Economic Effect of the Christchurch 22 nd February 2011 Earthquake A positive

Before…And After

So what is going to be a big cost (i.e. an economic impact?) BUT ALSO.. A positive economic impact at the same time by providing much needed employment (jobs) by stimulating our economy?

You guessed it..

The Negative Economic Effect The cost of rebuilding Christchurch CBD (NZ$40 billion) The country has to pay for it somehow Insurance premiums go up to help cover the costs The Positive Economic Effect The number of jobs that it will create It will stimulate the economy because money will be being earned and spent It provides an investment opportunity for foreign investors

Just how much $$ is it? The cost to the Government is estimated at $20 billion, but this has increased a few times Hurricane Katrina cost 1% of USA GDP Japan Tsunami cost 4% of Japan GDP Christchurch EQ cost 10% of NZ GDP

TASK: Read part 1 of the hand out and answer the questions in full sentences 1.How is the earthquake more ‘disruptive’ to the economy of NZ than the Japan Earthquake was to the Japanese economy? 2.Give an example/definition of: residential, commercial, and infrastructure 3.Summarise what is being explained in the graph – use specific figures in your description 4.What might rise the cost of the rebuild?

Introducing…Boffa Miskell Won the contract to redesign the CBD sFilg (Animated video of the city rebuild plan) sFilg According to their website… Boffa Miskell is a leading New Zealand environmental planning and design consultancy Over 100,000 rebuild ideas were suggested The company were given 100 days to come up with a ‘Blueprint’ for the new city

Introducing…Boffa Miskell They do: Landscape architecture, planning, urban design, ecology and cultural heritage services (protecting cultural buildings/sites) They have: A focus on sustainability The contract: worth $1 million (excluding the cost of any rebuilding itself) Their blueprint has been described as ‘modern, green, and revolutionary’

An excerpt from The Plan:

Task Read the excerpt from the Rebuild Plan (handouts) about the new sports facilities designed for Christchurch 1.Describe the location of the Cricket Oval in relation to the Christchurch CBD 2.How many people will it hold? 3.What will happen if it hosts international events? 4.Describe the location of the new Metro Sports Facility 5.Explain how this facility will boost the Christchurch economy? (i.e. bring money in). Use specific information from the resource in your answer

In Comparison Comparison to a similar event can help to describe and explain something better 2011 CHRISTCHURCH EQ When: 22 Feb 2011 Where: 5km deep, Port Hills What: 6.3 Magnitude Cost: approx. $30 billion 2010 DARFIELD EQ When: 4 September 2010 Where: 10km deep, Near Darfield What: 7.1 Magnitude Cost: approx. $4 billion

Paragraph Writing Bringing it all together Using the information from the previous slides, and from the handouts in front of you (including Part 2 of the ‘economic effects handout): 1.Write a paragraph about the negative economic effect of the 2011 earthquake, then.. 2.Write a paragraph about the positive economic effect of the 2011 earthquake

Paragraph Writing Paragraph Writing Sentence Starters A major negative economic impact from the Feb 22 nd _________ earthquake is the cost to rebuild. This cost is anticipated at $_____, with $_____ going into residential properties, $______into the commercial sector, and $3 billion to towards rebuilding ___________ This can be compared to the 2010 Darfield earthquake, which cost approx $4 ________. The difference is due to the fact that the 2011 earthquake was centred closer to___________, meaning that ___________________________ This impact affected many different people, such as _____________ because ______________________

So who else does the earthquake affect economically? Every single New Zealander who owns a house Your home insurance premium before the EQ was based on it’s ‘capital value’ Now your insurance is based on the cost of rebuilding your house

So who else does the earthquake affect economically? To be fully covered, you'll need to factor in not only construction and material costs, but architect, planning and consent fees, the cost of demolition and removal of debris/rubbish

So what does this equal? Higher insurance premiums Because labour and building materials have gone up in price over the years, the rebuilding cost is usually more than the CV of the house – It will cost more to rebuild a damaged home than what it’s worth to sell Insurance costs more to cover this An Auckland home recently valued the building at $280,000 yet the replacement cost of the building is estimated at $400,487

Homeowners need to specify how much their house is worth exactly BEFORE THE EQ: Insurance companies tell you how much your home is worth AFTER THE EQ: You calculate yourself how much the house will cost to rebuild, and insure it for that amount This means if you miss something out you won’t get covered for it. Watch the video and answer the questions below: How much will Claudia lose if an earthquake destroyed her home? Her new premium is $2000 per year, what did it used to be? Why has this changed?

Summary - INSURANCE A long term economic effect is the changes to insurance policy at a national scale Insurance is for the cost to REBUILD a home which can increase premiums New policy: homeowners tell insurance company what home will cost to replace Problem: home owners might underestimate the value and be short when paid out to rebuild their home after an earthquake

The EQC New Zealand Earthquake Commission A branch of the Government (a bit like ACC) Provides insurance from natural disasters to Kiwis A bit of your insurance premium goes into their fund and is then paid back out in a flood or earthquake Check out the ‘claims counter’ at

The EQC The EQC How it works: You insure a house and pay a ‘premium’ to the insurance company The insurance company receives the premium and insures you Part of that premium goes to the EQC The EQC uses that money to pay out for disasters across NZ to everyone You get $$ to fix/rebuild you house

EXTENSION: Insurance for insurance Insurance companies (eg State) cover people’s claims