New research commissioned by IAG New Zealand has revealed that natural hazards have cost the country a staggering $64 billion since 2010 – and the price tag is only climbing.

The study showed central government has spent at least $19b on disaster response and recovery, with a further $14b funnelled through public insurance schemes.

When private insurer contributions are added, the cost balloons to $64b – an inflation-adjusted average of $5.5b per year, with the Government footing around half.

IAG New Zealand Chief Executive Amanda Whiting said the findings underline the urgent need to shift focus from reaction to prevention.

“This research highlights again the significant financial cost that natural hazards have on New Zealanders, and the urgent need to reduce their impacts,” Whiting said. “These costs represent a drag on our economy and work against the growth and financial strength required to support the needs and aspirations of New Zealanders.”

A deep dive into government expenditure revealed that 97% of central government spending went toward response and recovery – largely for the Canterbury earthquakes, Kaikōura earthquake, and the 2023 North Island weather disasters. Just 3% was invested in risk reduction and resilience.

And that’s only part of the picture. The research excluded local government costs – such as the $8.2 billion Christchurch City Council is projected to spend on post-earthquake recovery – and didn’t touch on the wider social and economic fallout.

Whiting said the lack of comprehensive cost accounting is part of the problem.

“It is clear from this research that New Zealand has an incomplete understanding of the costs of its natural hazards,” she said. “Fixing this will enable better decisions to be made on when, where and how to reduce risk.”

International evidence shows every dollar spent on risk reduction can save four in recovery. Whiting said the findings should be a wake-up call.

“Reducing natural hazard risk is as much about improving the decisions we make as the money we spend to improve the safety and resilience of our homes, businesses and infrastructure,” she said. “This is becoming even more important as natural hazard events increase in frequency and severity.”