The Delusion of Coastal Property Owners

New Zealand Geographic Magazine has produced another stunning article on climate change.  The article covers a lot of issues, but the discussion on the psychology of climate risk is of special relevance for Thames-Coromandel.  There are still thousands of coastal property owners who don’t have a clue about the risks they face from sea level rise, coastal flooding and erosion.  

The article as a whole is well worth reading, but here are some really compelling extracts about public perceptions of climate risk from Deep South researcher Belinda Storey.  One of her areas of study is the psychology of climate risk.

“When people talk about ‘future proofing’ they often haven’t taken account of how much things are going to change,” she says. “If there’s one thing people need to understand it’s this: the future will look nothing like the past.”

The changing distribution of extreme events is one of Storey’s areas of research. “It’s really hard to get your head around,” she admits. “I was at a conference recently and someone said there had been four one-in-100-year floods in the previous year. What’s actually happening is the distribution of extreme rain events is shifting, and those aren’t one-in-100-year events any more.”

She draws me a graph, a classic bell curve with some intervals along the tails of the curve—standard deviations—to indicate extremes in the distribution.

The thing to realise is that change is not linear. For instance, if a rare event used to have an occurrence of one in 740 years—average plus three standard variations—a reduction in one standard deviation changes the probability to one in 44 years.”

“Suppose a council has to repair a stopbank, or build some other flood defence. They may decide that the flooding risk is changing by, say, five per cent, and therefore they ought to be conservative and add a 10 per cent safety margin. In fact, they should be increasing the margin several hundredfold.”

Another problem with artificial defences, such as an embankment to protect homes is psychological: they engender a false sense of security, a phenomenon known as the ‘levee effect’.

“If you build a stopbank, people feel safe and invest in assets such as homes and farms behind it,” says Storey. When failure happens, the damage is compounded.”

The Delusion of Coastal Property Owners

“Those who own coastal property are deluding themselves if they think they have permanent rights to that land. In reality, they’re leaseholders. The owner of the lease isn’t the government or an organisation or a person, it’s nature. And you can’t bargain with nature. You can’t ask for an extension.”

Storey argues that the change from freehold to leasehold thinking needs to happen, not just with property owners, but with councils and utilities, to reflect the fact that property has a time limit built into it.   Such a profound shift will not happen easily, but Storey believes insurance is a likely lever.

 “You might have a mortgage for 30 years, but your insurance policy is annual,” explains Storey. “An insurer can respond to changing risk almost overnight, either by hiking premiums or even choosing to exit an insurance market. If an insurer decides to withdraw, and your mortgage is conditional on insurance, you go into technical default. At that point the people who bear the consequences are property owners and banks, but the first link in the chain are insurers. They’re the ones with the greatest sensitivity to changing risk.”

A climate lease normalises the reality of increased risk, says Storey, conditioning the property owner to the expectation of diminishing value over time.

Haumoana hawkes bay2
Credit Tim Whittaker


“People delude themselves into thinking, ‘This won’t happen in my lifetime’, or, ‘I’ll sell before there’s a problem’,” she says. “If you accept a time limit built into a lease, you can’t fudge the issue or deceive yourself. You see the value declining as the sea is rising.”