High stakes in the climate diaspora

Dec 14, 2022
Flooded Streets, Lismore NSW.

Weeks and months after devastating floods hit many regional centres across NSW and Victoria, there emerged a fresh crop of mycelium-like symbols, otherwise known as ‘for sale’ signs. Pitched on lawns in front of stud-exposed and newly renovated houses, or on empty blocks of land. These commercial hoardings have become the grim tell-tale signs of the climate diaspora.

Residents in such locales are on the move – or trying to move. The extent of this diaspora is difficult to gauge as sellers don’t like to advertise their flood or near-flood experiences. But drive around regional centres and you’ll soon get the picture. The fact is that climate relocations are happening everywhere, certainly on a grand scale in poorer countries, but also in richer western nations.

Take for example the shifting cohorts in one of the hottest cities in north America – Phoenix, Arizona (population, 1.6 million), where temperatures have risen to such an extent that on any given spring or summer’s day convoys of vehicles can be seen fleeing for the hills in search of respite. Many Phoenix residents have had enough, moving to or buying up second homes in small but increasingly bloated towns like Flagstaff (population 7000). It’s in such places that ‘climate gentrification’ is taking hold, meaning that the more affluent folks from Phoenix are buying up houses at inflated prices in the hills, doing them up and in the process displacing renters and altering town and city cultures. The net effect is rising prices, higher rents, and the displacement of the less well off. Ultimately, it’s the poor and marginalised who end up in the property bad-lands from which the rich are escaping.

As journalist Oliver Millman observes: “A pattern of climate-driven gentrification is taking hold across the US, as those who are able to retreat from floods, storms, heatwaves and wildfires shift to safer areas, bringing soaring property and rental values with them”. Given that Phoenix will, by 2030, experience temperatures around 37 degrees for over 6 months of the year, we can expect the exodus to gather pace. It’s a common experience across the swelter zones and other sites of extreme weather. But it’s not only heat that is driving property prices south. As noted in a Forbes online article in May this year, “Home prices [in the US] are seeing dramatic shifts due to climate-related impacts: Areas with an increased rate of damaging events are becoming less attractive, and prices are dropping”.

It’s against this backdrop that climate gentrification may well become the norm across the US and many other wealthy nations. It’s already happening in Australia, one of the world’s largest island continents where the average temperature has risen over 1.4 degrees since 1910. A land of extremes, Australia has over recent decades suffered its share of climate-related catastrophes: fires, floods, storms.

As a result, social geographies are being redrawn. The escalating climate crisis has given added impetus to what is a problem with numerous ripple effects. ‘At risk’ areas near rivers, forests and eroding coastlines, or where droughts are prolonged and storms more frequent, will see city and town populations shift and change as insurance premiums skyrocket and land and property values tumble. Rising inflation and interest rates only make a bad situation worse, meaning that many of those desperate to leave hazardous areas may find themselves stuck and increasingly at the mercy of extreme weather.

Depending on which report you read, the outlook for the property market in more extreme weather prone areas ranges from bad to dire. Recent reports by the Reserve Bank of Australia and the Climate Council testify to the high probability of deteriorating house values in at-risk areas, although things may be worse than anticipated given the rapidity of climate change, with secondary impacts on the financial sector and the economy more generally. (In September of this year, the Insurance Council of Australia noted that since 2005, the Commonwealth government had spent $24 billion on disaster relief, and that by 2050 households will outlay over $35 billion every year in direct costs related to harm and damage caused by extreme weather events).

Agricultural and coastal areas are expected to be most impacted by a more extreme climate future. Real estate agents are already factoring in climate change impacts into their assessments of mortgage applications and the Australian Prudential Regulation Authority has encouraged more cautious loan allocations. The fallout from all this is already occurring in Australian regional towns hit by recent floods. House values have, in many cases plummeted, and more and more properties are deemed uninsurable. In a tight housing market, few are able to offload their properties, or they’re taking huge hits on selling prices.

I live in Mullumbimby which was smashed by the floods in late February/early March. I’ve been told that around 170 houses were inundated, some beyond repair. As I write, temporary housing in the form of ‘pods’ are being slowly (very slowly) constructed on the eastern side of town in what, to some, resembles a refugee camp which, arguably, it is. For many others, including friends of mine, they’re still in temporary rental accommodation. Some house owners are fleecing insurance companies with inflated rents, thus ensuring even higher premiums all round. Shortages of affordable accommodation have left many flood victims stranded, having to scratch around for rental accommodation, often miles away from where they live. Others live in caravans or secondary dwellings in backyard studios and garages. Some have taken to living in vans or couch surfing. The debate over holiday lets and Airbnbs rages on. (Periodically, some flood victims have been required to move out of their accommodation to make way for higher paying holiday renters).

Shrouding all this, is growing anxiety over what the future may hold. Ask most Mullum residents what this might look like and they’ll rehearse a variety of scenarios, ranging from doomsday to the cataclysmic. Every rain event is greeted with highhearted anxiety. One local councillor remarked at a meeting I attended that “Mullumbimby won’t exist in its current form in a hundred years”, adding that “we need to start thinking now about relocating houses and businesses to higher ground”. He’s right, but his timing may be out: climate chaos is happening much faster than most scientific models have predicted. More regular extreme weather systems are forecast. Which means that many of the properties that avoided inundation this time round, might not be so lucky when the next monster weather event strikes.

The regions most at risk of riverine flooding and other destructive weather events are in Queensland, Victoria and NSW. Mullumbimby in the northern NSW region of Northern Rivers faces a concerning future, with more catastrophic rain events predicted. This is bound to further soften the area’s property market, as climate conscious buyers take heed of increasingly dire warnings. As senior property economist Elanor Creagh puts it: “Climate risk is an investment risk… It is likely that in the years ahead, property seekers will become not only more discerning about design standards and sustainable features but also the physical risks borne by location and insurability, increasingly applying climate filters to decisions”. It’s something that home owners are keenly aware of – with all the trepidation and concern that this arouses

Earlier this year the federal government, along with the NSW state government, announced a fund of $800 million for buyouts (at pre-flood prices), house raising (up to $100,000) and retrofitting (up to $50,000). About $100 million has also been allocated for the purchase of flood-free land so that flood victims can be relocated. If the sums here sound modest, that’s because they are. For starters, it’s estimated that well over 1,300 homes in the Northern Rivers were badly damaged during the floods, while 5,000 homes suffered lesser damage. Given the massive scale of the floods, it’s hard not to view these figures with some scepticism. I can’t readily do the maths, but it seems to me that land purchases – remember that land values in many parts of the Northern Rivers remain high – makes the $100 million allocated by the feds and NSW government appear very modest. Decent quarter acre blocks in many parts of the region can fetch up to $800,000. Understandably, priority is being given to flood victims, especially those in more at-risk areas. But this raises many questions: what, for instance, about those people who never got water through their houses but who live in flood-prone areas? Are we simply waiting until the next flood strikes before acting? And what too of those who live in brick-built houses on slabs who can’t raise their dwellings? Sure, you can retrofit these houses, but what does the prospect of regular flooding do to peoples’ psyches? Additionally, raised houses next to houses on slabs means that the latter’s values are likely to plummet even further. And let’s not forget those people in the hills around places like Mullumbimby whose lives were devastated by landslides? The for-sale signs are bristling, but nobody’s buying.

Insurance companies have had their coffers significantly depleted by floods and other climactic events. In November, the Insurance Council of Australia estimated that flood and storm damage has cost the insurance industry around $12 billion. The figure for NSW alone stands at a whopping $4 billion. These costs are likely to keep rising. Set against such figures, the amounts offered by governments to NSW communities to rebuild or relocate seem paltry indeed.

The more cynical part of me wonders whether the wealthier in our midst would be prepared to live in retrofitted houses or are they likely, like those fleeing Phoenix, primed to take a hit and get the hell out of a flood zone? The fact is, there are communities across Australia, especially with rivers running through them, that will have to shift, and soon, as more extreme weather events occur. Longer term solutions are needed, and yes, they will be hugely expensive.

Perhaps we need a national harm and damage fund whereby the biggest polluters cough up to support those who have suffered the most direct consequences of greenhouse gas emissions.

But you can bet your bottom dollar that the CEOs of these companies won’t be living on flood plains.

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