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Insurance Retreat in Residential Properties from Future Sea Level Rise in Aotearoa New Zealand

Author

Listed:
  • Belinda Storey
  • Sally Owen
  • Christian Zammit
  • Ilan Noy

Abstract

How will the increased frequency of coastal inundation events induced by sea level rise impact residential insurance premiums, and when would insurance contracts be withdrawn? We model the contribution of localised sea level rise to the increased frequency of coastal inundation events. Examining four Aotearoa New Zealand cities, we combine historical tide-gauge extremes with geo-located property data to estimate the annual expected loss from this hazard, for each property, to establish when insurance retreat is likely to occur. We find that as sea level rise changes the frequency of inundation events, 99% of properties currently within 1% AEP coastal inundation zones can expect at least partial insurance retreat within a decade (associated with less than 10cm of sea level rise). Our modelling predicts that full insurance retreat is likely within 20 – 25 years, with timing dependent on the tidal range in each location, and, more intuitively, on the property’s elevation and distance from the coast.

Suggested Citation

  • Belinda Storey & Sally Owen & Christian Zammit & Ilan Noy, 2022. "Insurance Retreat in Residential Properties from Future Sea Level Rise in Aotearoa New Zealand," CESifo Working Paper Series 10017, CESifo.
  • Handle: RePEc:ces:ceswps:_10017
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    References listed on IDEAS

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    More about this item

    Keywords

    insurance; retreat; sea level rise; SLR; climate change;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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