Signs alongside roadworks tell pedestrians where to go Photo: RNZ / Angus Dreaver
Central and local governments need to weigh up the cost of insurance versus investment to offset New Zealand's high risk of natural disasters and a changing climate, the Infrastructure Commission says.
Commission general manager strategy Peter Nunns said New Zealand spent at least $10 billion in infrastructure rebuilding costs from two large earthquakes and two storms since 2012, not including the economic cost and disruption to people's lives and businesses.
Nunns said the likelihood and size of events such as storms was expected to grow in coming years, as well as the replacement cost of infrastructure.
"On an inflation-adjusted, per-person basis, public infrastructure is now worth 70 percent more that it was in 1990. So, the cost of replacing it after a natural disaster is rising at the same time as the likelihood of a disaster is rising," he said.
"It's more important than ever to make good decisions about when and how to reduce risks and minimise costs."
However, Nunns said New Zealand had an incomplete picture of the hazards it faced, as well as the risks posed to infrastructure, including how these were being managed.
He said the last review of insurance coverage for public assets was undertaken more than 10 years ago and found less than half of public assets were insured.
"This is challenging, as our research shows that, in addition to helping to smooth out the costs of responding to natural hazards, insurance can also help infrastructure providers make better decisions about when and how to reduce risk and minimise costs."
The commission's report, Invest or insure?, highlights how risks change over time and the risk management decisions made yesterday might not be the best decision for tomorrow.
The report sets out the issues and case studies looking at how adaptability and resilence to natural disasters, can offset the ever-increasing cost of insurance.
"It's important that infrastructure providers consider this in their long-term asset management planning," Nunns said.
