property Losses: Policy Issues and Options

Jonathan Boston
February 2023

This Report has been prepared as a contribution to a project being undertaken by the Environmental Defence Society (EDS) – ‘Aotearoa New Zealand’s Climate Adaptation Act: Building a Durable Future’.

Climate change poses unparalleled policy challenges. Many communities, along with much public and private property, will be at risk during the 21st century and beyond due to sea level rise (SLR) and more severe riverine and pluvial flooding.

Often, policies to accommodate or protect at-risk properties will be neither cost-effective nor technically viable. In many cases, therefore, publicly mandated ‘managed retreat’ – ideally before significant and extensive loss and damage have occurred – will be the only realistic policy option if the public interest is to be protected.

Managed retreat, however, will often be costly, controversial, and challenging. Communities will be displaced. Many private property owners will lose much, if not all, of their land and buildings. Most of these losses, certainly those due to inundation from SLR and the related loss of land, will not be covered by insurance. Hence, without public support, some owners risk losing their life’s saving – or worse, ending up with substantial debts. Many renters will also be displaced, losing their homes and social networks. Concerns about a loss of ‘place’, along with status-quo bias, will further complicate any proposed managed retreat.

This Report assesses the case for, and possible design of, a publicly funded scheme to compensate residential property owners for (at least some of) their losses.