Costs of climate adaptation and managed relocation would fall to central and local government, banks, insurers and asset owners, South Dunedin Future programme manager Jonathan Rowe said.
"Clarity is essential," he said.
His experience was initiatives could be taken "all the way to the point where we have to answer the question around who pays for what".
Mr Rowe supported calls for national leadership — including high-level objectives and well-defined roles and responsibilities — complemented by locally led decision-making and delivery, and an appropriate funding model.
The planning approach needed to be nationally consistent while allowing flexibility for localised solutions, he said.
South Dunedin Future is a joint programme between the Dunedin City Council and Otago Regional Council responding to climate change and flooding issues.
Aims include adapting South Dunedin’s infrastructure and environment "in a way that creates more room for increasing levels of rain, sea and groundwater, while protecting space for people and the things that matter".
Mr Rowe told a parliamentary finance and expenditure subcommittee yesterday relocation of people and assets should not be viewed as an option of last resort.
It was one tool in the toolbox alongside protective measures and accommodating and avoiding risk, he said.
Mr Rowe acknowledged finance was challenging and he said some climate adaptation would need to be part of a business-as-usual response to avoid unnecessary future costs.
The existing urban form in South Dunedin was misaligned with the environment, he said.
Asked by Dunedin MP Rachel Brooking to expand on this, Mr Rowe said the area had been built on in past decades in ways unlikely to proceed now.
"Effectively, we’ve created this basin that has no natural outfall for water," he said.
The area now had to contend with rising groundwater and sea levels and an increased threat from storms or flooding.
"How do we realign the urban form to manage these fluctuations in water we might get in future?"
Mr Rowe said substantial change could be required for land use.
There would need to be consideration of how to avoid disenfranchising a lot of people or creating areas deemed unattractive for housing or investment, he said.
University of Otago professor of public health and environmental health Alex Macmillan told the inquiry well resourced local decision-making was needed.
She described this as a partnership between iwi, local government and resident communities.
There also needed to be a "polluter pays" element in meeting adaptation costs, such as from companies producing fossil fuels, she said.
Prof Macmillan said mitigation continued to be the most cost-effective, equitable and healthy response to climate change.
The Insurance Council of New Zealand supported development of a national climate adaptation model, council chief executive Kris Faafoi said.
"This strategy aims to bring together central government, councils, the private sector and communities to effectively mitigate risks and ensure sustainable adaptation measures," he said.
"By addressing these risks now, New Zealand can avoid the higher costs associated with future climate-related disasters."
