Christchurch rebuild to drive NZ’s economy for years
Christchurch rebuild to drive NZ’s economy for years to come
August 16, 2012
Financial projections show that the rebuild of Canterbury following the earthquakes will drive New Zealand’s economic growth for years to come, University of Canterbury (UC) researcher Erica Seville said today.
Businesses however would continue to contend with uncertainty regarding insurance, future seismicity, demographics changes, and when and where they will rebuild, she said.
Seville will be one of the chairs at the major Australasian natural hazards conference to be attended by 250 specialists at the UC campus next week.
Her overview of the Canterbury earthquakes and their economic and business outcomes represents the first part of a series of reports on the earthquakes and their impacts for the Asia-Pacific Economic Cooperation (Apec). Seville said the impact of the earthquakes on the Christchurch businesses was significant.
``Estimates based on property damage place the combined cost of the Canterbury earthquakes at around $20 billion New Zealand dollars. This amount is the equivalent to approximately 10 per cent of New Zealand’s GDP.
``As a comparison, the estimated cost of the 2011 Japan earthquake and tsunami is around three to four percent of Japan’s annual GDP. While private insurers will bear a significant portion of the costs, the earthquakes have caused a notable deterioration of the Government’s operating deficit over the 2010/2011 year.
``However, the rebuild which is getting underway in 2012 and will drive national investment and growth in the New Zealand economy through 2015. Prior to the September earthquake, the Christchurch CBD was the business and entertainment hub of the South Island,’’ Seville said.
The area within the four avenues which effectively border the central city contained 6000 businesses and over 51,000 workers before the quakes.
As a combined result of the earthquakes, approximately 1300 buildings (more than 60 percent of the commercial buildings in the Christchurch CBD) have been marked for demolition, Seville said.
Due to the extensive damage and demolition in Christchurch, businesses have relocated throughout the Canterbury region and New Zealand. With heightened demand on available buildings, the cost of leases and rentals for commercial accommodation greatly increased.
Business surveys have found that up to 50 percent of businesses following the February earthquake experienced a decrease in revenue, while about 20 percent of the businesses reported an increase in revenue.
``A large portion of Canterbury’s guest accommodation was located within the Christchurch CBD and became either inaccessible or was damaged. International guest nights in January 2012 were down 40 percent when compared with January 2011. Domestic guest nights decreased 15 percent for the same period,’’ she said.
Due to the on-going aftershocks and long-term environmental uncertainty, the earthquakes have prolonged workplace stress. Organisations in several industry sectors across Canterbury identified staff welfare as the biggest challenge facing their organisation following the disaster.
Seville is an adjunct senior fellow at UC’s College of engineering. She co-leads the Resilient Organisations (ResOrgs) research programme which is a public-good research programme, led out of the University of Canterbury. She is also a director of Risk Strategies Research and Consulting.
Her interest in disasters was sparked from her London experience working at JP Morgan Chase during the September 11th terrorist attacks.
``After return to New Zealand, I found most NZ organisations were not so well prepared for major disruption. Given that many of these organisations manage, maintain and operate our critical infrastructure, provide employment for communities, and make up the economy, there is a need for them to be resilient.’’