The release last week of the draft National Adaptation Plan, which addresses the management (and retreat) of areas rendered untenable by the effects of climate change, serves as a reminder that emissions reduction – until now the main focus of government policy – is only half the story.
And, again, the emphasis is on developing a strategy which is effective, allows for a managed transition and allocates costs as equitably as possible, with least moral hazard.
The Government is clear that it cannot bear all the risks of these effects, and seeks a solution which will spread them fairly across asset owners, banks, insurers, private sector and local and central government.
How this risk will actually be distributed remains up for discussion. Submissions close on 3 June 2022.
Key areas of focus
The three strands which will be woven into New Zealand’s first National Adaptation Plan to run over the next six years, are:
- to reform our institutions so that they are fit for purpose
- to ensure that the relevant data, information, tools and guidance are available to support monitoring, risk assessments and reduction of those risks, and
- to embed climate resilience across multiple sectors via a wide array of government strategies and policies.
Each focus area contains a basket of existing and proposed ‘critical’ and ‘supporting’ actions with varying timeframes up to 2028 and involving different lead agencies and portfolios.
A core concern for businesses will be to avoid a situation where one sector bears an undue burden of climate change adaptation. The appropriate apportioning of risk and liability across the economy will be critical to ensure policy levers do not adversely influence markets or lead to perverse outcomes.
Financial compensation, legal liability, and the extent to which ‘buyer beware’ can be relied on are all issues that are flagged, but not resolved, in the draft Plan.
Effort should also be made to ensure that the proposed assessment and reporting methodologies do not add unnecessary extra compliance costs on entities required to report under the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act (see Chapman Tripp publications here). This could be an invaluable chance to create consistency and reduce the significant workload faced by those entities under the climate-related disclosures regime.
The consultation takes into account the wider reform of the resource management system now underway, proposing to take a closer look at local government’s role, including powers to modify or extinguish uses of land to address managed retreat.
The key proposed objectives and principles to guide the development of legislation include:
- clearly defining and allocating roles and responsibilities
- providing stronger tools for councils
- providing clarity on tools/processes for acquiring land and related compensation
- clarifying local government liability for decision-making and the role of the courts
- providing clear criteria for when central government will intervene
- ensuring iwi/Māori are represented in governance and management, and
- promoting the use of nature-based solutions.
As the policy and legislative package develops, regulatory risks related to adaptation will need to be built into the business plans and asset valuations of infrastructure owners and property developers.
Those businesses with robust climate risk analysis and a clear picture of climate-impacted land and assets will be best placed to anticipate the impact of these regulatory changes.
The final National Adaptation Plan is due in August this year.
There will be further opportunities to engage on the Government’s plans for managed retreat under the Climate Adaptation Act, but feedback now is likely to influence the early development of that legislation, which is expected to be introduced at the end of 2023.
The first Emissions Reduction Plan will be published later this month.