2022 International Speaker Series

Adaptation and resilience to climate change

27 April 2022

In this session we were joined by Professor Sam Fankhauser – Professor of Climate Economics and Policy at the Smith School of Enterprise and the Environment at the University of Oxford – for a conversation exploring climate adaptation and resilience, the link between climate adaptation and mitigation, and the importance of planning for adaptation now. Sam shares insights on how the UK has approached adaptation to date, and what’s important for us here in Aotearoa as we focus on adaptation in the coming years.

video transcript available
CHARLI KEELING: Kia ora koutou and than you for joining us for our first international speaker series of 2022. We are very pleased to welcome Professor Sam Fankhauser for a session on adaptation and resilience to climate change. Ko Charli Keeling ahau. I'm a senior advisor in the communications and engagement team at the Commission and I'll shortly talk us through how the session will run today. But first I'm going to ask Bevan to lead us into the session with a karakia.

You're muted, Bevan.

BEVAN: My apologies. Ngā mihi ki a tātou, e runga e te pawaka whakaata reo nei. Tēnā koutou katoa. Ngā mihi tino nui ki a koe te kaikōrero te wā nei ko Sam. Anei hi karakia.

He hōnore, he korōria ki te Atua
He maungārongo ki te mata o te ao
He whakaaro pai ki ngā tāngata katoa
Hangā e te Atua he ngākau hou
Ki roto, ki tēnā, ki tēnā o mātou
Whakatōngia to wairua tapu
Hei awhina, hei tohutohu i a mātou
Kia tau te rangimarie ki a tātou katoa
Hau pai mārire

So in English that's greetings to everyone online and a special acknowledgement to you, Sam, our speaker for this evening. All honor and glory to our maker. May peace and tranquility reign throughout the world. Goodwill and thoughts to all mankind. Creator, establish within each of us a wholesome spirit. Let your spiritual being grow within us. Help to guide us. May peace and goodwill be with us all. Kia ora tātou.

CHARLI KEELING: Kia ora Bevan, thank you. So before we kick off I'd like to ask you all to please share your name and the organisation or community you represent into the chat while I'm just taking us through how the session is going to run and let us know where you're joining us from in the world. It's really good for us to see who we've got online for these sessions and who's listening in. So this session will be led by our Commissioners Dr Judy Lawrence and Professor James Renwick. Judy is a climate adaptation expert and a strong thought leader on climate change adaptation. Her expertise is reflected in having been appointed as a coordinating lead author with the Intergovernmental Panel on Climate Change Working Group II, on impacts adaptation and vulnerability. She has developed extensive networks across central and local government and served as an elected member of a regional council. Judy is a multidisciplinary team player set between climate change sites and national litigation and adaptation policy. James is a leading climate scientist with a strong national and international reputation and four decades of experience in weather and climate research. His appointment as a lead author and coordinating lead author on three assessment reports of the Intergovernmental Panel on Climate Change demonstrates his experience. He's been involved in the governance of the World Climate Research Programme for the past eight years and was awarded the 2018 Prime Minister's Prize for Science Communication. So Sam is shortly going to present his work to us and that will be followed by a discussion between Sam, Julie and James. This will be then your opportunity to have your questions answered. You should see a Q&A box at the bottom of the screen where you can type your questions throughout. We'll try and get to as many questions as we can but we're likely to not cover all questions in the session, but please do ask ask away. And if you'd like to speak to each other throughout the session and share your thoughts please use the chat function. It's always good to see your conversations and a good space to share resources. I just want to let you know as well that we are recording this session – so anyone who isn't able to make it that you might know of will be able to watch this on our website shortly afterwards. I think that's enough from me, so I'm going to hand over to Judy now to introduce Sam for us.

JUDY LAWRENCE: Thank you, Charli. Kia ora tātou and welcome everybody, and particularly Sam. Sam is a professor of climate economics and policy at the Smith School of Enterprise and Environment at the University of Oxford, and he's also a Fellow at Reuben College. Before moving to Oxford he was Director of the Grantham Institute, a research institute on climate change and the environment at the London School of Economics, where he remains a visiting professor. Sam has published widely on the economics of adaptation to climate change and was an inaugural member of the UK Climate Change Committee, where he also served on its adaptation subcommittee. So welcome, Sam, and it's a delight to have you here and we're looking forward to hearing what you have to say and having a conversation with you. Over to you.

SAM FANKHAUSER: Thank you Judy for the introduction, and indeed Charli and Bevan for setting up the session so beautifully. And good evening everybody, or good afternoon, what it might be. I see there's people from many time zones in this chat, in this conversation, which is lovely to see. So yes, I'm going to talk a little bit about adaptation and the experience with adaptation in the UK. But before I do that, I just do want to say it's really wonderful to be engaging with the New Zealand commission. I was saying in the pre-chat just before we came on there, and three or four years ago, just before the New Zealand climate change bill became enacted, there was a lot of knowledge exchange between New Zealand decision makers who traveled the world to find out how it's done in other countries. So they they came to the UK as well, and we had a lot of exchange about what might be good practice, and we talked at the time about the importance of independent committees, which play a big role in the UK, and we sort of suggested they were an important thing. We talked about the importance of not just going on about emissions but also worrying about adaptation. So it's nice to see some of these messages embodied and embodied powerfully in a very strong set up, very strong process and the institutions in New Zealand – and indeed very impressive commissioners that have joined this enterprise. So, lovely to be here. That's just great to see some of the early conversations coming into into life, as it were.

But talking about adaptation... let me start with maybe three framing remarks and then move on to some of the implications of those frames to the way adaptation planning and adaptation decision making happens in the UK. And then hopefully we can have a conversation of how this compares with other parts of the world, with New Zealand, and see what we can learn from from each other.

So, three framing remarks. The first one is something that probably doesn't need repeating in this audience, but it's always worth saying – which is that adaptation and emission reductions, net zero and adaptation are complements, the two sides of the same coin. We need them both. There's often a perception that adaptation is about not being serious about emission reductions. There's often a perception that emission reduction comes first, and they get the bigger budgets and they get more attention. All of this in my view is wrong. We have a problem that we have to tackle from all sides. That means we want to deal with the causes of climate change – and that indeed is the emission reductions, that indeed is the drive to net zero – but then we also need to deal with the consequences of climate change, and that is the story of resilience and adaptation. And whatever we do on net zero we will, if we are very lucky, have one and a half degrees of global surface temperature to adapt to. If you're unlucky it will be a lot more than that. So adaptation is unavoidable, as it were. We've seen already what the 1.1 degrees that we already have in the pipeline, we've already seen what that can do and and so it's going to be more than that. And so adaptation, whether we like it or not, is part of what we're going to do for the rest of the century. So my first framing remark again, you will all know that, but not every policy maker always lives up to it, is that adaptation and emission reductions are complements, two sides of the same coin. We should treat them equally.

My second framing remark is is a positive one, I hope, which is the observation that human beings as a species are actually very good at adaptation. We find thriving communities, actually thriving ecosystems as well, in just about every corner of the globe. We find thriving societies communities in hot climates, cold climates, dry climates, wet climates, so as a species we're actually quite good to survive and be successful in most sort of climates that the planet can throw at us. So that's the good news. The sort of slight worry that comes with that is probably twofold. One is the sort of path dependence in that adaptation. The fact that we are good in lots of climate is the the result of centuries' worth of learning, adapting, cultural behavioral habits, some technology but a lot of ingrained cultural sort of behaviors that that we have learned to adopt. And changing those is not quite as easy as it might sound, so there's a lot of sort of ingrained lock-in, as it were, in terms of how we deal with the climate that we currently live in. So we are good in a lot of climates but the moving from the one we are used to, to a new one, it may not be quite straightforward. Partly also because we're not quite sure what exactly the new climate will look like. So that's my second framing remark: we are good as a species at the adapting to various climates, but what we have to adapt to now may be more difficult, and we will have less experience, less of a record to deal with, so adaptation is difficult even though we are good at it as a species.

My third framing remark – and I will dwell on this one perhaps a little bit longer – is that adaptation has quite good economic returns. Adaptation makes sense if you think of it in benefit-cost terms. If you sort of look at the cost of adaptation actions and you compared them with the rewards of adaptation action, you find out that adaptation really is a very powerful, very important thing to do... which goes back to the observation that we should treat emission reductions and adaptation as equal strategies. Let me just give you maybe one concrete example from the UK. It's a couple of years ago when I was on the adaptation subcommittee, as it was then called. Incidentally that's another sort of subtle hint of how people don't understand the equivalence – it was a subcommittee. It is now a proper committee but when I was on it, it was a subcommittee. And the research looked at flood protection in the UK, just some of the headline numbers of people, households, dwellings at risk from substantial flooding, substantial flood risk. And in the mid 2000s I think it was just over 300,000 dwellings that were at substantial risk of flooding in the UK– that was defined as I think one in 75 year risk of flooding. So about 300-330,000 households fell into that risk category. We then imposed an average, if you will, a sort of a median climate change scenario on top of that, and we found out that climate change by the mid 2030s – so in about 15 years from now – would double the number of risks or the number of of dwellings at the substantial risk from flooding. Instead of the 330 it became 610,000 dwellings at risk from flooding, so a doubling if you will of risk. If you then start to factor in adaptation, and we started off by the sort of more community-led adaptation strategies, the sort of community municipal level flood defence systems, the public good that are provided by the state and the early warning regimes and those sorts of community level interventions. And if you do that we calculated that you can more or less accept the impact of climate change. So we are back in a sense to the about 300,000 dwellings that are still at risk from flooding. So adaptation can in a sense offset the early phases of climate change. That was sort of our finding back a couple of years ago. But that wasn't everything. Because if you then, in addition to the community level defenses, also factor in property level protection – so that the sort of things that the individuals can do to their own homes to protect their own homes against flooding – and we figured out that instead of doubling the overall risk you can actually cut the risk in half. So of the 300,000 dwellings left you can protect another 200,000 or so through property level flood defenses. So that sort of shows you a little bit the power of adaptation in a very specific example. If you don't do anything the number of houses in the UK at risk of substantial flooding will double. If we do efficient and smart adaptation we can instead cut the number of dwellings at risk by half. And the net present value of the whole exercise was something like £200 billion. So that's just one example of the power of adaptation. To give you a few more, without going into the same detail, a few more sort of headline numbers... There's a literature out there now that calculates the benefit-cost ratio of various adaptation measures, and they come with a bit of a health warning because adaptation is unbelievably place based, unbelievably context specific, so no two benefit-cost ratios will be the same, but you can get a sense of what is possible. And if you look at that table of benefit-cost ratios just for coastal flooding for example, you find soft defenses of benefit-cost ratios of over 100 to 1. So the benefits are 100 times the cost. Even hard defenses sort of have benefits of 40 to 1. Relocation is the last resort in many ways, but even relocation in the right sort of context has benefit-cost ratios of, I think, two to one or something like that. So if you look at these numbers, you see the economic benefit, the economic power of adaptation in preventing some of the worst impacts of climate change. Now that doesn't mean anything goes and whatever you do will be smart. You you do have to do very careful project appraisal, very careful analysis, very careful scoping engagement activities, to make sure that you actually fine-tune your adaptation measures in the right way. But if you do do that, you can have very good economic returns. This is a health warning to those benefit cost ratios. In addition to being site specific, climate change is also very uncertain. So the simple benefit cost analysis is probably not necessarily what you want to do in a project appraisal. You want to factor in the fact that there's uncertainty and you want to factor in, 'do we adapt to one and a half degrees? do we adapt to two degrees? do we have to adapt to three degrees?' All those sorts of strategies, you want to factor in. You want to factor in that you may understand the global climate but not necessarily the local manifestations of that climate. So all that makes simple benefit cost ratio a bit too simplistic. But they can tell you, as I just tried to do, they can tell you the overall picture of just how powerful adaptation can be.

So those were my framing remarks, the three remarks. First, I said that adaptation and net zero are two sides of the same coin – treat them the same way. Second, people are very good at adapting, but what we have to adapt to now is slightly different or quite fundamentally different from what we had to adapt to in the past, and so adaptation is a big challenge despite us being good at it. And then the third framing remark was the economic benefits, the benefit cost ratios of doing adaptation well, are very very high. Let me now translate those three remarks – and I realise I have to speed up a little bit here – let me translate those three remarks into how has the UK translated those insights into an adaptation, planning and execution machinery. And I think some of the structures that I'm going to describe will be quite familiar to the people the listeners in New Zealand because they're not dissimilar to what you have adopted as well.

The key sort of plank of adaptation strategy – and I should say all this is enshrined in law, all these provisions are legislated in the Climate Change Act, the Climate Change Act of 2008 in the UK, and that law prescribes a sort of an iterative, continual adaptation process. It's sort of a five-year cycle, which speaks to the need to learn and find out what exactly we are adapting to and the continual need to adapt. So that five-year cycle kicks off with a climate change risk assessment. That's a very systematic view of the country to ask what are the main climate risks. That is then followed by a national adaptation programme, where the government in a sense responds to that risk profile and sets out how it wants to deal with those risks and reduce those risks. That process, the risk assessment and the national adaptation programme, is being monitored by an independent committee, the adaptation committee, which is part of the Climate Change Committee – so there's an independent level of scrutiny and analysis and guidance and advice that comes with it. The fourth element is called adaptation reporting, which is an obligation... the climate change risk assessments are at the national level, then there's an obligation for certain companies in the country (basically government regulated or government owned companies, so the utilities and and so on, and the regulated industries in the financial sector) to provide an adaptation assessment as well – which many thought of and still think of as a tick box exercise. But it is actually an opportunity for companies to engage with the issue and think, what is my own vulnerability as a company what do I do about it? So that's the package that you do in an initial instance, and then five years later you repeat the exercise again. You do another climate change risk assessment, which sort of looks at how climate has changed, how the national adaptation plan has been implemented, and where the risks have changed or not, and so you do that continually in a five-year cycle. So that's sort of the rhythm that we have.

Let me just say one quick word about the climate change risk assessment, so the first one in in in in those activities that we do every five years. The climate change risk assessments, we just finished the third one – so CCRA 3, as it is known. Everything has to have an acronym. CCRI 3 looked at the risks. It was published last – no, it was published earlier this year but essentially carried out last year. And I just want to point you to the methodology that has been adopted in it, because I think it's something that's worth comparing notes over and see how it compares to the way you do things. So it asks three questions to assess what the risk profile is. The first question is just an assessment of the hazard: is something a big or a small problem for the UK? Flooding is a big problem. Wildfires so far are perhaps less of a big problem. So you go through the hazards and decide which ones are the ones that the country really needs to focus on, which ones are the scarier ones. The second question that is then being asked is: are any of those assets already being addressed in an autonomous way? That's the second question that is being asked, and that speaks to the observation that it doesn't necessarily have to be the government that does the adaptation. There's a lot of adaptation that is being done by individuals, and potentially being done fairly well by individuals, and so you have to find that balance between the role of government and the role of individuals. So that's the second question that is being asked. And the third question that the CCRA asks is: is dealing with a particular hazard urgent or can it wait? If adaptation is something that we're going to do for the next 80, 100 plus years, it's like running a marathon – you have to not do everything at once, you do certain things now, you do certain things later. And that begs the question: what you do now, what's urgent now, and what can wait for later. And there's certain logic to it that tells you what probably should be done earlier, and that's the last thing I'm going to to say, and then open it up for questions. And that logic goes back to – if you think about the net present value of an adaptation action, if you simplify the world, net present value is... you have initial costs, you invest you build a seawall that costs you something, and then you have a stream of benefits. Some of those benefits happen fairly early on, and some of those benefits happen in the future. And so you then have three components that you look at that decide whether you want to do something early or late. The first question you ask is: does delaying change the cost profile, or does doing something early change the cost profile is probably a better way of asking the question. And that gives you a number of adaptations you want to do now, because if you do them now they are cheaper – if you delay them you lock in some expensive, high vulnerability profile [adaptations]. Infrastructure is a good example. The cheapest way to make infrastructure climate resilient is to design it while you build it, design it in a climate resilient way. Once it's built, once the bridge is built, once the house is in the floodplain, it becomes much more difficult, much more expensive to deal with it. So that's the first urgency test. The second urgency test is the short-term benefits: if we do something early, does it yield immediate benefits that we would miss if we delay the action? And the answer is yes, there are a lot of win-win options out there, things you want to do because they immediately pay, and why would you delay those those benefits, you know? Ecosystem protection falls into that category, sustainable urban drainage falls into that category. Those are things that immediately start protecting you against climate hazards, so why would you delay the action? And the third urgency test is about the long-term benefits: if we take early action, does that improve the long-term benefits that we might have? And the answer is yes, often it does again, because certain adaptation actions have long lead times. It takes a while to ramp up, to learn, to develop. Research and development falls into that category. If you want heat resistant, drought resistant crops in 2040, chances are you have to start doing your research and development now, not in 2039. So that gives you three reasons that are then fed into an urgency score in the climate change risk assessment. And the climate change risk assessment again, as I said, paints the profile and it's then fed in, sent back to the government as it were, and the government then responds with a climate change national adaptation program.

So that's the process we have in the UK. My assessment is it works well as a process. It's well established now, people know what they have to do, so it works very well. Let me finish with one caveat, though, which is: there's a difference between good adaptation planning – being good at talking about adaptation and understanding the problem – it's not the same thing as doing something about it. And in the UK I think we are reasonably good at having an adaptation process and talk about it and plan for it, but we're not necessarily good about taking the actions that you then follow. But that's (a) probably not a problem that's unique to the UK and (b) it's not a problem that's unique to adaptation. We tell exactly the same story when it comes to net zero. But it is one of the big problems that we now have. We understand the problem, whether it's emissions or adaptation. It's now the political will, the implementation power that we need. So let me stop here. And I'm curious as to your reactions, your comments, your corrections. your insights. Thank you.

JUDY LAWRENCE: Thank you very much, Sam,, that was very insightful, and I'm pleased that you finished on the conclusion of Working Group II of the IPCC [laughs]. And it's a global issue and it has global impacts.

I've got a couple of questions, one following up from what you've just said and one that I'd like you just to comment on quickly before we go into the question James will have. I noticed that, with respect to flooding, that you talked about adaptation – that these costs will work out worked out in terms of the early stages, and I'm interested to hear that your urgency criteria did not include potential for lock-in. And I'm just wondering if you could comment on that. That's the first question. The second really is that in New Zealand – and we've got a number of people here from local government – is that a lot of the adaptation to the rainfall hazards, the sea level rise hazards, and some of those physical hazards, as distinct perhaps from changes in temperature and issues such as health and our natural systems and how they respond... But these hazards that you have talked about are largely adapted to at a local level in New Zealand, and we're interested to know how the UK climate committee or Climate Commission has really dealt with this engagement and linkage with the local governance, if you like, which requires in (our country anyway) a high level engagement, because they're elected people and they're there representing the public. And we're interested to see how the how the UK has dealt with that that situation. Now I know your governance situation is somewhat different because there's more central government direction and regulation. So if you could cast your mind to our Kiwi situation and make some comment on how you've dealt with that issue, for both the risk assessment and for adaptation planning.

SAM FANKHAUSER: Right, yeah, thank you Judy, two very good questions. On the lock-in and the flood defense, you're absolutely right that there's a lock-in issue there. I would say, mentally it was for me in the bucket of making location decisions, siting decisions, where do you want to build your houses, where do you want to build your your factories. That's the bit that locks you in. But you're absolutely right, that decision is being influenced by the availability or the absence of flood defences, and if an area is protected you will build behind it as it were, and that then locks you in. And that creates a sort of continual responsibility to maintain that protection. You build a flood defence team, a dwelling appears behind it, and that means you have to keep up that flat defense ever after, otherwise you have the damage. And that's absolutely correct, that is one of the early, for me one of the tests of things you want to do early is think that dynamic through. If I protect an area it sort of means I have to protect it forever because people will respond to the protection. That's absolutely true. Well, incidentally that's not necessarily an irrational outcome. London is, you know, in a flood plain basically and if it wasn't for the Thames barrier London would be flooded quite regularly, and that's something that's pretty much locked in – but this isn't a scenario where you would try to undo that protection and move London upstream, as it were, that's just not on the cards. So certain certain things are, you know... sometimes it's rational to build in a floodplain because locationally that's where you want to be. The Chinese example I often use, the Chinese development strategy was to build along the coast. It was an expert-oriented, outward-looking growth strategy, which meant you want to have your economic activities en route to markets on the coastline near the ports. That was very rational, but obviously that increases your exposure, but that just means you have to deal with it through protection, but it was still not an unreasonable growth strategy.

So that was your lock-in question. Then the local level question is a very good observation. I grew up in Switzerland, and Switzerland is the country that has thought decentralisation to its logical conclusion, that everything is decentralised. So I'm probably allowed to say then – or maybe I'm not, but I'm saying it anyway: the UK isn't very good at decentralisation. It's a very haphazard, not well thought through process where the local authorities, local councils, have very little power and where they have the power they don't have the budget to deal with it. So it's not a pretty situation and that's true with climate change as well, and within climate change it's true for adaptation. There's an element of devolved responsibility at the level of the devolved nation, so Scotland, Wales and Northern Ireland have their own national adaptation programmes. The CCRA, the climate change risk assessment, does have devolved chapters as it were, so there's the climate change risk story for Northern Ireland, Wales, Scotland and England. So that level of analysis is there. But the true honest decentralisation, where you give the Mayor of London or the Mayor of Manchester power over adaptation decisions, that isn't really formalised. London happens to have quite a good local adaptation community run through the council but it isn't formalised, it isn't structured, and a lot more could be done – bearing in mind that a lot of the decisions are logically at the national, or sorry at the local level.

JUDY LAWRENCE: Thanks, Sam. I think James has a question that probably follows on from that quite nicely. James?

JAMES RENWICK: Thanks, Judy, absolutely right, and thank you very much, Sam. Really fascinating stuff and great to hear how well things are working with the committee in the UK, and you're already on the third climate change risk assessment document and so on. It was really interesting to hear that it's well understood how the process works in the UK. But you did say that it's one thing to talk about adaptation actions and planning, it's another thing to actually do it. And I've been wondering while you've been talking to Judy about some of the local engagement and local community action. And you know, you've got a community, you've got local government, you've got central government, and plenty of moving parts. Are there any examples in the UK where adaptation action has been taken and it's worked well? Some of the conversations you have around these things like managed retreat or changing infrastructure are hard conversations to have, and I'm just interested if you've got any reflections on how you approach that and whether there have been any successes you could point to already.

SAM FANKHAUSER: Yeah, that's a good question. I wish there was sort of an inventory where we could point to. The local councils and the local authorities do take climate change very seriously. Two thirds or three quarters have declared a climate emergency and their focus is on on net zero and emission reductions, and we talked to some of them to point out that adaptation should be part of it. London is a good example where that's starting to happen. And a lot of it is sort of participatory actions, you know, awareness raising, talking to community groups, talking to local businesses and raising awareness and doing things that way... which isn't necessarily a bad thing, as it happens. Going back to those benefit cost ratios that I mentioned at some point, there's some examples of benefit cost ratios of community awareness and community preparedness, and they're actually pretty good when it comes to things like flash floods, fluvial and flooding. Just having alert communities, well-functioning communities that can kick into action is a very powerful thing because these things are hard to predict so you can't sort of build your way out of trouble very easily and so you need the nimbleness in the community.

JAMES RENWICK: Yeah, I agree, and good communication is always vital, making sure everyone has the right information.

JUDY LAWRENCE: Sam, I think we'll move on to some of the questions that are coming through, but I just wanted to address the audience. Firstly, there are no slides, and secondly this is an adaptation conversation, and there is some information that Karen has posted in the chat where you can get more information. So I just thought I'd cover that off for those who came before the early part. But there's a question here about how adaptation costs might be shared across government, local councils, companies, insurers, individuals and others, and what the criteria might be for deciding cost sharing. And how should we make those decisions when there are competing interests for available funds? Would you like to venture something in that context?

SAM FANKHAUSER: Yeah, I'm not sure I can give you the crystal clear, silver bullet answer on that one, but let me give you a few pointers maybe. And one is that adaptation – unlike emission reductions, adaptation is much more likely to be in your self-interest. You don't have that sort of public good element. Property level flood protection is in people's interests. If you can protect yourself against flooding, why wouldn't you do it? I was once in a conversation about adaptation sitting up in my office, and I saw the flood water coming from the road and I had to interrupt my presentation. Ran down, put the sandbags out, and came back and continued talking. And that was bizarre for the audience, I suspect it was, but in my self-interest. I didn't need external help to do that. So there's a lot of things that people will just do because it makes sense doing it. But there are public good aspects to it, like the community flood defences, the London Thames barrier for example, that's a community level thing. So those would be shared by the community. You can probably raise that money if you want through local taxation. You could differentiate it by risk profile if you wanted to do that. I'm not aware of anybody doing that, but but you could. And that gives you a bit of an incentive to locate yourself in the right position. So that's the efficiency story of it. There's an equity fairness story to it as well, and a lot of households can't afford those sorts of insurance premia, and the unfairness of the world is such that poor households tend to live in the high risk areas and the rich people move somewhere safe. So you have to – for equity and fairness reasons, you have to have schemes that protect low-income households. In the UK we have something called Flood Re, which is a reinsurance team where the high-risk properties that might not get insurance anymore can be reinsured through a government, or an industry-level scheme. So these things have a big role to play as well for fairness reasons.

JUDY LAWRENCE: OK, thanks Sam. We have another question here about how widely net present value assessments are used in regional or national level adaptation strategies in the UK.

SAM FANKHAUSER: Yeah, they're being used. What we tend to tell people is: don't do plain vanilla benefit cost analysis because that's too simple. What you should do instead is yourself for a scenario, a range of possible outcomes, so prepare yourself for not just 1.5 degrees but be prepared potentially for 3 degrees. That doesn't mean you build the seawall for the 3 degrees scenario, but you build it in a way that you can adapt as you go along iteratively, if that is the scenario we end up in. So it isn't so much benefit cost analysis as decision-making under uncertainty, which is being promoted in the UK. Public decision making is governed by a rule book that is owned by the Treasury. That rulebook is called the Green Book, and in the Green Book it gives you instructions on, you know, if you build an infrastructure project, if you build a High Speed 2 railway up north, it sort of tells you how to deal with climate change risks in that context. It's a good question whether these instructions are being followed to the letter. They're taken seriously but I'm sure there's room for improvement.

JUDY LAWRENCE: James.

JAMES RENWICK: Yes, thanks again, Judy. We're getting a lot of very interesting questions coming through. I've got a couple in front of me here. You've talked about benefits from adaptation. When you when you say benefits do you mean economic benefits, money, business profits – or avoidance of loss or damage, I guess, to people who are threatened – or are you talking about both?

SAM FANKHAUSER: That's a good point. I think the benefit cost ratios are all about avoided losses, avoided damages, and that's quite a narrow mindset as it were. But in a sense it's good enough. If you get a 40 to 1 benefit cost ratio without having counted all the benefits, you don't need more information to make your decision. But you're absolutely right, there will be benefits that are intangible. Flood protection isn't all about avoided property damage, it's about the psychology, the stress, the upheaval and the human side of it, which is probably much bigger than the physical damage. And then there is probably the business opportunity as well in having climate resilient solutions that will be demanded in the market and can be somebody's... you know, 'my cost is your income,' sort of thing. So there is a business opportunity there to make a country resilient in terms of advisory services, consulting services, early warning systems, and better suited crops. There's a whole adaptation industry that you can imagine and that is starting to to happen.

JAMES RENWICK:. Yeah. Yeah. Thanks. And I've got one other one, it's a short question but it's maybe not so easy to answer. What's the single most important investment that we need to make in the next two years? And when when we say 'we' I suppose I'm thinking here in New Zealand, but you could consider 'we' to be the UK. Is there a single thing you think we should be looking at doing in the next couple of years that will give us the best bang for our buck?

SAM FANKHAUSER: That is a really good question and probably impossible to answer for all the reasons we said before, that adaptation is such a location specific thing and what makes sense in Oxford will not make sense in Scotland, and what makes sense in the UK... might actually make sense in New Zealand, because I think our profiles are not dissimilar – but it won't make sense in Australia, it won't make sense in Pakistan. So you have to be quite site specific. So let me try to find something that's generic. And the two generic things that we could roll out more is adaptation finance, so make sure we have a financial system that can pay for some of those things in a fair and efficient way, and so that's number one. Number two: some of the planning we talked about, that could be rolled out in more jurisdictions as Judy said. Maybe it should happen at the local level as well as the national level. So putting adaptation decisions into more decentralised decision-making – companies, local authorities, in lots of countries, in a lot of contexts, that sort of awareness. So if we do those two, awareness at the local level, planning at the local level, and finance, that will probably move us forward. If I talk long enough I'll find the answer.

JUDY LAWRENCE: [laughs]

SAM RENWICK: I'm sure.

JUDY LAWRENCE: OK, I've got another curly one here, Sam. In New Zealand we're seeing more and more extreme weather events, and that is too little rain and too much rain, and significant damage, landscape collapse, a number of different types of impacts. And the way we deal with it is to respond, put back where we were, and move on. And we're interested to know how the UK risk assessment measures or assesses the economic vulnerability of people, communities and the social vulnerability that is at stake. And that includes food, health, security. Is the local community preparedness part of the measure of the risk?

SAM FANKHAUSER: First of all, it's a good observation about the human tendency to, after the flood, build it back in the same way... which is slightly wrong but I guess the human tendency, you know, the politician who sort of comes up and stands there in the middle of the damage and says, 'I guarantee you I will build it for you exactly the way it was.' That's a good sound bite, but it's probably bad adaptation if you want to build it in a way that is more resilient for the next shock. I mean that bit is absolutely true. How is risk and the vulnerability of communities being measured? It's work in progress. A lot of the indicators that we have are quite aggregated and one of the challenges that we have is to make that more granular, to have vulnerability indicators by geolocation for example. And that's starting to happen with flood maps and so on. You have you have to have vulnerability indicators for individual companies, for example, and big companies tend to be prepared than small companies. We don't know quite as much about that, and what I just said may well be wrong once you start looking. And so that more granularity is still missing, but the safety indicators tend to be – they look at the quality of a plan, they look at evidence of action, of vulnerability reduction adaptation actions, and they it structured by sectors and functions, so if you're interested in what happens to business, what happens to the health service, what happens to infrastructure, rather than, you know, 'are we good at overheating? are we good at flooding? are we good at drought?' So we structure it that way.

JUDY LAWRENCE: Which leads on to another related question, which is whether or not the risk assessment process in the UK address is what we call transition risk.

SAM FANKHAUSER: Yes, by transition risk I assume you mean that the net zero side of the story, so the risk of stranded assets, of having the high carbon risk to to the economy.

JUDY LAWRENCE: Yes, the adjustment to a different system that could deal with risk in a more effective way, yeah.

SAM FANKHAUSER: Right. There's an increased awareness of linking mitigation and adaptation. The overlaps for example on land use are strong, not just between emissions and adaptation but also between adaptation and the natural environment. Peat protection for example is is something that ticks a lot of boxes: it's good adaptation, it's good mitigation because of carbon storage and it's good environmental protection. So we're starting to understand some of those overlaps a bit more. Buildings is the other area where it often happens – energy efficiency versus overheating, you have sort of certain trade-offs there. So that's starting to happen more institutionally. It's starting to happen by probably copying what you're doing. And we have two separate committees, an adaptation one and a mitigation one, and they're starting to talk to each other a little bit more. You've, I gather, gone the whole way and have one committee that does both, which is probably where you want to end up. But at the moment we have two committees that at least start talking to each other.

JUDY LAWRENCE: OK, James, have you got a question?

JAMES RENWICK: I have another question. I think we we might be getting down to the last one or two. But yeah, another question, in relation to what you were talking about before, Sam, about how you triage or prioritise the urgency of actions, you know, what to do next. One of the one of the audience members has asked: how well are these urgency tests influencing adaptation investment decisions? is this thinking taken on board in the community?

SAM FANKHAUSER: Yeah, I think the business community still has a lot of learning to do on on adaptation. You could conceptually apply the same logic, the same logic would apply to business decisions. If as a business I decide where I want to put my distribution centre and my warehouse, I can think in the same urgency score: do I want to protect it, now do I need to do it later, do I have early win wins? And so the logic would carry over. I don't think the business community is quite this... adaptation isn't quite as routine as it has become for the national government/ There's a chapter on business risks and business preparedness in the CCRA and there's a lot of evidence in it, but it is also feels a bit anecdotal, you know, it's an accumulation of anecdotal information and some businesses are better than others. Water companies, insurance companies by the nature of their business are up there, but a lot of others still have a way to go on these things.

JAMES RENWICK: Yeah, I guess just the level of requirement on different businesses are different in different locations. Right, I think I'll squeeze in one more question and then we'll wrap up. It follows on, really. There's been a bit of talk in the chat and someone mentioned how risk assessments can cause communities to want to put their head in the sand, e.g. flood zones or coastal inundation zones on residential maps, and one way to respond to that is to pretend that's not happening, I suppose. What are some ways to combat this, and how do we bring communities along on this journey where we see change in hazards and we need to take a response – how do we get into that engagement in a positive way?

SAM FANKHAUSER: Yeah, it's a good question. I imagine there's an element of gaming. It's not so much head in the sand. Maybe there's a bit of that. But there's also an element of gaming, as in who is going to pay for the flood protection. You know, an inclination, 'if I wait long enough the state will pay for'. The other scenario where there are clear tensions is on managed retreat, as we call it, which is relocation. And there's a reason why it's called management retreat and not relocation, and that's because it's a politically very sensitive, difficult thing to do. How do you decide whom you protect, whom you don't protect? You, now, that's politics. You can have an economic answer to it in terms of the value of the assets but that's only a small part of the answer. It's politics. And how do you compensate the people you move? So those are difficult decisions. And it does need more engagement, it does need more participation. But adaptation lends itself to participatory –

JAMES RENWICK: Yeah.

SAM FANKHAUSER: – just because it's very tangible. People know exactly, in a sense, they feel the risks and they can express their risk appetite. Participation is both needed and probably easier to do than in some areas.

JUDY LAWRENCE: Well, that's probably a good good spot to to conclude, Sam, and to thank you very much for a very wide ranging set of comments and insights – and very helpful for us. Today the national adaptation draft plan was put out for public consultation and it has a very large section on managed retreat where the public are invited to comment on some of the questions we've asked you tonight, about who pays and how do you share the burden and so forth. So it's been a very auspicious day for New Zealand to have you here as well, and we'd like to thank you very much for your time and for sharing your experiences. Kia ora tātou, and hand back to Charli. Thank you.

CHARLI KEELING: Yes, I echo Judy's comments. Thank you so much for joining us, Sam. It's been really fantastic to hear from you and I just want to say thank you as well to Judy and James for leading the session for us so seamlessly. And to all of you that have been listening in and have shared your questions, it's been really great to see some of the conversation in the chat. So enjoy the rest of your day or evening, depending on where you are, and I'm just going to hand over to Bevan to close the session for us with a karakia.

BEVAN HUNTER: Tuia i runga. Tuia i raro. Tuia i roto. Tuia i waho. Tuia i te here tāngata. Ka rongo te po, ka rongo te ao. Haumi e, hui e, taiki e.

For those of us who speak English: let us connect to the heavens above. Let us connect to the earth below. Let us connect within. Let us connect externally. Connect to the essence of humanity. Exploring the unknown. Realising the potential. Uniting as one in this gathering and conscious thought. So thanks again everyone tuning in from all around the world. Good evening or good morning wherever you are. Kia ora tātou.

CHARLI KEELING: Thank you everyone.