UPDATE (12/2/24): THIS EVENT HAS BEEN CANCELED. WE APOLOGIZE FOR ANY INCONVENIENCE.
Patrick Walsh, Economist of Environmental and Natural Resources Economics at the U.S. Environmental Protection Agency (EPA), will present the EEEP Seminar Series, “Distributional Impacts of Flood Adaptation and Infrastructure Funding in New Zealand” on December 4, 2024.
Abstract:
Floods are the most frequent, economically damaging natural hazard in New Zealand. In early 2023, the country experienced the worst flooding in its history, with billions of dollars in estimated damages and over 30,000 insurance claims. Meanwhile, flood management in New Zealand has changed significantly over the past several decades, moving from central government-directed planning to a devolved approach run by local governments. In most Regional Councils, the devolved approach involves “flood schemes,” which use targeted taxes to fund flood-related infrastructure. Although these schemes theoretically align incentives by placing the burden of infrastructure funding on those that most benefit from them, resources vary significantly across local governments, yielding concern about the distributional implications. In fact, many localities allow communities to self-select into flood schemes via local votes or meetings. On the insurance side, New Zealand has a unique combination of public and private coverage for homeowners. Insurance policies have traditionally not included additional cost for flood risk and the government covers a portion of flood damages.
These unique conditions allow us to analyze several interesting hypotheses around flood adaptation and equitable access. We analyze several adaptation and flood scheme-related hypotheses by using several spatially explicit national databases of public and private insurance claims. Our main Insurance claims data come from the Earthquake Commission (EQC), who cover the first $100,000 (NZD) in flood related claims. Initial results suggest that areas with flood schemes have significantly less claims. We also find that flood scheme locations are significantly related to flood risk, as well as local industry and infrastructure. On a broad level, the schemes appear to be deployed in a fashion conducive to protecting local economies. However, results suggest that both flood scheme location and effectiveness is related to local socio-economic factors, especially income. For instance, flood schemes have a much larger impact on damages in poorer areas, suggesting better adaptation in richer areas, all else equal. Given the increasing threat of sea level rise, which will expose new areas to flood risk, it is important to consider these factors in infrastructure planning. Infrastructure funding can vary dramatically across countries or regions, between heavily centralized approaches and regionally devolved approaches. This research identified some important consequences associated with the devolved approach.
Speaker Bio: Patrick Walsh is an Economist at the U.S. Environmental Protection Agency (EPA), where he leverages over a decade of experience in environmental and natural resource economics to shape and analyze policy. Patrick also previously managed a team of economists focused on climate change, conservation, and adaptation research at Manaaki Whenua – Landcare Research in New Zealand. Patrick’s research centers around environmental economics and policy, but he has also led cross-disciplinary research and large-scale programs in natural hazards, biodiversity conservation, and economic development.