Australians’ well-documented affinity for sun, surf and sand continues to fuel the growth of the coastal property market. This growth challenges rising interest rates and growing evidence of the effects of climate change on people living in vulnerable coastal areas.
People in these areas find it difficult to insure their property against these risks. Insurers view the Australian market as vulnerable to climate risks, as the effects of climate change could trigger large insurance payments. They price their products accordingly.
Clearly, there is a huge disconnect between the coastal real estate market and climate change impacts such as increasingly severe storms, tidal surges, coastal erosion and flooding. Reports, studies and analyzes confirming the climate risks we currently live with are not lacking. Another alarming State of Climate report was released last week.
We keep talking about achieving global net zero emissions. But this “blah blah blah” masks the fact that climate influences are already with us. Even if we make deeper and faster cuts to emissions, which we have to, our world is warmer now. Australians will feel the effects of this warming.
As so many developments on the coast embody, we can’t ultimately afford the business as usual.
Risks worry banks and insurers
The disasters we experience in Australia and the environmental collapse we are experiencing will only get worse. While a number of businesses may see this as opening new market and product boundaries, the reality is that climate change is creating a fundamentally uncertain, unstable and difficult world.
Banks play a central role in addressing climate risks. They are exposed to climate risk through mortgage loans on properties that were vulnerable to climate impacts and are now facing insurance pressures.
It is estimated that one in 25 Australian homes will not be insured by 2030. The Australian government risks incurring the huge costs of supporting the underinsured or uninsured, otherwise known as “insurers of last resort”.
This costly legacy illustrates why planning decisions made now must take into account the effects of climate change, not just the aftermath of disasters.
Rapidly escalating impacts and risks across industries require simultaneous, urgent and massive mitigation and adaptation. This means reducing emissions to negative levels – not only reaching net zero and changing our energy sector, but also actively removing greenhouse gases from the atmosphere.
We must also respond to the risks of climate change that are already locked in the system. We must make significant changes in how we think, act, price, and act on these risks.
As the climate changes, so should our dream of the coast
The consequences of a warming climate, including reaching and exceeding tipping points in Earth’s weather systems, are emerging sooner than anticipated. The behavioral, institutional and structural changes required are huge and challenging.
People often connect to places based on their historical knowledge of those places. These lived experiences, while important, inform a worldview based on an understanding of our environment before the rapid onset of climate change. This may skew our climate risk responses, but combined climate effects outpace our ability to adapt as they have in the past.
Institutional signals, such as warnings from the Central Bank, support greater public awareness of climate impacts and risks.
When buying a property, people need to take these factors more seriously than, for example, having an extra bathroom. Mandatory disclosure of regional climate change impacts can inform buyers’ decision-making. The data and models used should be clear about the validity and limitations of their scenarios.
Nature-based and equitable solutions
In recent years there has been an increasing focus on nature-based solutions. This approach uses natural systems and tools to tackle societal problems such as the enormous and complex risks posed by climate change. Indeed, many Indigenous peoples, communities and pathways of knowledge have long recognized the essential role of nature in enabling good and safe lives for people.
Nature-based solutions provide a set of valuable tools to solve the problems we currently face on the coasts. For example, in many contexts, building rigid seawalls is often a temporary solution, which instills a false sense of security. Planting soft barriers such as mangroves and dense, deep-rooted vegetation may provide a more permanent solution. It also restores fish habitat, purifies water and reduces floods.
Recognizing that the well-being of humans and nature is interdependent has important implications for decisions about moving people from high-risk areas. Effective planned withdrawal strategies must not only keep people out of danger, but also take into account where people will move as demand for land supply changes and how valuable ecosystems will be preserved. Nature-based solutions should also be included in withdrawal policies.
As the Australian Academy of Science’s Fair Adaptation Strategy explains, effective compliance also includes equity and fairness in the process. Research on historical retreat strategies has shown that failing to properly consider and respect people’s choices, resources, and backgrounds can further solidify inequalities. Giving people moving into a new home as many choices as possible helps them get through an emotional and highly political process.
We all need to find the courage to have difficult conversations, seek information to make prudent choices, and do everything we can to respond to the growing climate risks we face. As climate activist Greta Thunburg puts it: “Hope is not passive. Hope is not blah blah. Hope is telling the truth. Hope is taking action. And hope always comes from people.”
Acting with this kind of hope can set us on an entirely different and more positive path.
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Quotation: Both coastal property prices and climate risks are rising. We gotta get our heads out of the sand (2022, November 30), Retrieved November 30, 2022 from https://phys.org/news/2022-11-coastal-property-prices-climate-soaring.html.
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