Newsletter No 2 June 2010

Causes of increasing economic losses from future flood disasters


Laurens Bouwer, MSc

space_june10Natural hazard risk is dynamic, and expected to increase over time due to many reasons. Climate change is often said to be an important driver. In a new article in the journal Global Environmental Change, researchers from the Institute for Environmental Studies (IVM) argue that socioeconomic and land-use changes are at least as important for the increase in flood risk as climate change in the coming decades. They report on a framework for analyzing future disaster risks, using scenarios for changes in flood hazard probabilities and changes in the potential economic losses from such floods. The framework was applied to a case study area in the south of the Netherlands (dike ring 36, Land van Heusden/De Maaskant). This area with the two cities Den Bosch and Oss, is at risk from flooding in case of a dike breach along the river Meuse.

Socioeconomic scenarios reflecting low and high population change and economic growth were used, in order to assess the range of possible changes in flood losses in the future. These scenarios were translated into changes in land-use, most notably the expansion of urban and industrial areas in flood prone areas, using a land-use model. Also, estimates were made of the changes in the economic value of vulnerable objects, such as building stock, industry, and infrastructure. Using a damage model, an estimate was given of the change in direct economic losses under a series of possible flood events. Due to socioeconomic and land-use change, annual expected losses in this area may increase by between 35 and 172% by the year 2040, compared to the baseline situation in the year 2000. The autonomous increase in asset values, due to economic development has a large weight in the impact of socioeconomic change, as this may lead up to a doubling of losses under the highest economic growth scenario.

Climate change may lead to increasing river discharges, which would increase the frequency of possible dike breaches and thereby increase the flood losses that can be expected to occur. We find that climate change may lead to an increase in expected losses of between 46 and 201% by the year 2040 depending on level of global warming, assuming that flood probabilities or consequences are not reduced. Climate change and socioeconomic change amplify each other, and taken together may lead to an increase in expected losses of between 96 and 719%.

Many studies of disaster losses give a single loss estimate, which may lead to an under-appreciation of the impact of extremely large loss events. Therefore the study also presents loss-probability curves for future risks that describe the range of small and large events and their probabilities. This may help to assess the increase of the most extreme potential losses, which is relevant for instance for the insurance industry. The approach presented in the paper gives a more detailed and comprehensive assessment than previous studies, and this approach could also be applied in other countries. This is also relevant for developing countries, where expected socioeconomic change may lead to increases in risk that are even higher than projected in this study.

Flood prevention measures have been planned for the Meuse river basin, consisting of widening and deepening the river bed, creation of additional channels, and relocation of dike segments. The study also finds that these measures would counterbalance the increase in expected annual losses due to climate change under all scenarios, and thereby obscure any climate signal in flood losses. Flood prevention therefore has the potential to reduce the economic impact of climate change on losses from flood disasters. Such measures however cannot help to reduce the impact from increasing exposure to floods that occurs irrespective of climate change. We find that maximum losses may still increase by up to 170% by 2040, and here other adaptation measures may be needed to reduce the projected increase in risks, such as the flood proofing of buildings.

Reference

Bouwer, L.M., P. Bubeck, and J.C.J.H. Aerts (in press). Changes in future flood risk due to climate and development in a Dutch polder area. Global Environmental Change,
doi:10.1016/j.gloenvcha.2010.04.002

Contact Information: L.M. Bouwer, MSc.