Bailing out: The history of 10 NZ ‘managed retreat’ schemes

Saturday, 5 October 2024

ANALYSIS: MPs have agreed Parliament must end uncertainty about when homeowners can expect compensation for being forced from homes that climate change has rendered too risky to live in.

In a landmark report from Parliament’s Finance and Expenditure select committee released on Tuesday, called the Inquiry into Climate Adaptation report, MPs called on the Government to work to develop a ‘managed retreat’ framework, and possibly even a mechanism to pre-fund the massive costs.

Managed retreat, which is a term for no longer allowing people to live in homes in certain high-risk locations, does not come cheap as New Zealand’s increasingly long string of retreats illustrates.

But continuing to fully compensate homeowners for having to abandon homes is not something MPs think is tenable.

In their report, lawmakers warned it was not the Government’s job to preserve the value of New Zealand homes as climate change makes living in certain parts of the country more difficult, just to “ensure there is adequate housing for people who need to relocate”.

That’s a first step politically to nutting out how future managed retreat might be funded, and what share of the financial losses will remain with homeowners.

Minister for Climate Change Simon Watts has 60 days to respond to the select committee’s report, and he promised: “We will be working through how we will take it forward as we develop future adaptation policy.”

But working forwards will involve looking back at the 10 managed retreat schemes in New Zealand’s modern era, the first of which was in the late 1970s, as this week’s report outlined.

The Kelso floods of 1978 and 1980

The Otago town of Kelso was abandoned in the 1980s after repeated flooding.

It was located 10km north of Tapanui on the Crookston Burn close to its junction with the larger Pomahaka River.

But large floods in 1978 and 1980 led to Kelso's abandonment, with 17 families having their homes bought out using public funds. The costs were shared between central government and the Earthquake and War Damage Commission (now the Natural Hazard Fund), while the local council bought land for new homes to be built on.

Waitākere Twin Streams restoration 2002 to 2005

Not all managed retreat schemes are reactive. Some are about restoring damaged natural areas, or anticipating future flooding, and deciding to get homes out of the path of danger.

The earliest schemes overseas were designed to give rivers space.

Since the 1970s there has been managed retreat along some parts of the Danube River in Europe, which flooded again late last month.

Back in the era when money seemed no object, the now-defunct Waitākere City Council (since merged with other councils in Auckland) led a scheme to restore two damaged rivers known as the Twin Streams in the west of Auckland.

It involved the full or partial buyouts of 156 properties at a cost of $26 million from ratepayers.

The Matatā flood of 2005

It took more than a decade to force the last owners of homes in Matatā to leave their homes in a managed retreat that showed just how unpopular forcing people from their homes can be.

In 2005 after heavy rain the Awatarariki Stream dumped 120 Olympic swimming pools’ worth of silt, logs and boulders on to the area, destroying several houses.

Whakatāne District Council promised to construct a barrier, and residents built back but when that plan failed in 2012, 34 property owners were left unable to build, borrow or sell, after their homes and sections were red-zoned as too dangerous to live in.

Some did not want to go.

On March 31, 2021, a plan change finally extinguished the existing use rights of red zone residents. Whakatāne District Council, Bay of Plenty Regional Council, and central government shared the costs of buying the homeowners out at around $15m.

The Canterbury earthquakes of 2010 and 2011

The Red Zone stands as an eerie testament to decisions to build homes in ill-advised places.

It remains the country’s largest managed retreat scheme.

Around 8000 properties were demolished, and the owners got about $1.5 billion in compensation, mostly funded by central government, though the costs of some properties were shared with Christchurch City Council.

Lower Hutt Riverlink project

After more than a decade of planning RiverLink is under way.

The project, costing hundreds of millions of dollars, will transform central Lower Hutt and drastically reduce the chances of the city being flooded by Te Awa Kairangi/Hutt River.

It involved the buyout of 112 homes. The select committee report said the cost of that was “still to be determined”, with Greater Wellington Regional Council paying the tab.

Dudley Creek/Heathcote flood mitigation 2015 to 2020

Repeated flooding prompted a Mayoral Flooding Taskforce, and plans to reduce flood risks through waterway widening, landscape enhancement and infrastructure improvement.

It also involved spending $10.7m to buy out 28 properties, with Christchurch City Council footing the bill.

Kaikōura earthquake 2016

On November 14, 2016, a 7.8-magnitude earthquake struck near Kaikōura at 12.02am, tearing the 'lifeline highway' to pieces, twisting the train tracks and lifting the seabed by metres.

Insurers got 38,000 residential claims after the quake.

The Edgecumbe flood of 2017

In April 2017, the stopbank of the Rangitaki River burst, flooding the town.

After the disaster, the Bay of Plenty Regional Council bought out 12 homeowners, with another bought out later in 2019, at a total cost of around $1.7m.

The Nelson Flood of 2022

Between Tuesday, August 16, and Saturday, August 20, torrential rain deluged Nelson.

The managed buyout scheme that followed saw Nelson City Council and central government co-fund 24 home buyouts at a cost of $19.7m.

Cyclone Gabrielle in 2023

The devastating flooding and landslips in Hawke’s Bay, Gisborne and Auckland led to the country’s largest-ever managed retreat buyout event after a weather-related disaster.

Auckland Council and the central government co-funded the buyouts of around 700 Auckland homes at a price of $774m.

Even the country’s largest city struggled to cope with that cost, raising big questions about how less affluent areas facing eventual managed retreat like Franz Josef could afford to compensate homeowners.

The huge costs were a tough one for the city’s ratepayers and the stretched council to fund, and Auckland mayor Wayne Brown declared: “Auckland cannot cover any more buyouts.”