Risk Mitigation following Canterbury Earthquakes

Jim Palmer Chief Executive Council Risk Mitigation – Two Ideas

• Risk Assessment and Financing

Strategy

• Risk–based Reticulation Renewals Waimakariri District

Hurunui District

Waimakariri District

Christchurch City

Selwyn District

Our Challenge We’ve withstood one major event and it cost $127M – can we withstand another one?

. We are a net-debt, high-growth Council with few realisable assets

. The Alpine Fault failure is ‘overdue’ with a 30% chance within 50 years…. and we have other natural hazard risks

Our Response

Developed a Risk Assessment

and Financing Strategy Risk Assessment and Financing Strategy relating to Considered largest natural risks Major Natural Disasters - earthquake, flood, tsunami

November 2014

Our Biggest Risk Our Response

. Guestimated what the damage might be . Ground-truth it against the 2010 event . Considered funding strategy, both with and without insurance being available . Assessed impact on net debt & affordability . Developed as policy: . Limits for debt . Priority list for asset replacement

Council Funding Position with Crown Support and Insurance Estimated Crown/NZTA Insurance Council Share Reinstatement funding funding

Cost $M $M $M $M Above-ground Infrastructure and 30 0 30 0 Buildings

Below-ground Infrastructure 67 40 27 0

Roading 40 28 12

Reserves 10 0 0 10

Emergency Response/repairs 20 15 0 5

Community Support 5 0 0 5

Total 172 83 57 32 Debt Limits - borrowing as % of operating revenue Debt Limits with Headroom Outcomes . Gives confidence the consequences of major events can be accommodated . Demonstrates prudent management in terms of debt levels and affordability . Provides priority for asset reinstatement

Risk-based Reticulation Renewals

• Reticulation renewals were based on age, condition, and performance.

• Now, we use a risk-based approach

Waimakariri DC – Renewals Profile

VULNERABILITY … TO LIQUEFACTION

Location relative to hazard is critical.

IT’S NOT JUST EARTHQUAKES

Risk-based Reticulation Renewals

Considered . The burst history of the Water mains & CCTV footage

. The remaining useful life

. The vulnerability, made up of: . Location . Material ductility . Jointing method

. Criticality

Waimakariri DC – Renewals Approach Wastewater: • CCTV inspection of ~2% network per annum based on risk profile • Risk score (renewals priority score) to schedule preliminary renewal programme • Renewal method determined from criteria

Likelihood Score Consequence Risk

CCTV score Blockage history Vulnerability x Score = Score

Water: • Burst history and pipe condition recorded • Risk score (renewals priority score) to schedule preliminary renewal programme

Likelihood Score Consequence Risk Remaining Blockage history Vulnerability x Score = Score useful life Risk-Based Reticulation Renewals Location Diameter Material Criticality Vulnerability Remaining Risk Score (mm) Useful Life Sewell St, 375 Asbestos AA Extreme 27 6500 Cement Holland Dr, 100 Polyethylene C Medium 15 248 Kaiapoi Outcomes

. Renewal strategy reflects risk . Mains have lower chance of failure . More resilient in future disasters . Quicker return of services to the majority of people

So… two ideas

• Risk Assessment and Financing Strategy

• Risk–based Reticulation Renewals

THANK YOU