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'Managed retreat': is it time to think the unthinkable?

A University of Melbourne academic says it could be time to abandon buildings in some of Australia’s highest-risk regions.

As some areas of NSW face their third flood in two years, Postdoctoral Fellow Antonia Settle says a policy of “managed retreat” must now be considered.

“As a society, should we be setting up individuals and families for ruin by allowing them to build back in areas where they can’t afford insurance?” she asks in a piece on The Conversation website.

Dr Settle accepts that abandoning communities is highly controversial and a sensitive issue.

“In Australia this policy has been mostly discussed as something to consider some time in the future, and mostly for coastal communities, for homes that can’t be saved from rising sea levels and storm surges.

“It’s a sensitive subject because it uproots families, potentially hollows out communities and also affects house prices – an unsettling prospect when economic security is tied to home ownership.

“But managed retreat may also be better than the chaotic consequences of letting the market alone try to work out the risks to individuals and communities.”

She highlights the case of Grand Forks in Canada, a community of 4000 people which was devastated by floods in 2018.

Government money was supplied for flood mitigation, but a quarter of the funds was used to acquire 80 homes in the most flood-prone areas.

However, it wasn’t an easy process.

“Some residents simply didn’t want to sell,” Dr Settle writes. “Adding to the pain was owners being paid the post-flood market value of their homes.

“There were also long delays, with residents stuck in limbo for more than year while authorities finalised transactions.”

But despite these issues, Dr Settle argues managed retreat must be considered as insurers “price in” rising climate risks.

“Insurance premiums are going up. The value of homes in high-risk areas will drop as buyers look elsewhere, particularly in the wake of increasingly frequent disasters.

“A deliberate strategy of managed retreat, though distressing and difficult, can help to minimise the upheaval in housing markets as climate risks become increasingly apparent.”

The Insurance Council of Australia previously told insuranceNEWS.com.au that “all tools” to improve resilience should be discussed.

And Coordinator-General of the National Recovery and Resilience Agency Shane Stone has argued that some inundated homes should not be rebuilt.