Research has shown that the relatively short time frames in which property developers operate gives them little cause to consider climate legal risk.
This is changing, however, according to Mark Baker-Jones, special counsel, environment and planning at DLA Piper
Australia has faced significant political obstacles on the path to developing legal frameworks and policy to deal with climate change impacts despite substantial climate change mitigation related legislation
In the early 2000s in Queensland, there were a number of legal challenges to developments based around the risk of extreme weather events, though not designated actual climate change cases. These found that the court was not a planning authority and therefore it was not the court's responsibility to set design standards for developments susceptible to the impacts of extreme weather events.
A succession of decisions over the last decade, however, has led to what was the most significant climate change adaptation decision yet for coastal property developers and landowners in Queensland.
In July 2013, the Queensland Planning and Environment Court handed down a decision to disallow a large, integrated resort and residential community development at Rainbow Beach on the Cooloola Coast.
One of the issues in the case was the site’s potential susceptibility to storm surge and climate change related sea level rise, which contributed to refusal of the application. Moreover, although obviously not the outcome the developer was hoping for, the decision added some certainty for land use planning decision makers.
Baker-Jones said the decision in Rainbow Shores marked a critical point in planning law and sent an important message to coastal planning decision makers about the increasing relevance to coastal development of sea level rise and climate change related coastal inundation.
“In Queensland, at least, where development is proposed in a coastal hazard area and is potentially susceptible to storm surge inundation, unless otherwise protected, it is unlikely to be approved,” he said.
So what should the property industry learn from this? Baker-Jones said developers and property owners must look at their risk differently.
“This means considering how legal risk is assessed, evaluated and managed in light of the impacts of climate change,” he said. “We call this climate legal risk.”
Climate legal risk is the legal risk that comes about when the impacts of climate change affect a business’s common law or statutory duties. While the concept may be new to the property industry, it has been an issue for local governments for some time.
A report from the Southern Tasmanian Councils Authority noted that a key consideration for councils in the face of climate change is the potential liability they are exposed to through their various statutory roles, powers and functions.
From a developer perspective there are multiple benefits to acknowledging and managing climate legal risk early on.
“They can potentially avoid unanticipated and oppressive holding costs, unnecessary legal and consultant fees, damage to reputation, delays measured in months and sometimes years, or catastrophic project failure,” said Baker-Jones. “Early action can also reduce the risk of subsequent legal claims by affected stakeholders.”
To help businesses deal with change and ensure climate legal risk management is part of their overall strategy, DLA Piper has developed a series of protocols and procedures that corporate decision makers at all levels can follow when making decisions about natural hazard impacts, or decisions that are affected by natural hazards.
The procedures and protocols take into account the direct and indirect impacts of climate change and inform the decision maker as to how their business’ legal liability will be affected by the decision. This, the firm believes, is the most effective way to implement and embed climate change adaptation.
However, the aim of seeking ecological sustainability, in accordance with which climate change is currently taken into account, is likely to give way to the fiscal aim of facilitating economic development. Councils are understandably going to be cautious about refusing developments that can potentially bring jobs and money into the region.
“This raises the question of who will bear liability for planning for the impacts of climate change if it is not stipulated in legislation,” said Baker-Jones.
The increase in climate change litigation over the last decade, in part, has come about because of regulatory failure to deal with climate change impacts.
“A failure to regulate the legal liability associated with climate change will increase uncertainty and expose decision makers to greater risk,” Baker-Jones noted. “If decision makers are powerless to plan for the impacts of climate change, they can only react after the damage has been done.”
Unless legislators confront this central issue, climate change related litigation is likely only to increase.
“Adaptation to the impacts of natural hazards is about increasing resilience to climate change risks. It can only be achieved through risk-informed decision making. It has become apparent from experiences in Australia that unless climate change adaptation decisions take into account legal risk, they are prone to failure,” Baker-Jones said.