Building walls

Regardless of how many agree with Mr Trump’s proposal to build a wall, there are even more who argue about who should pay for it.

That situation is remarkably similar to what unfolded on the beaches of Collaroy last month. Reports suggest that after initial opposition from local residents, the council had finally agreed for a sea wall to be built. But between all the various parties involved, no agreement had been reached on who would pay for it before the waves came in and washed the homes away.

The science

All the scientific evidence from qualified experts tells us that sea levels will continue to rise, storms will bring more rain in each deluge, winds will be stronger, and bushfires more frequent and severe. Climate change may well drive cyclones further south than they have travelled in the past, and – most worryingly – into parts of our nation where we have not build houses to withstand them. Our exposed housing stock will see more floods, more fires, and more coastal erosion than ever before.

The insurers

Insurers will face adverse publicity as they cannot insure the uninsurable. The cost of providing insurance cover to houses that are exposed to coastal erosion is practically the value of the house itself. Who could or indeed would pay that price for insurance, even if it was available?  Insurers are already examining their exposures and tightening up their underwriting. They are walking away from the risk because insurance can only protect us from random events, not inevitable outcomes. Sadly, for both insurers who will lose customers, and for customers themselves, insuring individual homes is not a long term solution for coastal erosion.

This is why insurers have been arguing for, and continue to argue for, increased investment in adaptation and mitigation measures to improve our resilience against natural disasters.

Recently, Deloitte Access Economics produced its second report for the Australian Business Roundtable for natural disaster resilience and safer communities, that shows that as well as suffering great financial loss after each natural disaster, we also suffer long term social costs.

The banks

Unlike insurers, banks cannot walk away from the risk, as the home loans contracts they write go on for thirty or more years. Where the coastal homes get swept away, why would the home owner continue to pay the home loan, especially if they have no other assets?

More than any other developed nation in the world, Australia is highly exposed to natural disasters. Sixty per cent of our banks’ assets consist of residential loans – more than any other developed nation. Our homes are highly concentrated on our ravaged coastline, not to mention a significant number of our major airports, ports and other commercial activity.


The government and the people

Developers, local councils, state and federal governments must come together to stop development of homes in unsafe flood zones and improve our building standards for the climate of the future.

Some of our homes are lost with no prospect of being saved. Some could be saved by building walls or levees, retro fitting cyclone protection, or other adaptation measures. Actuaries, engineers, and our few remaining climate scientists are using the latest technology and science to figure out what we can reasonably do at an affordable cost.

Then we need to work out who pays for the walls to protect us from the sea itself.

Note: You can check out your own vulnerability here and most insurers have invested substantially in tech around mapping on floods and coastal erosion. You  can download maps of all of Australia from variety of sources including the CSIRO and the SES has also launched a related tsunami map.

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