One approach – and an approach we valorise in liberal societies – is to give reasons to act. That is, we use our powers of persuasion: we appeal to reasons why that person, or organisation, should reduce their risks.

We often appeal to another’s interests. For example, we show that the economic costs of climate adaptation are much less than the losses and damages we’re likely to suffer without them. For instance, the UK Climate Risk Independent Assessment (CCRA3) estimated that every £1 invested in adaptation could result in £2 to £10 in net economic benefits. With benefit-cost ratios this good, money should be leaping out of pockets…

And yet this isn’t what happens. There are many explanations for why economic rationality is not a reliable predictor of human behaviour. In climate adaptation, one critical issue is the distribution of costs and benefits – both across society and across time. Our circumstances as human beings are very particular and highly diverse. The burdens of climate adaptation weigh upon us very differently. Consequently, in a world of great inequality, many of us have reasons to believe that others should bear the costs of climate adaptation. In this spirit, I cannot escape the refrain: ‘What did future generations ever do for me?’ But we can’t all hold this view, or no one will pay for anything.

This is why the question of ‘who pays?’ is fundamental to climate adaptation. It is a question that diverts attention from interests to values, especially to another’s sense of fairness about where costs ought to lie.

In 2024, New Zealand Parliament’s Finance and Expenditure Committee was tasked with recommending objectives and principles for a policy framework for climate adaptation. I served as the independent specialist adviser and I proposed a broad view of duties to pay, lest the burden fall unfairly upon a narrow set of stakeholders (see my feedback here and accompanying slides here). In its final report, the select committee concluded:

We agree with our independent specialist adviser that allocating the full costs of adapting to climate change onto one sector of society is highly undesirable. We believe that investment in climate adaptation should be paid for by applying a combination of the following principles:

• Beneficiary pays: Those who directly benefit from investment in climate adaptation should contribute to the costs of adaptation.
• Exacerbator pays: Those who exacerbate risks and contribute to maladaptation should contribute to the costs of adaptation.
• Public pays: The costs of adaptation should be spread generally across society (either regionally or nationally).
• Ability-to-pay: Those with greater ability to contribute to the costs of adaptation should contribute more.

My rationale was this: Climate adaptation is a matter of reasonable disagreement in a diverse modern society. 

This was a democratic way of thinking about the problem, illustrated by John Rawls’s idea of public reason. 

In his words, ‘a basic feature of democracy is the fact of reasonable pluralism’. People hold different worldviews which conflict with each other on cultural, religious, philosophical and moral grounds. Far from being a failure of democracy, he treats this disagreement as ‘the normal result of its culture of free institutions.’

Simply put, if you give people the opportunity to live by their unique commitments, they will. In a diverse society, therefore, it is undemocratic to strive for unanimity, to bring everyone to heel around one specific worldview. In Rawls’s words, ‘a relentless struggle to win the world for the whole truth’ is incompatible with public reason. Instead, our public justifications for policy should proceed in a manner that respects other people’s values, doctrines and commitments; and that holds space for pluralism – even for policy problems where one viewpoint must eventually prevail.

Select committees are a microcosm of the political diversity that exists in Aotearoa New Zealand. The Finance and Expenditure Committee is comprised of representatives from all the parties in Parliament, each of which brings its own unique political culture, coloured by the values and beliefs that energises its constituencies. This is the political context within which any policy framework – including the proposed adaptation framework – must survive.

To be politically durable across successive governments, the adaptation framework will need to be – and be seen to be – politically reasonable. It needs to be sensitive to the fact that, in regard to climate adaptation, New Zealanders vary significantly in their risk tolerance, their material vulnerabilities, their orientations to the future, and their attachments to existing arrangements. Decisions over who should pay, and how, will invariably be contested. Therefore, the objective of a policy framework should not be to circumvent or displace disagreement, rather to reduce its breadth, to shed light on what is politically reasonable. Even if we can't agree on the common good, we can at least rule out common evils, one of which is being forced to transition to a future that one cannot countenance.

To reach agreement in the select committee was no small thing. It involved members accepting the legitimacy of allocative principles which, taken singularly, they were unlikely to endorse. However, members were also able to appreciate that an absolute commitment to any single principle – even a principle that was ideologically appealing – was likely to produce a biased and politically controversial outcome. I used narrative scenario analysis to show that a short-sighted focus on, say, the beneficiary-pays principle would produce an unstable future state.

This is not to single out the beneficiary pays approach for criticism, because any single principle in extremis is prone to produce monstrous or incoherent futures. A pure public-pays approach would maximize the moral hazards of government intervention, discouraging people from reducing risks themselves and leaving the causes of climate vulnerability untouched. A pure exacerbator-pays approach would sharply increase the cost of living, imposing higher costs of production onto business which would be shifted onto consumers. A pure ability-to-pay approach would likely undermine itself, losing revenue as the wealthy turned to tax evasion and emigration (see these scenarios here).

It is only when allocative principles are in combination with others – a balance among plural values – that more plausible and acceptable futures emerge.

These scenarios are not free from contestation, nor immune to criticism, but at least belong recognizably within the back-and-forth of democratic politics.

Ultimately, the Finance and Expenditure Committee did not have the final word on duties to pay. This question resurfaced with the Independent Reference Group (IRG), which was established for the purpose of ‘testing ideas and providing advice regarding policy development for the adaptation framework’. As distinct from the democratic process of the select committee, the IRG was a technocratic process (and I use the t-word descriptively, not pejoratively), comprised of experts from sectors directly impacted by climate change, including banking, insurance, Treaty partners and local government. Its recommendations were published in July 2025 (see here).

The report is peculiar. It is very short, only eleven pages of content. This means that a lot is left unsaid. Highly consequential proposals are made without much analysis or public justification. Moreover, the recommendations are disconnected from earlier work on climate adaptation, failing to refer at all to the National Adaptation Plan and Expert Working Group on Managed Retreat, nor even positioning itself in relation to the select committee inquiry. The IRG attracted some caustic reactions, yet I can't help but think that the above deficiencies are symptomatic of poor process. 

In regard to substance, I will focus only on the IRG’s recommendation that, over the next twenty years, New Zealand should transition to a beneficiary-pays approach to increased investment in risk reduction.

Among the criticisms, it was said the IRG's proposal would leave New Zealanders on their own after 2045, which I don’t think is fair. The IRG makes two substantial caveats to its endorsement of beneficiary-pays. Firstly, it acknowledges that the ability-to-pay principle should play a subsidiary role to ‘overcome challenges in particularly vulnerable areas’. Secondly, the IRG argues that we should take ‘the broadest interpretation’ of a beneficiary-pays approach. In particular, central government should be regarded as a beneficiary of climate adaptation, with a duty to invest in risk mitigation to ‘protect Crown assets, or where broader national benefits can be realised through the investment.’ In sum, the IRG recommends a strong version of beneficiary-pays, but not an extreme version (like the scenario included above).

The scope of ‘broader national benefits’ is left indeterminate. But if we accept the IRG’s invitation to interpret this broadly, the responsibilities of the state might still be far-reaching. By investing in climate adaptation, the state stands to benefit economically by avoiding:

• lost economic productivity from climate-related disruption, which eventually manifests as lost tax revenue;
• costs and risks associated with disaster response and recovery to climate-related hazards, which increases Crown liability as unforeseen expenditure;
• increased costs from the provision of social services for citizens and permanent residents affected by climate-related impacts, such as health and mental wellbeing services, jobseeker support, or vocational training;
• loss of social cohesion and community trust as a consequence of ongoing exposure to climate-related risks, with flow-on effects for trust in government and other institutions; and
• reduced access to affordable insurance that enables the private management of risk, which in turn increases the pressure on government to provide public insurance or other forms of risk transfer.

If government agencies can quantify these forward liabilities, and if the benefit-cost ratios are just so, then there is not only a rationale for public investment in climate adaptation beyond 2045, but a strong rationale to do much more now.

Nevertheless, the IRG's approach gives me two causes for concern. Firstly, I worry that the New Zealand Government lacks the analytical capabilities to evaluate the benefits and long-run opportunities of climate adaptation, and also the risks and costs of under-reacting. Programmatic efforts to apply a more holistic, long-term approach to policy evaluation – whether the National Party’s social investment approach or the Labour Party’s wellbeing approach – have been politicised and undermined. Insofar as we might appeal to the economic interests of the state, we arguably lack the tools to do so effectively. Addressing this analytical deficit should be included in the IRG's call to improve the quality and transparency of information about climate-related risks.

Secondly, I worry that the IRG takes a too narrow view of the state and its proper roles (a subject on which many reasonable people disagree). By focusing on the state only as beneficiary, the implication is a bargain-hunter state whose primary motivation is to reduce long-run spending. This fits with the current mood of austerity politics, but downplays other reasons for the state to be involved in climate adaptation. 

The first reason, which the IRG acknowledges, is to address the distributional impacts of climate change. If inequalities and vulnerabilities are being intensified by climate-related impacts, the state may have duties to address this, not necessarily to impose equal outcomes (egalitarianism), but perhaps to support the least well-off (prioritarianism), or to ensure that everyone has just enough to get along (sufficientarianism).

The second reason is social solidarity, the idea that members of a community have a mutual duty of assistance when disaster strikes. On this view, there is value in spreading the losses of climate change, because it contributes to social cohesion. This is an inherent good, not something to be pursued only for its economic upshot. Social solidarity is vital to build a sense of community, nationhood and common fate.

The third reason is to overcome collective action problems. Sometimes, a pattern of individualized, uncoordinated responses to a climate-related hazard will be far less efficient and effective than a centralized, coordinated response. A seawall, for instance, might be preferable to leaving homeowners to their own devices, such as dumping tyres and concrete blocks on the beach. This won't always be the case: for instance, if the challenge is ecosystem-based adaptation across large catchments that involve multiple landowners, I'd prefer a decentralized approach. But the existence of a counterexample does not justify a curtailment of the state into perpetuity, even for use-cases where its coordinating power would be welcome and useful.

The fourth reason is that the modern state, at its core, is an emergency machine. When the security of its citizens is at stake, the state has an inbuilt logic to leap into action, to deploy its emergency powers to do ‘whatever it takes’ to defend the national interest. This was clearly perceived by Thomas Hobbes (1588–1679) in his famous book Leviathan. He envisaged the state as a solution to disorder and conflict, which deploys its superhuman powers to defend the basic needs and rights of its citizens. In this context, it is rational for people to give authority to the state. This is what Judith Shklar described as ‘the liberalism of fear’, a politics that orientates itself by its shared aversion to the pain and cruelty that most of us want to avoid.

This is why many people fight climate change: because it threatens to produce lives that even Hobbes would recognize as ‘poor, nasty, brutish and short’. In such circumstances, the popular impulse for state protection could become irresistible. Consequently, transition plans like the IRG’s become very hard to sustain.

globaia.org/habitability

Indeed, the idea that the people of 2045 will accept edicts from the people of 2025 is rather wishful. Twenty years from now, New Zealanders will be living at a little under or over 2°C of warming. In the face of extreme weather events with greater intensity and frequency, in addition to changes in global supply chains and human mobility, it is not implausible that future New Zealanders will direct the state to provide the types of support that only they know they need, in light of the actual challenges they face. Will they really want the bargain-hunter state, or rather something closer to the wartime state that treats climate adaptation as economic stimulation in a weather-battered economy? These are choices that will be made in 2045 – and they will be made with little regard for the moralizing of 2025.

This should not be interpreted as an endorsement of heavy-handed statism, because in emergency circumstances the hand of the state is likely to be clumsy as well as heavy. Nor should this be interpreted as a refutation of the beneficiary-pays approach, because we need more businesses and homeowners to treat climate-related risks seriously, to manifest a decentralized response to the localized effects of global heating. 

Rather, this is a reminder that plans don't always survive contact with reality. In particular, a strategy to phase out state support for climate adaptation is unlikely to succeed if it hinders the state’s ability to protect its citizens, because this undercuts the state's legitimacy to exercise power. Arguably, if we want to reduce the future role of the state, then we are better to deprive it of future emergencies. On this view, an anticipatory liberalism might do as much as possible to frontload climate preparedness, in order to head-off the rise of the Climate Leviathan.

This will involve more than just identifying who should pay. We will also need to get clear on how to make them pay. This is where persuasion must be matched with compulsion. 

This is most obvious in the exacerbator-pays approach (which, incidentally, the IRG does not discuss at all). For example, infringement offences under the Resource Management Act 1991 are an instrument for imposing costs upon maladaptive activities. A number of forestry companies have been subject to such fines in recent years for mismanagement of forestry debris, because the mobilization of debris flows exacerbates the risks from heavy rain events. The current government has recently significantly raised the maximum penalties for businesses from $600,000 to $10 million, and for individuals from $300,000 to $1 million. This empowers society to do more than just appeal to principle, and to make others pay.

Compulsion is also critical to making beneficiaries pay. We live in hope that asset owners will act in their enlightened self-interest and invest willingly into climate risk reduction. In reality, however, society has learned to mandate some such investments, because we know that many asset owners are disposed to favour the uncertain risks of hazards over the certain costs of risk avoidance.

Consider smoke alarms, an investment that, like climate adaptation, is grounded in an economic logic of avoided loss. In New Zealand, new or extensively renovated homes, as well as rental properties, must install a smoke alarm in every bedroom, living space, hallway, and on each level. Developers must meet requirements under the NZ Building Code to obtain consent. Landlords and tenants are subject to financial penalties for failing to install and maintain smoke alarms. In these ways, the beneficiaries of reduced fire risk are made to pay. The source of funding is private, but the state plays a role through its regulatory functions and its powers of enforcement.

Compulsion can and must come from outside government too. Investors and lenders can diminish access to finance for companies that aren’t managing material risks in their value chains, including climate- and nature-related risks. Shoppers can exercise their consumer sovereignty by avoiding products that degrade resilience in the supply chain. Communities can withdraw the social licence to operate for companies that exacerbate local risks. (I expand on this theme here.) As Elinor Ostrom argued, we need climate leadership to be a whole-of-society endeavour, operationalised by mutual pressure and cajoling, not monopolised only by nation-states.

Yet compulsion, as unavoidable as it is, cannot run ahead of persuasion. Compulsion alone (especially in a liberal democratic state) is not politically durable. Ideally, compulsion will be supported by reasons that most – if not all – of us can accept. Which brings us back to where we began: the idea of public reason. Climate adaptation policy should proceed on grounds that are politically reasonable. It might feel disagreeable to be made to pay for climate adaptation – to pay a targeted rate for flood protection, for instance – but most of us can accept the reasons for doing so. This does not alleviate the fact of compulsion, but at least makes it freely accepted, a legitimate exercise of power.

In an ideal world, New Zealand's adaptation framework might address this interplay of persuasion and compulsion by asking not only who pays, but how to make them pay. To answer these questions convincingly, policy analysts will need to go deeper than they have before (myself included). Rather than apply high-level principles to climate adaptation as if it were a single allocative problem, we need to treat climate adaptation as a portfolio of distinct problems. The question of 'who pays?' is likely to yield quite different answers depending on whether our focus is managed retreat from coastal communities, or risk reductions for flood-exposed homes, or relocation of public infrastructure, or transitions away from maladaptive land-use practices. We should be prepared to accept that each of these activities deserves its own unique balance of duties to pay, influenced by history and local circumstance in addition to normative reasoning.

Similarly, the question of 'who makes them pay?' needs to take account of power, where it actually lies, and the prospects for voluntary and mandatory compulsion. This, in turn, helps to inform the strategic choice of economic instruments – from voluntary market transactions to targeted rates, from self-insurance to post-disaster assistance, from bank loans to sovereign green bonds. Without drawing the connections between the who, why and how of adaptation funding and financing, the appeal to allocative principles might amount to nothing more than moral petitioning, mere talk of ends without means.

To do all this, the adaptation framework will need to remain flexible – or, dare I say, adaptive. This is a virtue of democratic process, but I accept that others will see this as a vice. Some will be dissatisfied with a policy framework that leaves such matters unsettled, eternally up for debate. At least a technocratic process can be relied upon (usually) to generate a specific prescription. However, if the prescription is unworkable, this might be worse than no prescription at all; it might lock people into false expectations and crowd out opportunities for place-based problem solving.

Let us hope that the adaptation framework has recommendations that future generations have reason to accept. If not, it will rely on force to persevere.

Dr David Hall is Policy Director at Toha Network, which is building digital infrastructure for nature and climate action. He has a DPhil in Politics from the University of Oxford and previous roles include Senior Lecturer in Climate Action at AUT University, Policy Advisor for Rewiring Aotearoa, Forestry Ministerial Advisory Group, Contributing Author to IPCC AR6 WG2, and Founding Director of the Climate Innovation Lab for sustainable finance.

Originally published in The Transition(s) Lab.