Impacts: what will it cost us?

What will it cost us?

(Image: Kasey McCoy)

What will it cost us?


“…humanity is running an ecological Ponzi scheme in which society robs nature and future generations to pay for boosting incomes in the short term (Ehrlich et al., 2012). Even the World Economic Forum, which is captive of dangerous greenwashing propaganda (Bakan, 2020), now recognizes biodiversity loss as one of the top threats to the global economy (World Economic Forum, 2020).” Bradshaw et al, 2021

  • Insurance companies assess the risks of extreme weather and adjust premiums accordingly. In some cases the risks make it too high to insure, or premiums make insurance unaffordable.

“As the effects of these changes become more frequent through flooding, coastal inundation and drought, we’ll have less time to recover and there will be cumulative consequences. In addition, as different sectors respond to the changes, there is potential for impacts to compound through the economy.” Deep South

  • Legislation set to be introduced in 2021 will force large financial organisations in New Zealand to disclose how exposed their business and investments are to climate change-related risk. If this is passed, it will be a world-first financial strategy to force companies to protect themselves and their investors from stranded assets and the physical risks posed by climate change. It will also force them to divest investments in fossil-fuel related industries.

“Many large businesses in New Zealand do not currently have a good understanding of how climate change will impact what they do. The changes I am announcing today will bring climate risks and resilience into the heart of financial and business decision-making. It will ensure the disclosure of climate risk is clear, comprehensive and mainstream.”Climate Change Minister James Shaw, 2020

Predicting the future

“New Zealand is…one of the most vulnerable economies in the world to the impact of natural disaster… Based on data going back to 1900, we can expect on average for natural disasters to cost this country just under 1% of its GDP in any year or about NZ$1.6 billion…Climate change will raise the risks by increasing both the intensity and frequency of weather-related events. This will be made more acute because most of New Zealand’s population is located in coastal areas and beside rivers… By 2050 about one million older New Zealanders will be living in areas vulnerable to severe flooding, coastal storm surges, land slips and wind storms.” ICNZ, 2014

“Weather-related hazards have already cost the EQC $450 million in (inflation adjusted) payouts since the year 2000.” – Deep South

The current Climate Change Projections for New Zealand used by the Ministry for the Environment are based on the IPCC 5th Assessment Report, 2013. This assessment assumed the world would drastically reduce emissions and invent technologies that would capture carbon dioxide and store it back underground or recycle it as a form of fuel.

However, we have already passed 1.1°C of warming (Fig. 1). The last time Earth’s atmosphere contained the amount of carbon dioxide (CO2) present today (>400ppm)—2.6 to 5.3 million years ago—sea levels were 10 to 20m higher, global temperatures were an average 2 to 3°C warmer, and Antarctica was a plant-covered oasis up to 14°C warmer.

The 2019 UN Emissions Gap Report states that the failure governments to meet reductions’ targets means the goal of 1.5°C is most likely unrealistic. The 2019 World Meteorological Report now warns of ‘severe climate shock, increasing risks to human health, and population displacement‘. 

Climate-related events have and continue to outpace the predictions used in the IPCC’s Fifth Assessment Report: the ocean is warming faster than expected, the level of methane in the atmosphere is rising faster than expected, melting across the Antarctic and Greenland ice caps is far faster than expected, and temperatures reaching 45°C in Siberia melting permafrost are way faster than expected.

The list of ‘unprecedented’ and ‘faster than expected’ events continues to grow. Dangerous climate tipping points not factored into the 2015 Paris Agreement are now being breached, and Covid-19 has had little impact on net emissions

The 2020 Ministry for the Environment National Climate Change Risk Assessment for New Zealand Arotakenga Tūraru mō te Huringa Āhuarangi o Āotearoa is a clear message that we are not immune to these shocks. This report uses the RCP8.5, the ‘worst case’ scenario with the understanding that:

“More extreme scenarios are possible, and the sensitivity of the climate system remains uncertain.”

It also offers a clearer understanding of the costs (Fig. 2). That, in turn, helps us understand what steps we can take to mitigate the risks and adapt to changes that are now unavoidable.

“The human enterprise is in potentially disastrous ‘overshoot’, exploiting the ecosphere beyond ecosystems’ regenerative capacity and filling natural waste sinks to overflowing. Economic behavior that was once ‘rational’ has become maladaptive. This situation is the inevitable outcome of humanity’s natural expansionist tendencies reinforced by ecologically vacuous growth-oriented ‘neoliberal’ economic theory.”Rees, 2019

Fig. 1: Instructions for this interactive graph (Credit: The Institute.)

  • Mouse over anywhere on the graph to see the changes in global temperatures over the last thousand years.
  • To see details for time periods of your choice, hold your mouse button down on one section then drag the mouse across a few years, and release it.
  • To see how this compares to the past 771,000 years, click on the ‘time’ icon on the top left.
  • Compare this to rising global temperatures by clicking the planet/thermometer icon at the top left corner.
  • To return the graph to its original position, double-click the time icon to the left of the thermometer/planet icon

Temperatures were warmer 120,000 years ago, however the amount of carbon dioxide in the atmosphere today is much higher. There is a lag time between carbon dioxide concentrations and temperature, so higher temperatures are ‘locked in’ over the coming decades.

The risks for New Zealand

Fig. 2: The 2020 Ministry for the Environment National Climate Change Risk Assessment for New Zealand Arotakenga Tūraru mō te Huringa Āhuarangi o Āotearoa. This website focusses on how we can use the domain: ”The Natural Environment’ to reduce the risks and projected impacts on the other domains. Fore example, protecting and restoring coastal ecosystems will reduce the speed of rising sea levels and coastal erosion (Image: MfE p.9).

The Resource Management Act

The Resource Management Review panel found that our councils and laws are not equipped to deal with the complexities of climate change adaptation and managed retreat. The report recommends mandatory environment limits or ‘bottom lines’ for biophysical aspects of the environment including freshwater, coastal water, air, soil and habitats for indigenous species.

Existing problems with the RMA (specific to climate change) include:

  • Insufficient focus on adapting to climate change and natural hazard risks
  • Confusion between overlapping laws
  • Capacity, capability and funding barriers
  • No clear risk management framework
  • Lack of clarity about which agencies are responsible

Review recommendations

  • Establishing a Managed Retreat and Climate Change Adaptation Act
  • Address issues of liability and compensation for managed retreat
  • Establishing an adaptation fund for climate change risk reduction
  • Giving district and city councils powers to snuff out existing land use rights where necessary to adapt to climate change or natural hazard risks. (Only regional councils can currently do that)
  • Allowing land use conditions such as relocatable housing or limited tenure


Net emissions:

Net emissions means gross greenhouse gas emissions from all industrial activities, burning fossil fuels for energy, and agriculture, minus carbon sinks from forestry, changing agricultural to improve soils, and regenerating natural ecosystems. However, instead of declining, global emissions continue to increase each year. Due to reduced transport, Covid-19 has meant a temporary respite of carbon dioxide emissions. However, that has not reduced agriculture emissions in New Zealand and elsewhere. Manufacturing in China has also resurged. Moreover, dangerous tipping points are being breached, which means natural carbon sinks are now becoming sources of methane and carbon dioxide.

RCP8.5 ‘Worst Case Scenario’:

RCPs or Representative Concentration Pathways, represent the concentration of greenhouse gasses in the atmosphere based on how these gasses retain heat.

  • Heat is measured in watts per metre squared, written as W⋅m2
  • In most graphs, the numbers 2.6, 4.5, 6.0, and 8.5 are W⋅m2 however W⋅m2 is implied, and the four units are written as four scenarios: RCP2.6 being the lowest amount of heat (2.6 W⋅m2) and RCP8.5 being the most (8.5W⋅m2)
  • In some graphs and reports (not on this website), the numbers are written without a decimal place: RCP26, RCP85 etc.
  • These scenarios are based on models for the 2013 IPCC Fifth Assessment Report. They were developed in the years leading up to this report, so the data is at least 7 years old. Limitations and shortcomings are outlined here (this website).
  • More recent research and real-world observations indicate that the RCP8.5 scenario may be conservative.
  • Improved earth systems climate modelling is now underway that will help inform the IPCC Sixth Assessment Report due in 2022.