Don't repeat the mistakes of Christchurch earthquake rebuild after Cyclone Gabrielle

Dr Eric Crampton
Sunday Star Times
19 February, 2023

Twelve years ago, an earthquake flattened much of Christchurch’s downtown. Civil defence, as well as those nearby and able to help, responded immediately to rescue those trapped. Local government kept everyone informed while working to restore services. Central government provided necessary support. And civil society came together to assist.

Everyone did the best they could, faced with a horrible situation.

The more substantial problems came later, in planning the recovery and rebuild.

The past fortnight’s heavy rains and cyclone have been horrible. Again, civil defence has jumped to respond, along with neighbours, communities, and local and central government. We will hear more of their stories as communications are restored.

Those of us far from the damage look on in horror and in appreciation of others’ efforts. And, at least for some of us, in hope that some of the cautionary lessons of the Christchurch rebuild are kept in mind.

Five years ago, Dr Bryce Wilkinson and I co-authored a report on Christchurch’s recovery from disaster. The biggest lesson, at least for me, was that it is far too easy for government to unintentionally frustrate and stall recovery.

After the immediate civil defence response, local government in Christchurch encouraged ambitious reimaginings of what the city could look like. But central government was to be on the hook for costly projects to which it had not entirely agreed. Central government then required a retrenching to less costly plans.

At every point along the way, it was far from clear what would be allowed on different downtown sites. Earthquakes generate their own form of uncertainty – some of which took geotechnical site assessments to sort out. Regulatory uncertainty was harder to resolve.

As one simple example, 757 days after the February 2011 earthquake, the owners of the Copthorne Hotel were ready to rebuild, the insurers were ready to pay, and the city was desperately short of hotel spaces. But nobody could tell the hotel’s owners whether they would be allowed to rebuild. You see, the planners had a vision for an Arts Precinct in the area, and the planners had not decided yet whether such a Precinct was a good place for a hotel.

The earthquake provided an opportunity to play at the old computer game SimCity – but with a real city, with real people whose hopes and dreams cannot be paused while planners decide.

Floods are awful, but they thankfully do not provide the same tabula rasa for games of SimCity. Nevertheless, putting homeowners on hold while coming up with broader schemes for climate adaptation and managed retreat would be a mistake. Hopefully, that risk is avoided.

One option that the government might consider, if it worries that too many houses are built in places that are too risky, is an adjustment to how EQC premiums are set.

Currently, your EQC levy depends only on the value of your property. A million-dollar home perched on an unstable clifftop with beautiful views will pay the same EQC levy as a million-dollar property in the safest part of the country.

Work by Motu in 2018 showed that this aspect of our natural disaster insurance scheme works, on average, to the advantage of richer neighbourhoods rather than poorer ones. Letting premiums vary with riskiness would encourage building in safer places. It might also reassure private insurers who seem to have feared the political risks of such moves.

Another lesson from Christchurch is that government might help to resolve uncertainty that would otherwise hinder recovery.

Natural disasters can reveal parts of insurance contracts that had seemed clear when contracts were signed but are anything but come the event. Simply having a decision can matter more than what the decision is. A decision lets everyone move on.

In some cases, the cost of pursuing a declaratory judgment can make for delays if each affected party hopes someone else, also affected, takes on that burden. The government could watch for areas where a test case would help everyone move on.

Ironically enough, government inadvertently created some of those contractual uncertainties in Christchurch by changing building requirements while the rebuild was in progress. If a building were insured for restoration to an as-new status, but a change in the rules meant that the building as-new could no longer be consented at that site, how should insurance proceed? Building to the new standard would be a betterment. But reinstating to the insured specification would result in an unusable building.

We are still deeply in the immediate response to the cyclone. The government’s priority very rightly has been finding those lost, rescuing those in need, delivering aid, and securing communications. Hopefully, the weather will clear and the scale of revealed damage will be less than we might fear.

But the recovery and rebuild to come will be substantial. And Christchurch provides a few cautionary lessons.

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