Climate change adaptation: who is willing to foot the bill?

Climate change adaptation: who is willing to foot the bill? | Insurance Business New Zealand

Climate change adaptation: who is willing to foot the bill?

IAG recently released the results of its Climate Change Adaptation Survey, and one of its most striking statistics was how few respondents were willing to contribute to the cost of climate change adaptation, with as little as 4% agreeing that businesses should pass costs on to customers.

Only 31% of respondents agreed that measures should be paid for via increased rates and taxes, despite 79% identifying climate change as an important issue.

Bryce Davies, executive manager corporate relations at IAG, said that the issue of climate change adaptation is a “moral challenge”, and that a serious conversation needs to be held with a “wider range of stakeholders” around who will ultimately foot the bill for adaptation measures.

Read more: Kiwis want government, businesses to act on climate change - IAG study

“To my mind, climate change adaptation is not necessarily a technical challenge, or even a financial challenge. I think it’s a social and moral challenge,” Davies said.

“But tied up in our response to such a profound challenge, there must be a recognition that although we might seek to adjust and transition, there are trade-offs, and there will be winners and losers.”

“We need to confront that truth, and start setting our expectations around our approach, and what that journey will be like,” he explained.

“We saw in the findings of the survey a clear hope that ‘someone else’ will help pay, and it’s a plea to not be one of those who lose. But my concern is that if we are not willing to pay as customers, homeowners, ratepayers, taxpayers, or even as investors, then who is left to foot the bill?

“The only people I know who aren’t any of those things is the next generation, and we are already asking them to pay too much. So, we need to start setting clearer expectations around who pays, and much more beyond that.”

Davies said that the effects of climate change are likely to show within the economy first, as businesses retreat as a result of increasing risks. He said a conversation needs to be held across a broad range of communities and sectors, as the issue of climate change adaptation cannot be solved solely by one government, sector, or group of experts.

Read more: COVID-19 a stumbling block in NZ’s fight against climate change

“The question is when or how we’re going to start setting some of those expectations,” Davies said.

“It’s not just the risk that we have homes and businesses that will be inundated as seas rise - economic retreat, as people and businesses factor the risks into their decisions, will appear first, and that will trigger social consequences that I assume our ambition would have us avoid.

“Solving this is not the work of officials and governments alone. An urgent dialogue is needed for a wider range of stakeholders - experts, iwi, insurers, bankers, engineers, planners, network providers, etc. must all be part of the mix, all in the same room at the same time, having a conversation.”