The government must be prepared for people demanding compensation as sea level rises make some homes uninsurable, MPs have been told.
Parliamentary Commissioner for the Environment Jan Wright told the Finance and Expenditure Select Committee today that, in the near future, insurers might decide not to cover areas at high-risk of flooding and coastal erosion.
Her report, delivered at the end of last year, identified at least 9000 homes around the country located less than 50cm above spring high tides.
Dr Wright said the government needed to take leadership as dealing with sea level rise was too complex for individual councils.
"When houses become uninsurable, or insurance becomes unaffordable, or there are certain restrictions put into policies, people are going to be very upset.
"And so if there are claims of compensation, how does that break down between local government and central government? I just think it's not too early to start to think about those issues," she said.
People were still going to want compensation if they were not insured, Dr Wright said.
"You just need to look at the red zone in Christchurch where people who were uninsured, the government still needed to pay out some money in the end," she said.
Dr Wright also wanted real estate agents to include the risk of sea level rise or flooding when selling property so owners could be more informed.
She said she had not yet had a response from Finance Minister Bill English about her report.