Climate change fiscal costs are largely currently assessed as solely the impacts of major weather events and consequent restoration costs. While restoration costs after extreme weather events are likely to rise exponentially over the next century and beyond, there are significant other fiscal impacts that also need to be factored into planning. Note also that damage to infrastructure from climate change will steadily increase in both intensity and frequency over the next 100 years and beyond.
Ignoring future planning for these certainties will result in even more damage to New Zealand’s economy and its citizen’s livelihood safety and wellbeing than is necessary. The impacts of climate change will be disproportinately felt by those with limited incomes.
The longer we delay anticipating and responding to the impending fiscal risks from climate change, the greater the impacts will be on New Zealanders.
Food security for all, but particularly those with limited or no income, is a key issue in maintaining the wellbeing of New Zealands’ human population.
As climate change increasingly impacts New Zealand, food supply chains are likely to become more and more disrupted, resulting in increasing costs and decreasing volumes for food and other supplies.
Supply chain disruption will occur for a number of reasons:
- More and more frequent intense climate events will result in more frequent road/rail washouts and flooding of increasing magnitude both within New Zealand and beyond.
- Sea and airline cargo will be increasingly disrupted by extreme weather events (including a significant rise in flight turbulence) and intense oceanic storms, resulting in increase damage to transport vehicles and food stocks, higher insurance costs and resultant food price increases, as well as disincentives for farmers to produce more produce as export costs rise.
- Drought, flood and increases in temperature in New Zealand and overseas will result in reductions in animal numbers and plant based food.
- Rising sea temperatures, along with ongoing unsustainable fisheries exploitation are likely to mean the large NZ fishing industry will collapse within a few decades
- The recent expansion of the dairy ’industry’ into areas of New Zealand which are totally reliant on intensive irrigation, like the majority of the East Coast of the South Island, means such areas will become completely unsustainable for water intensive crops and animals. Already high irrigation levels in Canterbury, as a result of drought, are resulting in unsustainable levels of water being drained from local rivers and aquifiers as well as nitrate and other pollution of potable water supplies
- Rising sea levels will increasingly impact on both sea and airport infrastructure. Most of New Zealand’s major airports are built in flood prone areas or close to the sea, and rising tides will impact on port sea walls, wharves, cranes and container storage areas. The cost of rebuilds and/or relocation of air and sea port infrastructure are very significant.
- Consequent reduced food production for export by New Zealand food producers will result in increasing balance of payment’s deficits which will likely result in fewer overseas food and other imports, as well as less government taxation, resulting in less income to finance climate change mitigation.
- As climate instability increases, specific areas of New Zealand like Northland and the East Coast of the North Island are increasingly vulnerable to major ongoing flood and slip damage and consequent food production losses. South Island East Coast and Nelson droughts are also becoming more frequent, with similar consequences.
Climate Change is also not only impacting of food supply but is also beginning to significantly impact on overall insurer costs for housing, businesses and new ‘developments’. As insurance premiums rise, all fiscal transactions will slow, as fiscal risks to suppliers and purchasers increase. A slowing economy ( estimated conservatively as a reduction of at least 20% in 30 years) will result in job losses and further risks to human wellbeing, unless forward planning and implementation occurs now
Disruptions to and increased risk in air flights will also inevitably result in progressive reductions in tourism income into New Zealand (currently 11.4% of GDP)
The recent analysis of Civil Defence responses to the Hawkes Bay weather event has demonstrated that Civil Defence is not sufficiently resourced to respond adequately to even the current level of extreme events. Two cyclones within a few weeks, as a Vanuatu has recently experienced, would stretch CD to breaking point. Significant increases in central and local CD resourcing are going to be essential. Similarly, Police and NZ Army will need upgrades to cope with the increasing frequency and magnitude of climate extreme events.
Energy Consumption
New Zealand’s increasing consumption of energy, particularly in increased use of EVs and other machinery that is being transitioned to electrification and also IT /AI/Cloud based impacts. While NZ currently has just sufficient sources of renewable energy, if current electricity demands continue to increase, considerable investment in renewable energy production in solar and wind will be required.
Carbon Credit Offset Costs
If we continue under this current government policies to take less action on local carbon reduction, we will need to purchase increased offshore carbon credits in the billions of dollars to meet our international obligations. Additionally, failure to meet our international obligations will impact on our capacity to export our produce to many countries.
Biodiversity Loss
The loss of New Zealand’s indigenous biodiversity is well documented and acknowledged as a major ongoing concern. However biodiversity loss of both indigenous and non-indigenous flora and fauna is occurring at an alarming rate in New Zealand.
We do not fully understand the intricate interconnections that occur between all species in Earth’s soil and air and the risks to inadvertently tripping ‘tipping-points’ resulting in extreme and sudden biodiversity loss are consequently high. There are also significant difficulties in attempting to measure the fiscal implications of biodiversity loss. However the current trajectory of biodiversity loss in New Zealand and across the world, has the potential to not only severely contract GDP globally, but potentially to extinguish all life on earth.
The fertility of our soil, increasingly contaminated with artificial fertilizers, pesticides and weedicides is rapidly deteriorating, particularly as mycorrhizal fungi; essential to soil fertility, cannot survive in toxic environments. New Zealand’s continued capacity to produce high volumes of agricultural exports will therefore be compromised in the medium to long term. The loss of pollinators through toxicity, loss of habitat and introduced viruses is also a major risk
Population Impacts
In recent years NZ governments have increasingly used migrant labour as a cost-effective mechanism to increase GDP, however without the consequent necessary increased development of critical infrastructure in housing, health or education. Rapidly increased populations have also put increasing pressure on biodiversity as ‘developed’ urban areas have expanded exponentially, and factors like recreational fishing and foraging by ever larger numbers of people , impact on species numbers.
Potential Solutions
Forward planning is urgently required to both proactively reduce the inevitable adverse impacts of climate change and to ensure sufficient funding and other resources are available to local and regional government and local communities. The human and fiscal costs of not proactively planning for the inevitable will be exponentially larger unless work is begun now.
Every Local community must be encouraged and resourced to become as self-sufficient as possible as supply chains are increasingly disrupted.
Local versus National
It is clear that local governments will not be able to finance the continuous work to both reduce local climate change impacts and to respond to local adverse events through rates increases. A formalised collaborative practical partnership between local and national funding bodies needs to be established specifically to address climate change risks.
National Resourcing
National systems are becoming increasingly financially pressured to respond to adverse event mitigation. It is therefore be essential to urgently establish a national funding body , likely based on the ACC contribution model that can resource the immense amount of work required.
Iwi
Local Maori iwi have traditionally played an immensely valuable role in supporting local populations put at risk by weather and other adverse events . Because of their strong local knowledge of the environments and resources and connections and their hugely practical responses to events , iwi need to be fully resourced to support ongoing emergencies. Further, local iwi’s traditional and Te Tiriti role of guardianship (Kaitiaki) of their lands needs greater recognition and support.
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References
https://www.oxfordeconomics.com/resource/the-global-economic-costs-of-climate-inaction
ashttps://www.sciencedirect.com/science/article/abs/pii/S1002016023001388
https://www.abc.net.au/news/2024-05-22/the-link-between-climate-change-and-turbulence/103877522
New Antarctica 