Background

Flooding is one of Aotearoa New Zealand’s costliest natural hazards, and risk of flooding is expected to increase as the climate system warms. To prepare for this, we need better ways of predicting and understanding the impacts and implications of elevated flooding risk to households, insurers/banks, and the broader economy. We can achieve this with climate stress-testing across geographic space and through time.

Research Aims

The goal of the Strand project is to integrate bottom-up and top-down approaches of stress-testing the resilience of New Zealand’s real-estate market and financial system to climate-related flooding risks, such that behavioural, macro-economic, and social criteria can be incorporated to expand the range of influences beyond what have previously been considered. This hybridised model is being built upon the foundational blue-skies research in the Marsden funded Strand project (2021-2024), leveraging and expanding the skilled and highly multidisciplinary research team from five research institutions and numerous research partners (including Reserve Bank of New Zealand, CoreLogic) and world-leading experts. Specifically, this expanded team will:

1. Improve the physical multi-hazard analysis using site-specific climate and groundwater datasets, 

2. Factor behavioural responses of market participants (homeowners, banking and insurance firms) and explore how this may affect the pricing of flooding risk, 

3. Develop better ways to estimate risks to mortgage lending including repayment and defaults,

4. Capture the wider effects of flooding risk on the broader economy and financial stability, and 

5. Go beyond financial impacts and considers social, physical, and cultural factors with a spatial multi-criteria risk index. Successfully achieving these goals will result in more accurate, applicable, and relevant climate risk estimates that better serve the needs of climate risk pricing and adaptation policies.

This project is a continuation of the Marsden-funded STRAND project.