Warming climate was expected to wreak havoc on North Island ski fields in 2050. The voluntary administration of Ruapehu Alpine Lifts suggests climate change could already be taking its toll on the nationally significant operation.
When James Renwick saw the Ruapehu ski fields operator had gone into administration, he immediately thought of climate change, and a report he worked on for the ski industry body two decades ago.
After a string of poor seasons, Ruapehu Alpine Lifts, which operates Whakapapa and Tūroa, appointed John Fisk and Richard Nacey of PwC as voluntary administrators, citing significant cash flow pressure.
Fisk and Nacey will continue to operate the not-for-profit business while assessing options to maximise recoveries for creditors. This could include a $15 million loan from the Ministry for Business, Innovation and Employment, a $6m loan facility from ANZ Bank, and investments from local councils.
Lenders had been putting the squeeze on the company, and a partial sale to raise funds had been mooted but ultimately turned down late last year.
Renwick, a professor of physical geography at Victoria University Wellington Te Herenga Waka and member of the Climate Change Commission, said the risk of climate change for ski operators had been accepted for a long time.
“The Ski Area Association of New Zealand commissioned a study on this the best part of 20 years ago, looking at the question how much longer will ski fields be able to remain viable? How many snowmaking machines will they need, when should they stop investing basically.”
The forecasts from the study suggested the North Island ski fields would be marginal by 2050, Renwick says. “I was a bit surprised to see this happening now; it’s only 2022. But that’s the way it goes.
“It’s been the writing on the wall for quite a few years now and people in the industry certainly have known it. It’s sad to see.”
Covid plays a significant part in the business’ cashflow issues, but nevertheless, the voluntary administration is arguably the most tangible impact of climate change on a regionally significant New Zealand business so far.
Recently, climate change and marine heatwaves left around two in every five salmon in New Zealand King Salmon’s Marlborough Sounds farms dead.
More than 1000 tonnes of fish waste were sent to landfill and the NZX-listed business reported a $73 million loss for the 12-months ended January 31.
It is also closing most of its farms in the Marlborough Sounds.
Renwick said the ability to ski resonated with people more than other climate issues such as marine heatwaves killing fish.
“It’s funny, I’ve given a number of public talks and sometimes mentioned in lectures at university, about our ski fields having to close down in the future. The feedback is ‘Wow, wow, skiing’, not everything else I’ve said, straight to skiing.”
He said the South Island ski fields, being further away from the equator, had a much longer period of viability.
Alongside winter tourism activities and aquaculture, Renwick said agriculture – from crop and fruit cultivation through to dairy production – was next on the block for significant adaptations. For example, there could be changes to which grape varieties could be grown in each wine region.
“We could be in for a very rough ride in the future, unless we get on top of emissions very quickly, which I hope will happen this decade.”
Climate Venture Capital Fund director Dr Jez Weston said it was symptomatic of the wider business community that following a couple of studies on how the changing climate would impact ski fields, little was done about it and investment continued.
“If you look through the [Ruapehu Alpine Lifts] annual reports for the last 10 years, they are not mentioning climate change as a risk.
He said directors of the company had a duty to the shareholders and to lifetime pass holders to act in the best interest of the company, including looking at the long-term risks.
“I think a lot of people in the business community are thinking that this is someone else’s problem, or it’s the Government’s problem, or it’s a long-term problem, which means I can kick the can down the road again. Now the can is looking pretty battered.
“We’ve had three years of the warmest, wettest winter ever, and seven years of bad winters. There will always be variation around the mean [climate], but the mean is getting warmer and it looks like it’s getting wetter as well.
“If that precipitation is falling as rain, not snow, then they’ve got a business problem dealing with it.”
Likely solutions would be a pivot towards mountain biking and hiking, but being in a national park, any significant changes to land use could throw up problems.
“If a problem is going to take you many years to solve, then we need to start many years ago.”