WELLINGTON LIFELINES PROJECT - Protecting Wellington's Economy Through Accelerated Infrastructure Investment Programme Business Case - WREMO
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WELLINGTON LIFELINES PROJECT
WELLINGTON LIFELINES
Protecting Wellington's Economy
REGIONAL Through Accelerated Infrastructure
RESILIENCE Investment Programme Business Case
PROJECT Revision 3 – Date 04 October 2019
Camera F ault scarp of the Wellington Fault at Long Gully
(Source: Lloyd Homer, GNS Science)
ii / Wellington Lifelines – Regional Resilience Project
Foreword
The probability of a major earthquake the nation $6 billion in the aftermath sequenced and inter-related map of what is
hitting our capital city of Wellington is of a magnitude 7.5 earthquake on the required to substantially enhance resilience,
widely accepted. In recent years local Wellington Fault. thus reduce the risk to the economy.
councils have worked on increasing
There are other paybacks as well - the With this part of the work now complete,
household resilience and have tightened
quantitative analysis modelled only a the question is: who is responsible for
building codes to protect lives in such an
narrow slice of the benefits. For example, ensuring delivery and who will champion
occurrence, but this focus on readiness it did not include the “business as usual”
has not been reflected in other areas of this plan to completion?
benefits for society from having the
emergency preparedness. Saving lives is individual projects delivered in a rational Wellington’s infrastructure is owned by a mix
paramount, but the survivors of a major and sequenced way over a twenty year of central government, local government
disaster also need to be able to function in horizon, or the resilience benefits in and private sector shareholders and the
a working economy after the event. In the the face of more frequent but lower project so far has been a shared process
case of Wellington, the need for economic impact events such as floods or smaller between management and technical staff of
resilience is critical, not only for the half a earthquakes. The modelling related only those utilities. However, the challenge now
million people who live in the region, but to an extremely large earthquake, but rests with decision-makers in boardrooms,
also for the nation. the work programme would provide council rooms and the Beehive to achieve a
The bald figure of 13.5% of New Zealand’s protection in many other circumstances. high degree of collaboration.
GDP does not tell the entire story of why Nor did the study capture two other Delivering the outcomes we have
Wellington’s economy is important. Not benefits that have been the subject of identified will require a re-think of
only is it the seat of Government and the increasing public scrutiny in the years investment plans because we will be
transport hub between the North and following the Christchurch earthquake asking elected representatives, company
South Islands, but its large knowledge sequence – firstly, social wellbeing governors and senior managers to agree
sector also has New Zealand’s fastest growth benefits and, secondly, the value to to sequence their work to take account
in digital businesses. This concentration of society of underpinning financial
services financial and technology sectors of interdependencies, rather than each
confidence in a region. organisation running its own separate
makes it vulnerable to loss of firms who rely
on intellectual capital and have the agility Regarding social benefits, we are not aware programme. Central government will
to move quickly to another place – not that the cost of reduced societal wellbeing have a key leadership role and will need
necessarily in New Zealand – should their has been exactly quantified in Christchurch. to work with the Lifeline providers to
current location be unsustainable. However, it is clear that faster recovery drive that interdependent approach.
would help mitigate the high levels of
To ensure rapid economic recovery stress and anxiety that are experienced in a Investment in resilience is always front-
following a major earthquake, it is major event and that are a cost not only to of-mind immediately after an event but
imperative that core infrastructure is as individuals but to the whole community. the urgency fades with time. This study
resilient as possible. In 2016 the Wellington is a compelling case for action. It is not
Lifelines Group took up this challenge and On the second point, instilling confidence a quick fix, but if we do not start and
in a city or region is critical in terms of complete it we are gambling against the
began its Regional Resilience Project.
attracting investment and maintaining probability of an event.
The project analysed the economic costs adequate insurance cover. This plan would
of not being prepared for “the big one” and underpin that confidence in Wellington. The prize for getting this right will be a
then analysed the savings to the nation Current conversations on a proposed highly resilient Wellington: future-proofing
if we were prepared, with infrastructure transport plan for Wellington (“Let’s Get an important part of New Zealand.
sufficiently resilient to be able to maintain Welly Moving”) and a high-level regional
services or recover rapidly. The latter investment plan would be better informed
scenario included the appropriate by, and would benefit from, the prudent
sequencing of work over a twenty-year approach taken in this plan, which is about
period to reflect interdependencies building in resilience.
between the various types of infrastructure. Dame Fran Wilde
No person or organisation can totally
The headline figures are that a coordinated guarantee against infrastructure failure Chair, Wellington Lifelines
investment of $3.9 billion would save in a large event, but this plan provides a Group (WeLG)
Wellington Lifelines – Regional Resilience Project / iii
Executive
Summary
Significant benefits identified by big will the economic and social impact helped identify infrastructure projects that
improving Wellington and New be when the earthquake happens and would increase resilience and support
Zealand’s infrastructure resilience to what can be proactively done about this? faster economic recovery in the Wellington
earthquake events To give confidence to Wellington residents region in the aftermath of a 7.5 magnitude
This study details how investing in and the people of New Zealand, as well as earthquake. A preferred programme of
infrastructure resilience will reduce the international investors, insurers and visitors, infrastructure projects was identified and
national economic impact of a large we must have a credible plan in place modelled in RiskScape (by GNS Science)
Wellington earthquake by more than to minimise the potentially devastating and MERIT (by Market Economics) to
$6 billion. In addition to the avoided impact of a disaster in Wellington. understand potential economic benefits
economic losses, there will be significant flowing from pre-earthquake investment.
The recent Kaikoura and Canterbury
social benefits achieved through RiskScape and MERIT are the most
earthquakes demonstrated the need to
Wellington’s communities surviving and advanced outage and economic modelling
build resilient infrastructure in our cities.
thriving after a major seismic event. tools available and it is the first time that
Evidence from our domestic experience
these have been applied on this scale to
The study is the first of this size and recent international disasters has provide insights into the national economic
and complexity ever undertaken shown that communal infrastructure is impacts of any large natural disaster.
in New Zealand. It considers the critical to habitability and, when it fails,
interdependencies of 16 infrastructure cities can quickly become unliveable. When Demonstration of benefits of improving
providers in order to identify a step- key infrastructure is out or operating at Wellington Region’s resilience
change improvement to the Wellington degraded levels of service, people leave, The first key finding from the modelling
region’s resilience to a large earthquake. productivity drops and communities - and was that if a magnitude 7.5 earthquake
Many of the resilience projects are already the economy - suffer as a result. Lifeline occurs on the Wellington Fault with no
on long term asset plans and have funding infrastructure organisations are key service investment (the do-nothing scenario),
earmarked. This study identifies that if the providers to our cities and regions. They the expected loss to New Zealand’s
interdependent infrastructure projects have a major role to play in minimising the GDP over a 5-year period will exceed
are accelerated and delivered in a priority impacts of hazard events. $16 billion (this is in 2016 dollars and
order, there will be significant benefits to Lifeline organisations have historically excludes recovery costs or building
Wellington and New Zealand’s economy planned their resilience investments damage - it is just the economic impact).
when a major earthquake occurs. independently and over long periods of The second key finding from the modelling
time. The drawback of this approach is that was that if the preferred investment
Wellington is vital to New Zealand’s
planning can become disaggregated and programme is implemented before
economy but is currently very
projects delayed due to a lack of urgency the earthquake occurs, the expected
vulnerable to large seismic events
and/or internal competition from other economic loss reduces to $10 billion over
Wellington is a vibrant and growing priority projects. Even more compelling is a 5-year period, and a $6 billion impact
capital city and a key contributor to the that a city’s overall resilience is inherently to New Zealand’s economy is avoided.
New Zealand economy. It is the seat of interdependent across lifelines. For This reduction in economic loss is due to
Government, has high concentrations of example, there is limited benefit in building the reduction in outage durations on key
professional and value-added services, a resilient water network, if the electricity lifeline infrastructure with the preferred
is a centre for arts and innovation, a network is not equally resilient so that programme implemented. The people
key tourist destination and also fulfils pumping stations can function after an of Wellington will be less impacted and
a role as a vital transport link between earthquake. Lack of co-ordination in economic activity in New Zealand will
the North and South Islands. Wellington
planning resilience projects will result in return to normal sooner.
contributes 13.5% of New Zealand’s gross
suboptimal investment outcomes.
domestic product (GDP), has a significant Preferred programme of infrastructure
place in the national identity and is home Integrated infrastructure approach to investment to deliver maximum
to more than 400,000 people. understand and model Wellington’s resilience benefits
Wellington’s vulnerability to a major economic resilience The preferred programme of investment
earthquake is well-known and it is not a This study draws on the expert knowledge comprises 25 resilience projects at an
question of if, but when “the big one” will held by Wellington Lifeline Infrastructure estimated total capital cost of $3.9 billion.
occur. The imminent questions are: how providers. Each Lifeline organisation This cost is not all extra or new expenditure,
iv / Wellington Lifelines – Regional Resilience Project
as many of the projects identified already This study schedules projects so that
feature in the long-term capital plans resilience benefits can be optimised. For
of Wellington’s infrastructure providers. the first time an economic value is placed
Additionally, many of the projects are on what these projects collectively
justified on the primary (non-resilience) provide in terms of resilience when a
benefits they provide to the people major earthquake (or another natural
of Wellington. By undertaking smart hazard event) occurs.
prioritisation and acceleration of these
The study analyses the benefits of
infrastructure improvements, the ‘”business
improving resilience to a high-impact
as usual” benefits are also further amplified.
but infrequent major earthquake. The
The programme includes projects proposed infrastructure improvements
across the fuel, transport, electricity, will also make the Wellington region
telecommunications, water and gas more resilient to higher frequency seismic
sectors. Projects have been scheduled events (for example earthquakes similar
across a 20-year time horizon and have to the Cook Strait and Kaikoura events).
been arranged so that interdependencies Taking these smaller and more frequent
between projects and other lifeline services types of shock events into account will
are considered. Fuel, road, and electricity mean the real economic benefits will
projects were found to provide the greatest exceed $6 billion of avoided impacts for
resilience benefit to other projects. the single magnitude 7.5 earthquake
The investment programme has been modelled in this study.
broken into three equal phases with
Wellington and New Zealand must
projects in Phase One (years one to seven)
make improving resilience a priority
typically being of higher feasibility and
more fully solutioned. Investment in Phase It has been over 160 years since a truly
One will lay the foundations, while scoping large earthquake hit the Wellington
and planning of Phase Two and Three region – the magnitude 8.2 Wairarapa
initiatives should commence immediately. earthquake. Every day that passes without
“the big one” means we are one day closer
Funding capital costs for Phase One is to when it will occur. Statistics suggest
28% committed, 20% contingent with that there is around a 30% chance of a
a small amount of revenue from user damaging earthquake every decade,
payments. Approximately 51% remains so we need to keep pressing forward to
unfunded at this stage. In order to realise the benefits that are clear from this
ensure that there is adequate funding at study before the inevitable happens.
the right time, central government will
need to be involved. This does not mean The people of Wellington and New Zealand
that central government needs to fund are relying on key decision-makers to
the 51% - the lifeline entities themselves ensure their wellbeing and economic
will need to work out new funding future are secure. Our objective is to
mechanisms over forthcoming years galvanise into action everyone concerned -
and will require consumer/community infrastructure providers, local government
understanding and support. There will be and central government. The target is to
difficult conversations about long versus confirm the Wellington region’s integrated
short term thinking - conversations that infrastructure resilience plan by early 2020
will benefit from central government and commit to making it happen.
leadership, given the national economic
Now that we have identified the pathway
value of the approach.
to resilience success, any other outcome
will be a failure.
Please note:
This Programme Business Case (PBC) has been undertaken in 2 stages. Stage 1 of the
PBC ‘Demonstration of Benefits’ was completed in April 2018. Stage 2 ‘Financing
and Timing’ was completed in September 2019. The remaining Commercial and
Management cases will be developed individually by the Lifeline organisations.
Wellington Lifelines – Regional Resilience Project / v
Contents Executive Summary iv Glossary of Abbreviations x PART A – THE STRATEGIC CASE 1 1 I ntegrated Infrastructure Resilience to Protect Wellington’s Economy 3 1.1 Integrated Infrastructure Resilience 3 1.2 Context of this Document 4 1.3 Elements of Resilience and Focus of this PBC 4 1.4 Development of the PBC 4 2 S trategic Context for Investing in Wellington’s Resilience 5 2.1 Wellington’s Seismic Risk 5 2.2 Wellington’s Geographic and Infrastructure Context 5 2.3 The Economic Context – The Importance of Wellington to New Zealand 8 3 A lignment to Existing Strategies 11 3.1 Strategic Mandate 11 3.2 Summary of Existing Strategies 11 4 I nvestment Objectives 15 4.1 Problems, benefits and investment objectives 15 5 R isks, Constraints and Dependencies 17 5.1 Risks 17 5.2 Constraints and Dependencies 18 5.3 Opportunities 19 [Explanatory Statement: In producing this While all due care has been taken by the client or any other party may suffer report Aurecon has relied on inputs supplied Aurecon in compiling this draft report resulting from any conclusions based on by GNS Science under contract to GWRC Aurecon can neither warrant nor take information provided to Aurecon, except and information from other parties. The responsibility for the accuracy of the GNS to the extent that Aurecon expressly report is provided strictly on the basis that work or such other parties. Aurecon takes indicates in the report that it has verified the the information that has been provided is no responsibility and disclaims all liability information to its satisfaction.] accurate, complete and adequate. whatsoever for any loss or damage that vi / Wellington Lifelines – Regional Resilience Project
PART B – EXPLORING THE PREFERRED WAY FORWARD 21
6 O ptions Identification and Assessment 23
6.1 Critical Success Factors 23
6.2 Option Generation 24
6.3 Options removed from scope 24
6.4 Options not Assessed but Retained 24
6.5 Options Remaining 25
6.6 Short-listing Assessment 27
7 P rogramme Development 29
7.1 Base Case 29
7.2 Projects included in the recommended programme 29
7.3 RiskScape and MERIT 39
7.4 Application 40
7.5 RiskScape 40
7.6 The MERIT Model 41
7.7 Summary of Results 41
7.8 Other Initiatives 42
7.9 Programme Implementation 42
8 The Financial Case 48
9 The Commercial and Management Cases 50
9.1 Outlining the commercial strategy 50
10 N ext Steps 50
Wellington Lifelines – Regional Resilience Project / vii
PART A – THE STRATEGIC CASE 1 / Wellington Lifelines – Regional Resilience Project
Wellington Lifelines – Regional Resilience Project / 2
1. Integrated Infrastructure
Resilience to Protect
Wellington’s Economy
1.1 – Integrated Infrastructure Resilience
The Wellington Lifelines Regional This project was initiated because effects through targeted infrastructure
Resilience Project is an initiative of all infrastructure providers want to investments. Given Wellington’s
the Wellington Lifelines Group (WeLG) collaborate to address infrastructure strategic importance as a transport
which recognised the need for a step- deficiencies and, more explicitly, show hub with a large advanced economy
change and an integrated approach the significant value of understanding and its role as the capital city, such
to increase the resilience of lifeline interdependencies between different investments will also benefit the wider
services. Local Councils and others lifeline services. Working together national economy.
have put great effort into imbuing the ensures any investment is focussed
population with resilience. However, The work is being carried out with
on the best results for the building of
in the case of a large earthquake, Central Government as a part funder,
resilience for the region, not just for
Wellington’s infrastructure also needs to together with local government and
each individual utility.
be resilient, not only for people, but to the infrastructure providers. It is
ensure that business can continue after The work addresses the likely economic closely aligned with regional resilience
the event and to substantially minimise impact of a M7.5 earthquake to help initiatives1 and built environment
GDP loss for New Zealand. inform options to reduce the economic resilience initiatives.
Figure 1: Convoy of army trucks carrying essential supplies for Kaikoura Hospital following the 2016 Kaikoura Earthquake. Transport links to Wellington Region will be
highly compromised after a shock event like a major earthquake, which could require similar convoys. (Source: RadioNZ)
1 T he PBC is expected to be a substantial contribution to developing a resilience strategy, alongside other
initiatives, such as the work of the Wellington Regional Resilience Coordination Group (WRRCoG), which
focuses on the six-month period following a major event.
3 / Wellington Lifelines – Regional Resilience Project1.2 – Context of this Document
The purpose of this Programme The development of this PBC is being were consulted on the outcomes and
Business Case (PBC) is to help enable undertaken in two stages: alignment sought between individual
smart and integrated investment Stage 1 – Demonstration of Benefits organisations long term plans and the
decisions for public value across a raft Stage 2 – Financing and Timing integrated infrastructure plan.
of lifeline organisations and the wider Stage 1 focuses on the strategic The aligned finance and timing of the
sectors. The New Zealand Treasury’s and economic cases for improving resilience programme (i.e. the financial
Better Business Case (BBC) process has Wellington’s infrastructure resilience. case) has been delivered as Stage
been used to guide the development of The outcomes of this stage were then 2, with the remaining, commercial
this PBC. used to profile the benefits of having an and management cases of the BBC
The five-stage BBC model was followed integrated infrastructure plan across all process left up to individual lifeline
lifeline organisations in the region. organisations to complete.
which covers the: strategic, economic,
financial, commercial and Subsequent to Stage 1 being
management cases. completed, lifeline organisations
1.3 – Elements of Resilience and Focus of this PBC
Resilience can be broken down into three main elements:
Infrastructure Resilience = Robustness + Redundancy + Response
Robustness relates to the inherent and resources available in order to resilience. This is because these
capacity of an asset or system to respond immediately after a shock elements have the largest impact on
be able to withstand a shock event. event. While it may be desirable to the economy, the key purpose of this
Redundancy is the existence of minimise the reliance on response, after PBC as demonstrated by the Project’s
alternative options to back up an a shock event there is a practical reality title - Protecting Wellington’s Economy
infrastructure service (such as an that response will always be required. Through Accelerated Infrastructure
alternate road to a destination or Investment.
This PBC targets the robustness and
diversity in power supply connections).
redundancy elements of infrastructure
Response relates to the pre-planning
1.4 – Development of the PBC
The Strategic Case and the Options and Alternatives Assessment Report
documents have been prepared by a team of infrastructure specialists, scientists
and economists. This PBC has undergone interim peer reviews throughout its
development by members of the project team and project steering group.
Wellington Lifelines – Regional Resilience Project / 42. S
trategic Context
for Investing in
Wellington’s Resilience
2.1 – Wellington’s Seismic Risk
The potential for a major shock event, east) is highly vulnerable to a major earthquake to provide information
especially a large earthquake affecting physical shock event. and to enable systematic analysis on
Wellington, is well known. A wealth of how the vital lifelines perform following
studies, reports and experience show While the physical impacts of an the event. This information has been
that the Wellington Region (focussing earthquake are appreciated, the likely used to assess specific potential
on the western side from Wellington economic consequences have not been coordinated investments across the
City in the south-west to Kapiti Coast fully grasped. This Resilience Project lifeline organisations.
and Upper Hutt in the north and north- has simulated the impact of a M7.5
2.2 – Wellington’s Geographic and
Infrastructure Context
Some of Wellington’s infrastructure is
highly vulnerable to physical shock
events such as earthquakes. This is
“When” not “If”
due to the historic build quality, the
location of the region’s lifeline services
being heavily constrained to limited
- Large Earthquake
geographic corridors suitable for these
services, and the infrastructure crossing in Wellington Region
fault lines in multiple locations.
Major earthquakes in 1848, 1855, 1942, and 2016 caused significant damage in
The pattern of urban development the Wellington Region since European settlement in about 1840. In addition,
of the western part of the Wellington geological research has identified many more large earthquakes resulting
Region is shaped by its seismic history. from rupture of the regional active faults over the past several thousand years.
The Wellington Fault line that forms the Therefore, it is certain that the region will be exposed to the threat of strong
western side of the Hutt Valley and the earthquakes in the future.
escarpment to the south is but one of a
series of fault lines that have raised the The current National Seismic Hazard Model of 2010 (NSHM2010)2 has
hills and formed the valleys. The whole synthesised the research data to derive the average recurrence interval of
area is being lifted as the Australasian various levels of shaking on the Modified Mercalli Intensity (MMI) scale (refer
Plate is being under-thrust by the to Appendix A for more details on the MM Intensity scale). For a firm soil site
subducting Pacific Plate (Hikurangi in Wellington there is an average ~30-year recurrence interval for MMI 7, ~120
Subduction Zone). Infrastructure and years for MMI 8 and ~ 400 years for MMI 9.3
regional development has taken place For reference, the February 2011 Canterbury Earthquake typically had MMI values of
over and around these seismically- 9 in the Christchurch Central Business District. The 2013 Seddon and 2016 Kaikoura
created geographic features. earthquakes resulted in MMI values in Wellington of about 6 and 7.
The western side of the Wellington Future earthquakes that will cause damage in Wellington could be centred on
Region at the south-west corner of the nearby active faults (Wairarapa, Wellington, Ohariu), the Hikurangi subduction
North Island has a physical geography fault extending beneath Wairarapa and Wellington, or rupture of more distant
that makes it especially vulnerable to faults in northern South Island (including the Alpine Fault), Cook Strait, or
major events. This is because a large further north and northeast in Manawatu, Wairarapa and southern Hawkes Bay.
2 I nformation from the NZ National Seismic Hazard Model supplied by Russ Van Dissen, GNS Science
3A
bridged and adapted from: https://www.geonet.org.nz/earthquake/mmi
5 / Wellington Lifelines – Regional Resilience ProjectVULNERABILITIES OF THE WELLINGTON REGION IN A MAJOR PHYSICAL EVENT
N
N 2
1
Otaki
2
Kapiti
Island
W
a ik
a
Paraparaumu
nae
Tararua Range
Ri
r
ve
Masterton
1 2
2
LEGEND
58
Featherston Carterton
Porirua Upper Hutt
Masterton
2
a
ap Tararua
Lower Hutt ar
a ir
ke
W Porirua
1
Remutaka
Forest La
Kapiti Coast
Wellington Wainuiomata
Wellington
South Wairarapa
Fitzroy Bay Upper Hutt
Lower Hutt
Wellington Port
Wellington Airport
Road
Rail
Figure 2: Overview of the Wellington Region (dark shading indicating the location of major ranges between Wellington and the rest of the North Island)
earthquake will cause isolation of same time, would have significant be susceptible to earthquake damage
the communities between mountain impacts on the transport routes and, similarly, cast iron water pipes
ranges and the sea. The Tararua and and other lifeline services in the that are commonly used in the region
Remutaka ranges effectively surround Wellington Region. Such disruption are brittle and cannot accommodate
Wellington and limit the access points would prevent people travelling and ground movement from earthquakes.
and routes for lifeline services into the cause severe difficulties in transporting
Another factor is the way infrastructure
region from the remainder of the North food, water and essential emergency networks are configured with few, if
Island. Further south on the western supplies into the region. The long-term any, alternate (or redundant) paths
coast, there are extremely narrow recovery efforts would be significantly
transport and infrastructure corridors constrained by the limited corridors and
between steep slopes and the sea from the damage they would sustain.
Paekakariki to Paremata. Several other factors make Wellington’s
The eastern corridors to the metropolitan infrastructure vulnerable to shock
region via the Remutaka Range and Hutt events. Since Wellington was founded
Valley are also very constrained owing to 175 years ago, the infrastructure has
the steep topography. been progressively developed to
support population and economic
The steep terrain continues into the growth. However, much of the early
western region – the Belmont Hills infrastructure is still in use today.
– separating the Hutt Valley from
the western coastal area and further The earlier infrastructure was
constraining infrastructure corridors. constructed without awareness of
the sort of shock events it might be
Wellington itself is surrounded by
subjected to, and so used construction
hills and the harbour with only three
methods/materials now known to
corridors for transport access and
have low resilience to such events. For
utilities. (Figure 2)
example, widely used unreinforced
Figure 3: Damage to CentrePort from the 2016
Disruptions to the above corridors, (or lightly reinforced) masonry and Kaikoura earthquake (Source: Maarten Holl,
particularly if they happened at the concrete construction is now known to Fairfax NZ)
Wellington Lifelines – Regional Resilience Project / 6Figure 4: SH1 access along the South Island coast severed by large landslides following the 2016 Kaikoura Earthquake. Similar landslides of this magnitude are expected to
occur in Wellington should a major earthquake occur in the region. (Source: Walter Rushbrook / Aurecon)
to enable services to continue to be ‘State Highway 1 across Cook Strait’ and be restored, returning to pre-quake
provided if they are damaged by a an export connection to the rest of the levels of service will take many years. A
shock event. For example, there is a lack world. The port is a major contributor modern New Zealand analogue for this
of practical alternative transport routes to the regional economy and should is the slow Christchurch infrastructure
or water/electricity connectivity once a major earthquake occur, would be a recovery after the 2011 magnitude 6.3
primary routes are severed. vital lifeline access point. earthquake. More than seven years
on, the infrastructure recovery work is
With reference to the Canterbury The economic impact of the Kaikoura
still ongoing and impacting how the
and Kaikoura Earthquakes previously earthquake using the MERIT model (as
city functions. Arguably, recovery in
described (refer excerpt: Large is being used for the present business
Wellington from an earthquake shock
Earthquake in Wellington Region – case) was estimated at $360m lost GDP
event will be even longer, owing to
“When” not “If”), even relatively low to over 18 months. Of this, $92m was in
the current level of lifeline resilience,
Canterbury, with the balance in the rest
moderate levels of shaking from these more difficult geography and lack
of New Zealand – Wellington having a
earthquakes caused considerable of redundancy, in comparison to
major share in the first two weeks.
disruption to the Wellington Region Christchurch.
including affecting the normal The recovery time from a major
functioning of infrastructure networks. earthquake in Wellington will also be
Most notably, there was damage to the significant (see below for more details).
port which is a key link in providing a While basic infrastructure services may
In this context, it is critical that Wellington’s
resilience planning is of the highest order
to sustain the people and economy of the
capital city of New Zealand.
7 / Wellington Lifelines – Regional Resilience Project2.3 – The Economic Context – The Importance of Wellington to New Zealand
The Wellington Region has characteristics that make it exceptional in terms of
its attractiveness as an advanced economic location. Whilst the impact of being
the capital is apparent, there is a unique mix of location, appealing natural and
built environment and history, that creates a culture attractive to more advanced
industries and the mobile knowledge workers they employ.
As a result:
T he capital has the highest Wellington has the highest median I t hosts the fastest rate of
proportion of Masters and post- income in the country, and the local new tech businesses, and
graduates in the country, and 88 per economy has grown 21 per cent highest concentration of web
cent of high school students pass since 2011. and digital businesses in New
NCEA level 2, compared with 83 per Zealand, which provide 16,000
jobs and 4000 businesses,
cent in the rest of the country.
contributing $2.1 billion in GDP.
The special significance of the As a Gamma city, Wellington has a “high In the event of a big shock, businesses
Wellington economy is shown by its degree of accountancy, advertising, in the higher level – professional
position within the Globalisation and banking/finance, and law services so as services, finance, telecommunications
World Cities (GaWC) hierarchy - The not to be dependent on world cities”. By and internet sectors – with key
world according to GaWC4 is a city- contrast, Christchurch as a Sufficiency relationships in Australia and other
centred world of economic flows. Cities level city, only has a “sufficient degree of countries, are more likely to relocate
these (more sophisticated) services”. abroad than elsewhere in New Zealand.
are assessed in terms of their advanced
Such businesses would take with them
producer services. With a tendency for higher-order
8% of the national GDP, resulting in
services to gravitate towards the
Wellington is ranked as a Gamma city skilled people leaving Wellington.
upper-tier cities, the major risk for
which means that it links a small but New Zealand is that a large event Emigration is most probable because
high-performing economic region into will badly affect the Wellington CBD it is inconceivable that all the inter-
the world economy. Auckland, as a (which generates 77% of total GDP for connected set of elements that
Beta+ city links a moderate economic Wellington City, 48% for the Wellington make Wellington a Gamma city
region into the world economy. Region and 8% of national GDP5). would transfer together within New
Figure 5: Wellington’s hills and slopes (Source: Epicbeer/Flickr)
4h
ttp://www.lboro.ac.uk/gawc/gawcworlds.html
5 Wellington City at a Glance: ecoprofile.infometrics.co.nz/Wellington%2bCity/Infographics/Overview
Wellington Lifelines – Regional Resilience Project / 8Figure 6: State Highways 1 and 2, and the railway line linking Wellington City to the Hutt Valley & Wairarapa along the Wellington Fault line, circa 1985 (Source: Lloyd Homer, GNS Science) 9 / Wellington Lifelines – Regional Resilience Project
Zealand. Wellington has unique Present Value of such a loss over time
characteristics; ideal location, making would be about $30-$40 billion7.
it easily accessible from the North
Previous studies had put the cost of a
and South islands, a strong culture
“major Wellington earthquake” at US$24
of arts, creativity and innovation that billion in 19958 – roughly equivalent to “A Wellington quake
includes its high-performance, globally
recognised Digital Technologies sector,
NZ$50 billion today. could leave up to half
and the seat of Government. It has Whilst there has been considerable of the city’s houses
focus on the Wellington city centre
a very appealing setting with easy
and its office buildings, the impact
unliveable and the
access to the natural environment.
All this makes it attractive for high- on private homes – and therefore the average repair cost per
level businesses and the ‘creative people of the region - should not be home a third higher than
classes’. It is probable, in the event of forgotten. Wellington’s workers will
need somewhere to live. in Christchurch. The
a major earthquake, that significant
components of the economy would Wellington has many major assets that
repair cost for the city
move to the upper tier cities in the are themselves of significant value would likely total over
region with similar profiles – notably – they include universities, schools,
Melbourne and Sydney – with
$6.9 billion for residential
hospitals, arts and cultural venues,
consequent losses to the New Zealand eateries, international sports venues, properties alone”9
economy. Even once Government Wellington Airport and the sea port.
returned to Wellington it could can be expected that large numbers
Together they support the special
of people will leave the region should
be expected that there would be elements of Wellington’s higher order
Wellington’s infrastructure cease to
permanent losses. economy. Losing them would be a
function for a period of time and
major loss for New Zealand.
The Wellington Resiliency Strategy6 there will be an economic impact
quotes a BERL study finding that a The level of the economic impact of of many billions of dollars. Exploring
significant earthquake in Wellington a major shock event on New Zealand ways to minimise the social and
could result in New Zealand losing about and the region depends on its precise economic impact is why this PBC is
1-2% of its current GDP per year. The Net nature and scale. But very clearly it being undertaken.
Case Study: Benefits of Investing in Resilience
– Orion’s 2010 and 2011 Earthquake Experience
There were huge societal Orion invested $6m in its seismic
benefits from Orion’s ability to restore strengthening programme from 1996,
power to 90% of the city within 24 which served both the company and
hours following the September 2010 Christchurch well following the 2010
earthquake and within approximately and 2011 earthquakes. Orion saved
10 days following the more severe, $30m-$50m in direct asset replacement
February 2011 earthquake. costs following these events, far
$6m
Investment
$30-50m exceeding the $6m investment.
cost SAVING
in direct asset
replacement costs
6W
ellington Resilience Strategy March 2017 100 9 Victoria University Senior Lecturer Geoff Thomas 10 R
esilience Lessons: Orion’s 2010 and 2011
Resilient Cities speaking at the NZ Society for Earthquake Earthquake Experience Independent Report, Kestrel
7W
ellington – essential to NZ’s Top Tier: Its resilience Engineering’s technical conference as reported Group, September 2011
is a national issue BERL, December 2015, p.3 on Stuff http://www.stuff.co.nz/national/nz-
8G
regory, op cit, quoting Professor Hal Cochrane earthquake/92081766/wellington-homes-repair-
from the Department of Economics at Colorado costs-predicted-to-be-a-third-higher-than-in-
State University christchurch-in-a-big-quake
Wellington Lifelines – Regional Resilience Project / 103. Alignment to
Existing Strategies
3.1 – Strategic Mandate
This PBC is the most realistic study Given the large number of organisations for Disaster Risk Reduction. The purpose
undertaken in New Zealand to date, in covering multiple infrastructure types, of the framework is to substantially
terms of the level of detail and complexity there is no individual document that reduce disaster risk and losses in lives,
of the analysis. It provides an in-depth could be described as New Zealand’s health effects, livelihoods and economic
assessment of the interdependencies definitive lifeline resilience strategy. impacts. This PBC is highly aligned with
between lifelines, and details the benefits However, a variety of plans, policies and the priorities of the Sendai Framework:
of a combined suite of interventions strategies exist that collectively provide
Understanding disaster risk
that would not be realised if these were the strategic context for preparing
assessed separately. this business case. Some of the plans Strengthening disaster risk
are in the Civil Defence Emergency governance to manage disaster risk
One of the key drivers for improving
Management sector, while others are
infrastructure resilience is provided by the Investing in disaster risk reduction
found in more general infrastructure
Civil Defence Emergency Management for resilience
plans, often for a particular infrastructure
Act 2002, which states that lifeline
type. These plans for particular Enhancing disaster preparedness for
services (utilities) must “function at the
infrastructure are important as they effective response and to “Build Back
fullest possible extent during and after an
show how resilience fits within the Better” in recovery, rehabilitation and
emergency”. This is why lifeline services
organisations’ overall priorities. reconstruction.
have taken the initiative to work together
to lessen the impact of an earthquake Additionally, New Zealand is a signatory
hazard event. in the United Nations Sendai Framework
The legislative and organisational
frameworks provide a strong mandate for
lifeline services to plan for emergencies
and improve resilience.
3.2 – Summary of Existing Strategies
A summary of previous WeLG studies and
their findings can be found in Appendix B.
Table 1 overleaf provides a summary of
strategies which support the investment
in the Wellington Region’s Resilience.
Appendix C contains more exhaustive
details of each piece of supporting
information.
Figure 7: Wellington Water reservoirs near Karori, Wellington City. Water supply after a shock event such as
an earthquake is a key resilience issue facing the region (Source: Graham Hancox, GNS Science)
11 / Wellington Lifelines – Regional Resilience ProjectWellington Lifelines – Regional Resilience Project / 12
Table 1: Strategies identified which support investment in resilience
Strategy Relevance to Resilience / the
Organisation Description
Identified Business Case
Ministry of Civil Defines the roles and responsibilities The CDEM Act provides a clear mandate
Civil Defence Defence and of government departments, local to be prepared and ensure resilience
Emergency government agencies, emergency measures are in place to respond to
Management services and lifeline utilities in planning a shock event. This WeLG PBC is a key
Act 2002 and preparing for emergencies, plus initiative to comply with the legislation
response and recovery in the event of and enable resilience to be improved
an emergency. for the people and economy of the
Wellington Region.
The legislation requires lifeline utilities
to ensure their business is able to
function to the fullest possible extent,
even though this may be at a reduced
level, during and after an emergency.
Additionally, organisations are required
to participate in the development of
national and regional plans.
Ministry of Guide to Provides a cohesive strategy for This business case is a major
Civil Defence the National operational arrangements for an contribution towards the plan’s goals of
Civil Defence emergency of national significance. enhancing New Zealand’s capability to
Emergency The Guide comments that Lifeline recover from emergencies and reducing
Management utilities are primarily responsible for the the risks from hazards to New Zealand.
Plan 2015 reduction of outage risks, for example
by the location and installation of assets
consistent with local hazard conditions.
Department of Local Outlines the responsibilities of local Local councils and their related
Internal Affairs Government government and has requirements to organisations are closely involved in
Act 2002 provide for the resilience of infrastructure this resilience business case. Their
assets by identifying and managing risks funding contribution to this PBC and
relating to natural hazards. participation in preparing this business
case demonstrates their compliance
and commitment to the legislation.
Ministry for the Resource Sets out matters of national Alongside other legislation, the recent
Environment Management importance that decision-makers amendment further strengthens Central
Act 1991 must recognise and provide for in Government leadership and direction
various circumstances. to improve resilience to natural hazards
such as earthquakes.
An explicit mandate was introduced
in the 2017 Amendment including
“the management of significant risks
from all natural hazards” as a matter
of national importance.
National National Helps set the national direction for The preparation of this resilience
Infrastructure Infrastructure infrastructure management and business case is highly aligned with
Unit, Treasury Plan 2015 development. The plan specifically the intent of the plan. This PBC utilises
identifies the importance of having the RiskScape and MERIT modelling
resilient infrastructure. It notes that tools which have been developed
resilience can be achieved through a from government funded research
combination of investing to make things and development programmes. As
stronger and operational changes. part of the options assessment used
in this business case both physical and
The plan encourages research to shed light
operational resilience options will be
on resilience to natural hazards and apply
considered to identify the preferred
the lessons learned from Christchurch.
programme/s of infrastructure work.
13 / Wellington Lifelines – Regional Resilience ProjectStrategy Relevance to Resilience / the
Organisation Description
Identified Business Case
Ministry of Civil Emergency Provides a continuity plan to ensure Improving the resilience of the capital
Defence Relocation government functions can continue city to minimise the thresholds for key
of Executive after a shock event (including government functions and Parliament
Government relocating key government functions to relocate – a move which will be
and and Parliament to Auckland should highly disruptive.
Parliament the need arise). The Plan is based on
Plan 2014 nine assumptions concerning the
level of assumed functionality of key
infrastructure and lifeline utilities, such
as transport links and roading networks,
power, drinking water, wastewater
and telecommunications.
Local Councils Wellington Sets out how to prepare for, respond to This business case specifically addresses
Resilience and recover from disruptions. the water, wastewater and transport
Strategy 2017 projects. The interdependencies with
Highlights some key actions including:
other lifelines providers and critical
investing in water and sewage resilience
customers are explored to help provide
and awareness; and integrating
a coordinated and prioritised plan.
resilience into transport projects.
It also makes specific mention and support
of this Resilience business case work.
Ministry of Government Gives priority to investments that The economic benefits across multiple
Transport Policy improve resilience on transport routes lifeline services of investing in improving
Statement where disruptions pose the highest resilience on key transport routes have
2018/19 – economic and social costs, through been modelled as part of the work.
2027/28 recognition of interdependencies This in turn informs and helps prioritise
between lifeline networks. solutions for critical transport routes.
Supports the development of regional
resilience plans to provide solutions for
the critical transport routes in urban
areas, including Wellington.
Lifeline Resilience Sets out each lifeline organisation’s This business case is highly aligned
Organisations Strategies obligations under the CDEM Act with the strategies and obligations
relating to resilience. These are of lifeline providers. As a sign of their
given effect to in the form of projects strong commitment to resilience,
and plans. Documentation outlining lifelines providers have helped fund
their commitment to resilience is often this PBC work and providied asset
set out in asset management plans information required for the modelling.
and policies available from The coordinated and prioritised
each organisation. programme/s of work from this PBC
work will feed into their short- to long-
term plans for implementation.
Wellington Lifelines – Regional Resilience Project / 144. I nvestment
Objectives
This section of the Strategic Case documents the specific investment objectives of
the business case, drawing on the identified problems and the expected benefits. The
logic map set out in this section informed the final resilience programme described in
section 6.
4.1 – Problems, benefits and investment objectives
Facilitated workshops were held with lifeline organisations and government
representatives in 2017, to identify the specific problems and benefits to be
addressed and subsequently, the investment objectives. See Appendix D for the
Investment Logic Map (ILM). The participants collectively identified and agreed
the problems, benefits, investment objectives, and their respective weightings as
summarised in the following sections. Refer also to Figure 8 on the following page.
4.1.1 – Problems 4.1.2 – Benefits 4.1.3 – Investment Objectives
A challenging geography, highly Benefit 1: Significantly reduced risk to Investment Objective 1: Significantly
concentrated economic activity in New Zealand’s economy (60%) reduce the risk to NZ economy from
the CBD and very low infrastructure o Reduced Predicted NZ Economic Loss shock events affecting Lifeline Services
redundancy makes the NZ capital o Reduced Predicted Recovery Period in the Wellington Region (60%)
uniquely vulnerable to a shock event,
enefit 2: Safer People and More
B Investment Objective 2: Reduce the
resulting in economic and social risks
Resilient Community (20%) safety risk to people living in the
for the region and country.
Wellington Region from a shock event
o Reduced Recovery Period
Historically low value placed on affecting Lifeline Services (10%)
resilience, unclear expectations o Reduced Population Loss
o Reduced Community Isolation Investment Objective 3: Make the
and lack of alignment/priority for
Wellington Regional Community more
investment in the NZ capital results in o Reduced Disease Risk
resilient against the effects of a shock
inaction, with increased economic and
Benefit 3: Optimised Strategic Lifelines event affecting Lifeline Services (10%)
social risks for the region and country.
Investment (20%)
Investment Objective 4: Optimise the
o Finalised Investment Plan combined investment in Wellington
o Aligned Central/Local Government Lifeline Services (20%).
o Reduced Recovery Costs
15 / Wellington Lifelines – Regional Resilience ProjectPROBLEM BENEFIT
Uniquely Vulnerable Capital NZ Inc
(70%)
Significantly reduced risk to
A challenging geography, New Zealand's economy (60%)
highly concentrated economic
activity in the CBD and very
low infrastructure redundancy
makes the NZ capital uniquely
vulnerable to a shock event,
resulting in economic and social
risks for the region and country
Evidence
Wellington topography
2 road access points on faultlines
Fault lines / critical hotspots (water, port)
One electricity grid exit point (no redundancy)
Knowledge based economy in CBD
Previous studies
People
Safer People and More
Resilient Community (20%)
Historically Low Value &
Priority Placed on Resiliency
(30%)
Historically low value placed on
resilience, unclear expectations
and lack of alignment/priority
for investment in the NZ capital
results in inaction, with increased
economic and social risks for the
region and country
Evidence
Lack of accessible & dedicated funding streams
Short term investment focus providing daily services
Short term political priorities Government & Lifelines
Lack of clear targets & standards for resiliency
Inconsistent regulatory standards between ultilities Organisations
Lack of scenerio planning at network level
Low understanding of critical inter-dependencies Optimisde Strategic
Lack of info on customer / community expectations Lifelines Investment (20%)
Figure 8: Summary of Investment Logic Mapping Outputs
Wellington Lifelines – Regional Resilience Project / 165. Risks, Constraints
and Dependencies
5.1 – Risks
Table 2 highlights the main risks identified, relating to this business case.
BBC guidance is that “a risk is the chance of something happening that will
have an impact on the achievement of the investment objectives”. In that
context, the following have been identified, in accordance with the 80/20
principle in the BBC documentation:
Table 2: Risks Assessment Summary
Consequence Likelihood Comments and Risk
Main Risks
(H/M/L) (H/M/L) Management Strategies
Failure to invest prior to the next High Medium A major shock event occurring prior to
catastrophic shock event occurring, investment will result in catastrophic
resulting in multiple deaths and injuries. life and economic losses in the
Wellington Region.
The actions recommended in the business
case need to be pursued expeditiously.
The programme is not accepted as a Low Low All strategies assessed support
valid case for investment. infrastructure investment for
resilience purposes.
The business case is developed
following leading practice, is peer
reviewed and appropriately injected
into critical decision-making processes.
Resource consents for important High Medium Resource consents for individual works
programme components, for example will be the responsibility of the particular
works on or near the Wellington lifeline organisations. WeLG could be an
Harbour foreshore and seabed, are active supporter, where needed, drawing
opposed or rejected. evidence from this business case.
The economic benefits are not seen as Medium Medium Ensure correct representation of the
sufficient justification for any additional resilience benefits as only a proportion
public sector investment. of the total. Provide clarity on the
range of events where increased
resilience is provided. Have credible
supporting peer review.
Fuel is a critical lifeline which all other High Medium Enhance the contacts with the
lifeline services depend on to restore their fuel companies alongside relevant
network but may not receive the required authorities. Make sure that the
investment owing to the structure of the business case proposals are sound.
industry and lack of engagement.
17 / Wellington Lifelines – Regional Resilience ProjectConsequence Likelihood Comments and Risk
Main Risks
(H/M/L) (H/M/L) Management Strategies
Land use changes as a result of Medium Low The Transport Agency will undertake
Transmission Gully or a major facility a detailed business case for each
relocating such as CentrePort may transport intervention which will
reduce the potential benefits realisation consider demand and land use as well
for other projects. as resilience.
Substantive alteration to project scope Low Medium This PBC demonstrates the criticality of
through the planning and design these projects in providing resilience
process altering the assumptions used to the Wellington Region. Significant
to identify the preferred programme. changes to scope for projects within the
preferred programme should ensure
that the same or higher resilience LoS
is achieved. WeLG could be an active
supporter and work with infrastructure
providers to ensure that the potential
resilience benefits are not lost through
the project’s lifecycle.
The risk assessment summary shows that the consequences of the current state
of Wellington’s lifelines infrastructure and rejection of future funding will have
significant impacts on both the Wellington’s regional economy and the wider
New Zealand economy.
5.2 – Constraints and Dependencies
According to BBC guidelines, “constraints amount of either operating or capital
are limiting parameters within which expenditure that can be incurred”.
the investment must be delivered.
The following tables indicate the high-
These can include relevant Government
level constraints and dependencies of
policy decisions, initiatives or rules.
the existing lifelines networks in the
Affordability constraints can include
Wellington Region.
funding envelopes or limits on the
Transmission Gully (Source: Transmission Gully
SAR, NZTA)
Table 3: Constraints
Constraints Notes
Lead time Long decision-making, planning and construction times before infrastructure
resilience projects are able to generate potential benefits.
Funding mechanisms The ability of some lifeline organisations and the public sector to invest in
infrastructure is restricted.
Commercial constraints Many providers of lifeline services operate in competitive markets, including
telecommunications, port services and fuel providers. Their existing
infrastructure vulnerabilities and potential resilience improvements are
commercially sensitive, which can result in an unwillingness to disclose details
and approximate investment costs for some initiatives.
Benefit realisation interdependency Benefits are presented at the macro level and consider the GDP impact of the
programme of projects as a whole. Cost benefit analysis will be applied to
individual projects as they are advanced and funding decisions are made.
Wellington Lifelines – Regional Resilience Project / 18You can also read
