Final result

Regulation by prescription:

These are mandatory (legal) requirements that must be met under specific laws/legislation. They are the primary instrument of government agencies to achieve agency objectives.

This mechanism and the next, which deals with planning processes, are closely allied because many of the regulatory steps that governments can and do take to influence climate change adaptation either directly or indirectly relate to land-use and development planning. That said, there are regulatory instruments beyond the planning arena relevant to the climate change adaption discussion or which, if created and prescribed, could influence adaptation investment and other action. The case studies on flooding, regional/local government and the finance and primary industry sectors form the basis for the discussion here.

Coercive regulations expressly in relation to climate change adaptation in Australia are rare, the NSW sea level benchmark being an example of the exception. In general, State legislation relating to land-use planning does not contain any requirement to take climate change into account. Some states have legislation specific to climate change or coastal management that can include a non-coercive requirement for decision makers, including planners, to consider climate change, particularly increased flood risk due to sea level rise. For example, the Queensland government administers development planning through the Sustainable Planning Act 2009 (Qld) (SPA). The Act allows for the development of the Queensland Planning

Provisions, which set out a standard structure for planning schemes and drafting instructions. These Provisions include standard zones and overlays and assessment criteria. In terms of flooding, the Provisions include a standard overlay for flood hazard in the ‘development constraints’ category. However, the use of the overlay in planning schemes is optional, even where flood mapping information is available (QFCI 2012: 106-108). Also problematic in many regulations are the extensive exemption provisions that can compromise consistent management of risks such as floods (see Case Study 7).

The non-coercive versus coercive nature of regulations warrants discussion as it brings to surface some of the barriers at play in greater use of the regulatory mechanism. To this end, the regional/local government case study is relevant. For example, Australian state and territory Local Government Acts provide Councils with the capacity to make and enforce by-laws so that they may perform their functions provided such actions are not expressly precluded by other legislation (National Office of Local Government, 2004). Such powers are rarely incorporated into adaptation strategies, such as the City of Melbourne’s Climate Change Adaptation Strategy, which tend to take a broader project or activity based approach to advancing broad community action such as climate change adaptation. This case prevails despite legislative reforms to expand the general competence powers of local governments which open new avenues for giving such strategies more teeth.

These reforms include added capacity for Councils to engage in stronger forms of governance, advocacy, service delivery, planning and community development, and regulation (SMEC 2008).

Of particular relevance to climate change adaptation are the opportunities afforded by general competence reforms to strengthen approaches to development planning and building codes consistent with meeting adaptation goals and targets. The reluctance of local governments to fully capture these opportunities has led to accusations of Councils bending to pro-development group pressure and for pursuing climate change policies largely on political and economic grounds (Jones 2011; Engel 2009). However, some of this reluctance can be attributed to uncertainty and perceived uncertainty over the public liability of councils with regards to land planning under common law. Local councils are reluctant to take action on climate change adaptation due to concerns where:

x Councils do or do not release information relating to climate change impacts x Councils approve or refuse to approve applications for development that may

be susceptible to climate change risks

x Councils make chances to climate change planning instruments to incorporate climate change considerations which affect existing developments

x Councils install or do not install protective structures” (Productivity Commission, 2012 p 134)

The Productivity Commission Report 2012 considers this “uncertainty about the legal liability of local governments is emerging as a barrier to effective climate change adaptation”(Productivity Commission Report, 2012 p 136), despite the protection offered under various state civil liability acts such as The Wrongs Act, 1958, s83 in Victoria (England 2008). The Productivity Commission goes on to say that planning regulations that accommodate climate change adaptation need to facilitate a risk management approach, and incorporate community risk tolerance, rigorous consultation processes and full cost benefit analysis of land use. A key component of the risk management approach is for development approvals to be time-limited or trigger-bound to enable land to be used in the short term until new adaptation approaches are needed (Productivity Commission 2012: 139-143).

One area where coercive regulations can be effective in facilitating appropriate adaptation responses is in the establishment and enforcement of building codes.

While it is preferable to avoid siting development in areas of flood risk, this is not always possible to achieve (QFCI 2012: 223, 245). Improved materials and design can be used to improve flood resilience and can significantly reduce damages and enable rapid clean up and recovery. This is a useful adaptation measure for climate change, as it can mitigate more frequent small flooding as well as extreme flood events. Prescriptive building requirements are generally easier to apply to new development, but they can also be applied to rebuilds, as in the case of North Wagga Wagga (Wagga Wagga City Council 2010).

The concept of coercive regulations is also discussed in the primary industries case study. In the farming sector, extending regulations such as those relating to environmental protection has been contentious, and in any case would be difficult to implement where the negative consequences of certain practices are diffuse and cannot be attributed to a point-source. A common fear expressed by many farmers is the notion that they one day may need a real licence to farm and not just a social licence to farm (Williams and Martin 2011). The imperative for collective action across farms has been a constant dilemma for catchment management, particularly where issues require voluntary and often widespread cooperation between many farm enterprises. Here, while regulations may struggle to compel collective action, they may at least compel individual compliance to not act in ways detrimental to the environment, for example by restricting clearance of native vegetation.

In the finance market case study, opportunities for both non-coercive and coercive are discussed. Specifically in the case of adaptation, non-coercive regulation can stimulate appropriate sector responses by supporting a business case for the replacement and refurbishment of existing and future physical assets/infrastructure to increase resilience. Coercive approaches, however, can be taken by prescribing particular behaviours; although certain taxation-based system can also act to provide a strong incentive for change. Here, new taxes on the finance sector for example can be imposed as a way to raise money for public climate finance. In the case of the latter, legislation could prescribe how investors and financiers must alter their

practices to facilitate adaptation. For example, legislation could stipulate that financiers must lend at preferential rates for infrastructure adaptation projects and household adaptation measures, or that institutional investors are prohibited from financially supporting listed carbon-intense projects or industries.

The conclusions of the coercive versus non-coercive approaches in the finance market case study can be thought about more broadly. In summary, the advantage of coercive regulation is that it minimises the challenge of providing cost/benefit analyses for voluntary action. However, the disadvantage is that, on its own, it is ill-equipped to deal with an emerging and dynamic area like climate finance, and may constrain the scope for unexpected, innovative adaptation by firms or sectors.

Climate finance regulation for adaptation needs flexibility and credibility given the complexity and newness of this area. As such, it needs to be responsive to new information gained through learning by doing, and will require input from experts in the field (including private finance actors) in order to have traction with them.

Moreover, coercive regulation forces private finance actors to become government-directed instruments of adaptation. It is not surprising that, in market economies, they prefer to not be coerced.