The Parliamentary Commissioner for the Environment is urging the government and the private sector to figure out how to avoid home owners' equity plummeting due to climate change.
The commissioner, Dr Jan Wright, believes the country is facing about 30cm of sea level rise over the next 50 years. On top of that, storm surges are likely, making buildings that lie within 50cm of high tide vulnerable.
There are 13,000 buildings in New Zealand that fit that criteria, including 8800 homes. The replacement cost of all of the buildings is estimated to be $3 billion, and that doesn't include the cost for infrastructure, such as roads.
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The enormity of the issue needed to be thought about in monetary terms, as well as the impact it would have on the environment, she said.
A working group consisting of local and central government and the private sector, such as insurance and banking, was needed, she said.
A plan was crucial so problems like negative equity could be avoided.
"We do insurance in an annual way, every year you pay for your insurance again. If insurance companies decide to stop or the premiums become unaffordable ... then you could be looking at a case where the mortgage, which of course is a 30-year one not an annual year one, is more valuable then the value of the house, and that's a negative equity issue."
Central government needed to sort out its guidance and direction on the matter down to local level, she said.
Insurance Council chief executive Tim Grafton agreed that the problem needed to start being thought about now.
While the country has decades to address the risks from climate change, there were properties around the country where coastal erosion was a serious factor.
Where properties are frequently inundated or damaged due to coastal erosion or flooding, then they will likely face higher excesses and higher premiums.
"If they are continuing to receive insurance cover, should they change insurer they may find it difficult to find another insurer who'd be willing to go on risk."
The council was keen to be involved in a working group and the insurance industry had been one of the first sectors to focus on the risks of climate change, he said.
But Finance Minister Bill English said to set up a specific group the government would need to be confident that there were significant future costs from climate change.
"There's any number of pressures now or over the next few years on government spending and we don't set up working groups to deal with all of them but happy to look at whatever the commissioner's got to say about it. We can always speculate on future costs of almost anything."
However, Climate Change Minister Paula Bennett does not think the problem is so speculative.
She believed Dr Wright had a point. Mrs Bennett said she wondered whether her great-grandchildren would be able to live in some coastal properties. If nothing was done to tackle climate change problems such as sea level rise, then it was unlikely they would be able to.
New Zealand needed a longer-term, carefully developed plan on the financial implications from rising seas, "where we have something that's sustainable and long-term and it very much addresses those sorts of things like what are the costs, where is the money going to come from?"
Dr Wright said, while there was still time to deal with the impending problem, the process on working out how the public and private sector collaborated to deal with it needed to start now.