UPFRONT Sleeping giant in the climate debate

The ongoing debate surrounding New Zealand’s climate change policy has drawn comment from wide range of business interests. To date, the discussion has largely been dominated by those who will be immediately affected by greenhouse gas emission regulations (whether in the form of carbon tax or something else), the large emitters (heavy industry and the agricultural sector) and potential credit owners (foresters).
The property sector has been surprisingly silent. Over the long term these people have as much (or more) at stake than the early winners and losers in the carbon market.
The issue for the property industry is not so much about carbon regulation (though this could well produce knock-on effect that alters the dynamics of the property market), but rather the predicted changes in climate. Historically, buildings have been largely constructed on the assumption that the weather for the next 100 years will be very similar to that experienced over the previous 100. However, increasing numbers of scientists are now telling us that will not be the case.
It is predicted that by 2050, New Zealand will see 20cm rise in sea level, more rain in the west of the country and less in the east, winds that are more powerful, and more frequent and intense weather events.
The recent experience with the Central North Island floods of 2004 and the Bay of Plenty floods of 2005, dramatically illustrates the effect that intense weather events can have on our buildings and communities. The science suggests that such events are likely to happen more often and with greater intensity when they do.
This is significant threat to New Zealand’s $260 billion (Statistics NZ, 2002) built environment, which has been designed on the basis of historical weather conditions. As result, New Zealand is looking at either big upgrade bill, or an increasing risk of weather-related property damage, and possibly both. For the property sector players, the consequences of this are significant.
On the one hand, the industry must continue to do business every day, making decisions on the basis of the information it has to hand. Cost pressures mean there is little time or resource available for second guessing design standards prescribed in building codes or developed by expert engineers.
On the other, the fact of climate change is now in the public domain, and raises real questions about the appropriateness of current design standards that must be dealt with. In the event that future buildings fail as result of inappropriate design, litigation will surely follow, and courts are unlikely to have much sympathy for those that knew, or should have known, and failed to act.
Concern about this issue sat behind amendments to the Resource Management Act in 2004. These require councils to consider climate change in the development approval process, and when assessing policy statements and plans. Whilst this was useful development which should enable better decision making, it should not be seen by the property industry as panacea. The key actions that everyone in the property industry needs to take are:
• Gain an understanding of the predicted impacts of climate change.
• Consider how the predicted impacts might affect current and past projects.
• Ensure that due diligence processes for all key decisions incorporate climate change knowledge.
In other words, view climate change in the same way as any other strategic business issue.
Once this occurs, we might see the property sector take much more prominent position in debate around New Zealand’s climate change policy.
Sean Lucy is practice leader, climate change and James Hassall is lawyer at Phillips Fox.