Back at the beginning of the 20th Century H.G. Wells, the great science fiction writer and visionary, wrote about the way that civilization would become ruled by scientists, engineers and managers. That is what is taking place – regardless of the number of lawyers who become our elected leaders.

What he didn’t foresee was that they would need to oversee a massive shift in the way that every aspect of the social contract would need to be changed.

Let’s look for a moment at the ramifications for society and business from Climate Change.

Just recently, governments have started releasing statements about the impact of rising sea levels on communities. They frame these things always to envision the change in 100 years rather than what is likely to happen in the next ten years, because they don’t want to panic people, and they also don’t want to have to do anything that might cause them to become unelectable in the near future.

But the release of the information does have an impact just like a stone thrown into a pond creates ripples across the pond and back again.

Now you first have to figure that in releasing information now, it means that this information has been floating around the governments and bureaucracies for years, being verified and validated, with impact studies being written, so that there is no room for ministerial error and no room for any senior bureaucrat to be seen as a panic merchant.

So for the moment lets figure that when they say the science results are in about Climate Change, they are bloody well in and that’s that.

Next, when they talk about rising waters over 100 years they are not including the prospect of tidal surges, which often provide the real impact in a flood.

So let’s say for argument’s sake that the net net of this is that within 5 to 10 years there will be more Hurricane Katrina episodes.

OK – so that is the background – 5 years and big problems.

Now let’s look at what the impact of this information is on local councils and state governments.

Local councils are the ones that implement planning laws, and state governments determine valuations on property.

Clearly a whole lot of low lying areas on the coast – which is the most expensive real estate generally – are going to find that a lot of the houses that have been built over the last 50 years and more, are vulnerable. Whose responsibility is it to determine the advisability of building new sea walls to protect private real estate? And how do they go about advising home owners who were told that their houses meet local building guidelines, that the building guidelines were out of date and irrelevant given the changes in storm surges?

You can see the potential here pretty quickly for a whole load of law suits being bought by home owners who will argue that while a storm surge may be an act of God, the councils had fair warning that climate change was coming. That should keep the courts pretty busy for a few years. Not to mention the law suits that will hit property developers who should have known better…

But it goes deeper than this. Real estate value is a key determinant in setting taxes. If a piece of land is likely to be under water in 100 years, why should it be valued at a million bucks today? If I owned a million dollar property on the coast this is what I would be arguing, as the state government comes to call and pick up its taxes. So the whole tax base for both councils and states has to be called into question right now.

The same thing goes for insurance. At what point in time will the actuaries in the insurance business come to the conclusion that flood risk in any property that is below a certain elevation is not acceptable, and that therefore they will not insure? And at that point how will banks be able to provide a mortgage when there isn’t insurance on foot?

You can see where this is going, right?

It is that houses and land built below a certain elevation or within a certain number of metres of the coast line will be non-viable investments except for those people rich enough to pay cash for the property and not require any insurance.

Of course, this in turn will mean that the vulnerable real estate will be worth virtually nothing, so perhaps the homeless will be able to move in?

The concept of this and the very real prospect of a total overturning of thousands of years of business practice and state and federal property laws and insurance risk and banking history must be driving those who are thinking about this absolutely bonkers.

At some point in time the penny will start to drop for the people who are living below the future water line. Better to sell now to some schmuck who hasn’t been reading the papers and is unaware of where things are headed while you can.

We have a friend who recently moved out of Sydney and one of the most important things that she looked for in selecting her new home was to determine what the elevation of the house was, and what the elevation of the road to the nearest shops was. She is nothing if not thorough. It will be interesting to see how real estate sellers start using the information too… “Check out this property. It is above the 100 year predicted flood line for Sydney. You will be high and dry here!” …