(Bloomberg) -- New Zealand’s government will help to buy out the owners of cyclone and flood-damaged houses in areas deemed susceptible to severe weather events, beginning a process of managed retreat in the face of climate change.
Together with local councils, the government will offer to buy as many as 700 residential properties across the North Island that were damaged by Cyclone Gabrielle and heavy flooding earlier this year, Finance Minister Grant Robertson said Thursday in Wellington. It will also co-fund the work needed to protect some 10,000 properties where interventions are feasible to manage the impact of the changing weather.
“The weather events saw property damaged across multiple areas of the North Island,” Robertson said. “There is no precedent for the response required, but we do know that with climate change there will be more events like this in the future.”
Gabrielle swept across the Upper North Island in mid-February, destroying bridges, blocking roads and leaving tens of thousands without power and communications. Eleven people died. The disaster came just two weeks after a storm driven by an atmospheric river dumped record rain on largest city Auckland, causing widespread flooding and paralyzing transport networks.
Both events forced evacuations as rivers burst their banks, flooding entire neighborhoods and towns. The cyclone was most devastating in the east of the North Island, where many living in river valleys had to scramble for survival as rising waters destroyed their homes.
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People in homes designated as Category 3 properties, where future severe weather event risk cannot be sufficiently mitigated, will be offered a voluntary buyout by councils, the costs of which will be shared with the government, Robertson said.
An estimated total cost of the buyouts is about NZ$1 billion ($600 million), he said, adding details of how the process will work and the role insurers will play will be determined in coming weeks. One possibility would be that the insurance payout moves with the purchased property, he said.
“I want to be very clear, the government is in no position to be able to meet the total costs of these kinds of disasters,” Robertson said. “They unfortunately are now going to be more regular events.”
(Updates with comments on insurance in seventh paragraph)
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