Visible but ignored: The economic and political consequences of failing to plan ahead

A new legislative report from New Zealand should be a wake-up call supporting urgent climate adaptation action

The arrival of two back-to-back Florida storms in recent weeks briefly put climate adaptation on the national conversational agenda. Some Floridians "are packing their bags," trumpeted The Wall Street Journal the other day. Residents are seeing that nine of the top ten hurricanes (by cost) arrived in the past 10 years, and that it's likely that huge populations in St. Petersburg-Tampa and Miami—highly-risky areas where development has surged over the last few decades—will be hit in the coming years.

Sarasota FL was hit by three hurricanes in two months. Source Lisa McBride, Sarasota Neighborhood Experts

But the economic effects of failing to plan ahead for the intensifying manifestations of climate change remain mostly second-order questions in America. Right now, we're still focused on ad hoc, hugely expensive, after-the-fact disaster relief, even as time and accelerating climate change are both charging ruthlessly ahead. 

The standard narrative: Many Floridians are saying they'll rebuild. That's the American way: keep fighting to keep things the way they are.

At some point, the bill for failing to face and address the increasing risks of amped-up storms, sea level rise, rainbombs, and wildfires will come due. Politicians risk rising or falling depending on their grasp of this moment, right now, when it was just barely possible to avoid staggering dislocation, expense, and all-around misery by planning for transformative changes in how and where we live. 

Or not. It's also possible that our giant US economy can cope with two dozen (or more) regional pockets of suddenly repricing property assets and a series of localized Great Financial Crises. 

But given the way markets get infected and sentiments run in packs, it's more likely we'll see nationwide effects, both economically and politically, for failing to plan. Leadership is desperately needed to align and drive work across different levels of the US government and encourage/subsidize the private sector to sign up for transformative changes. 

Recently, a cross-party committee of the New Zealand national legislature emerged with a set of climate adaptation principles that are remarkably clear-eyed and focused on economic issues. Five noteworthy nuggets:

1. Someone needs to be in charge. A lead agency needs to support an all-of-government approach to climate adaptation. 

2. "Fair warnings" have consequences. If people have fair warning of the risks of where they are living or plan to build, government shouldn't let them socialize the costs of doing so.  

3. Central government needs to set nationally consistent risk-assessment standards and processes aimed at transformative adaptation, including by insuring that banks and insurance companies have the incentive and ability to reduce risk where they can. Much better information flow and risk communication by central government is needed. 

4. Local government needs the power and legal authority to act decisively.

5. Managed retreat is on the table in these principles. But the committee steps forward and supports this statement: "Preserving wealth or protecting property owners from the risks of property ownership is not a legitimate objective of the funding system." Ensuring that people who need to relocate have a safe place to live is important; protecting second-home owners is not.

Let’s put this in context for America. In the US, we'll need someone in the middle of the White House to be in charge, because one federal agency won't necessarily pay attention to another agency.

"Fair warning," which is what the State of New Jersey is attempting to provide to residents, will help tamp down regulatory takings claims under our laws: no one can have legitimate investment-backed expectations that their properties will be protected from government public safety requirements if they know they are in risky places.

We absolutely need the kind of standardized climate data and information flow, real risk assessment and prediction, for which this New Zealand legislative committee is calling. (Rolling back federal standards designed to make sure that taxpayer-funded building projects be protected from flooding and rising seas, which happened in 2017, was not a good idea.) And it will be important to prioritize the housing needs of people who need to relocate, not the interests of second-home owners.

This report is a milestone. It's just a start, and it's coming from a country that is very different from our own. But this committee, the Finance and Expenditure Committee of the New Zealand House of Representatives, is moving in the right direction. The economic and political costs of failing to plan in a principled, ethical way will have severe repercussions sooner or later in America. 

We might as well get going now. 2024 will almost certainly be the warmest year on record. Losses from climate-accelerated damages are already being felt in our property markets, and those values aren't going to bounce back. The time for delay is over.