The New Zealand government has spent at least NZ$19bn on responding to natural hazards since 2010, and a further NZ$14bn through its public insurance schemes. Another NZ$31bn was spent by the private insurers during this period. Thus, the total cost of natural hazards since 2010 is NZ$64bn according to a new study.
The findings of the study commissioned by IAG New Zealand were released earlier this week. The findings revealed in a media release by the company show that 97% of the Government’s expenditure was on responding to and recovering from natural disasters, with the response to the Canterbury earthquakes, Kaikoura earthquake and the North Island weather events of 2023 dominating spending. Only 3% was spent on risk reduction and resilience.
IAG New Zealand CEO Amanda Whiting said, “This research highlights again the significant financial cost that natural hazards have on New Zealanders, and the urgent need to reduce their impacts. These costs represent a drag on our economy and work against the growth and financial strength required to support the needs and aspirations of New Zealanders.”
Ms Whiting said the total amount spent, will in fact, be much higher. This is because this research does not include significant spending by local government, such as the NZ$8.2bn that the Christchurch City Council is projected to ultimately spend on recovery in response to the Canterbury and Kaikoura earthquakes. It also does not include the wider social and economic costs which Deloitte suggests could account for at least 50% more cost.
Ms Whiting said, “It is clear we need to do more to reduce natural hazard risk, especially when we know that there is a strong case for doing so. International research shows that a dollar invested in risk reduction can reduce spending on response and recovery by four dollars.”
“Reducing natural hazard risk is as much about improving the decisions we make as the money we spend to improve the safety and resilience of our homes, businesses and infrastructure.”
The media release by IAG New Zealand said it is also clear from this research that New Zealand has an incomplete understanding of the costs of its natural hazards. Fixing this will enable better decisions to be made on when, where and how to reduce risk. This is becoming even more important as natural hazard events increase in frequency and severity.
Ms Whiting said, “IAG continues to invest significantly in data and its application to improve decision making and is working with government and other partners to put this capability to use in improving how natural hazard risk is managed. This is a priority for us and must be a priority for New Zealand.”