The Waikato weather bomb: Understanding the impact

Extreme weather and climate events are an important natural hazard that cause damage and inflict costs on local communities. To plan appropriate response measures that minimise damage and are cost-effective, it is important to both understand the economic effects of extreme events and to understand the way in which communities understand, perceive and prepare for such risks. Such information becomes increasingly relevant in the context of climate change, which is expected to increase the frequency and severity of heavy rainfall and consequent flooding in New Zealand.

The long-term management of risk is particularly important in the context of climate change, which is expected to change the intensity and frequency of some extreme weather events such as heavy rainfall leading to flooding. This report provides information on the economic costs and community understanding and responses to flood risk for the Coromandel area following the 2002 "weather bomb" that caused major flooding to a number of townships in the area.

The 21 June 2002 Weather Bomb developed from a mid-latitude depression that rapidly deepened as it approached the northern tip of New Zealand. Severe Weather Warnings for the storm were issued by MetService on 19 and 20 June forecasting heavy rain and strong wind for the region. Anticipating the intensity of the storm, MetService issued media releases that deliberately used the term "weather bomb" to attempt to maximise public attention to the potential severity of the weather. Heavy rain and strong winds were widespread over much of the northern parts of New Zealand, with slips and flooding reported in Northland, Coromandel and the Waikato. An intense band of rain occurred at the rear of the main rain area, causing torrential rain to fall after the catchments were already saturated by earlier rainfall. Significant flooding was recorded in Waikawau, Waiomu, Tapu, Te Puru, Tararu, Te Aroha, Tirau and Putaruru, but also occurred in other areas across the region (unrecorded). Return period analysis by Environment Waikato suggests that the storm was a 1-in-100 year event.

For the purposes of this study the Coromandel 'high-impact' area is the section of western Coromandel coastline from immediately north of Thames to Coromandel township (inclusive). As well as Coromandel township, this 'high-impact' area includes the communities of Waiomu, Tapu, Te Puru and Tararu (See Fig. 1). These are the only areas where 'high impact' properties could be analysed because they are the only places for which Civil Defence has records of impact data and maps. The 'low-impact' Coromandel takes in the remaining Thames Coromandel District. Many of the district's residents have experienced flooding at some time in the past. The 'South Waikato' sample is of randomly selected homes in Tirau and Putaruru.

This study:

1. evaluates the direct and indirect costs of the 'Weather Bomb' event,
2. gives a macroeconomic view of the event in terms of the region-wide economic effects, and
3. provides an understanding of the impact on the community affected in terms of preparedness and the perception of risk.

Two general surveys were used to collect data from households and businesses within the affected areas. The questionnaires were developed to collect quantitative data for the three main areas of analysis listed above. Particular attention was paid to content and design to enhance the return rate. Both surveys also include full demographic questions compatible with national census data. Questionnaires were hand-delivered to households and businesses that were known to have been directly affected by the flooding. The remaining sample of households and local businesses were mailed questionnaires. The surveys were hand-delivered and posted during September 2003. The total domestic survey return rate was 33.1 %, and the total sample of completed domestic questionnaires was 439. The business survey was conducted on a much smaller scale than the domestic survey and the return rate was 28.5 % (a sample of 69 businesses).

Approximately 35 % of affected properties (about 300 within the 'high impact' settlements) had flooded land, 37 % had flooding of the basement and/or outbuildings, and 28 % suffered house flooding above the floors of the living areas. The exact nature of the flooding and losses (other than value) within homes was not centrally recorded and not covered within the scope of the questionnaire.

The depth to which a house is flooded affects the number and types of items that are damaged. Household mean losses are disproportionately low when mean flooding in that house is 5 cm or less deep. Average losses rise roughly proportionately to mean flooding depth for depths from 5 to 50 cm. Household mean losses are disproportionately high when mean flooding in that house is more than 50 cm deep. Vehicle mean losses jump upward on properties where the mean household flooding was above 5 cm deep, and then remain relatively constant.

The largest combined overall losses in the Weather Bomb event were overwhelmingly for flooding in the 10-50 cm depth bracket. If mean household flooding depths > 50 cm had been more common, the losses could have been an order of magnitude greater (other than for vehicle losses, which should have remained at similar levels). Conversely, if mean flooding had rarely exceeded 5 cm depth, losses would have been an order of magnitude less (including vehicle losses).

Analyses of the economic impacts of New Zealand natural hazard events have been relatively sparse compared to analyses undertaken overseas. Impacts have been assessed here under the categories of direct and indirect impacts. Due to difficulties in determining intangible economic impacts these have not been modelled for the Weather Bomb event. The most notable outcome of this analysis is that the economic impacts, although enormous for some individuals, were relatively minor for the Waikato community as a whole, and much less than might have been anticipated, given the severity of the weather event.

Direct costs were limited almost entirely to property damage. The estimated insurance claims made as a result of the event were $21.5 million, with around $8 million related to the Thames-Coromandel area. Data from the survey suggests that this was split 0.84/0.16 between households and businesses ($6.7 and $1.3 million respectively). Total uninsured losses are estimated at $2.1 million, based on the survey data. In addition, TCDC estimated that agency response costs were $3.1 million, with much of that attributed to labour costs. The total direct costs are thus estimated to have been $13.2 million for the TCDC area. The true loss to the area likely sits somewhere between 0.1 - 0.6 % of the area's asset base (estimated to be around $1750 million). This relatively crude estimate provides an indication of the relative size of the event.

In terms of indirect losses the business survey results suggest that the net impact of the weather bomb on business sales was positive (around 30 % more revenue from increased business than the value of lost business). Note that this does not represent a true positive net impact to businesses in the Thames-Coromandel area, because many negative impacts, particularly damage to property (a direct loss, quantified above), are missing. The cost borne by insured TCDC households and businesses via insurance excess payments is estimated to total around $0.45 million. Additional losses as a result of losses of no-claims bonuses, premium increases and, in some cases, cancellation of policies, also occurred but are extremely difficult to quantify. These losses are also only partly related to the Weather Bomb event alone. Adopting a longitudinal framework involving assessment of the incremental impact of successive hazard events is likely to provide a fairer picture of the longer-term cost of repeated events.

A regional version of NZIER's computable general equilibrium (CGE) model was used to estimate flow-on effects to those dependent on parties who were directly affected. These effects were found to be negligible. Industry output, factor demand and household welfare were found to be affected by less than 1 %, probably close to the margin of error.

The flow-on effects of the weather bomb are likely to have been minimal because: (a) the duration of the event was relatively short, (b) the severity of the weather bomb in terms of its direct economic costs were also relatively mild, and (c) Thames-Coromandel is in effect a small, borderless economy (which means, for instance, that the impact of business closures which arose as a result of the weather bomb is mitigated by the easy accessibility of substitute goods and services from the surrounding Waikato economy).

A key issue resulting from this study is the need to explore in more detail the links between weather warnings and appropriate responses of individuals in high risk areas. Warning the public about flood events is the responsibility of the regional and local councils, based on Warnings from MetService and other information. There is considerable research pointing to the value of simple alert schemes to help individuals, organisations and communities respond to developing crises. The need for improved tools for responding to floods in New Zealand has been identified in recent research on the Waikanae floodplain and suggested by this study. Given the short flood response time in the catchments and the lack of flood warnings systems it is still not clear how a system would work, but it is a problem worth exploring.

The community survey measured a range of attitudes, beliefs and understandings of flood risk, the Weather Bomb event and the community in general. From previous social research we are aware that people's understanding of risk and response to risk are determined not only by scientific information or direct physical consequences, but also by the interaction of psychological, social, cultural, institutional and political processes. Changing people's perceptions of risk alone will not necessarily bring about changes in their behaviour or increased action to address a particular risk. People may not be motivated to prepare if they do not perceive or accept their risk status or perceive hazards as salient. Irrespective of the level of perceived threat, people will be reluctant to act if they perceive the effects of hazards as being difficult or impossible to mitigate through personal action (low outcome expectancy). Measures designed to reduce potential adverse impacts may not be implemented if people do not believe they are competent to carry out the appropriate activities (low self efficacy). People may lack the resources (e.g., time, skill, need for cooperative actions etc.) required to implement reduction measures (low response efficacy), or transfer responsibility for their safety to others (low perceived responsibility). They may not trust information sources, or may not act because of uncertainty regarding the likely timing of a hazard occurrence.

The community consultation over future risk management options, undertaken over the past six months (since August 2003), is continuing to address a range of issues relating to acceptable risk, appropriate mitigation options and the community's willingness to pay. Follow-up research is needed to see how the perceptions documented in this study influence the process. This work is currently underway.