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Cost-benefit analysis and flood control policy in The Netherlands
... More recently, more attention is paid to the (reduction of the) consequences of flooding. In connection to that, also the concept of risk has received renewed attention in the Netherlands (Brouwer and Kind, 2005). ...
... For most parts of the country more than one flood scenario is possible, and this may lead to a wide range of variation in damage estimates. To manage the high level of uncertainty and provide a feasible range of values for flood risks derived from the model for reliable use in CBA of flood protection scenarios as in Jonkman et al. (2004), Brouwer and van Ek (2004), Brouwer and Kind (2005) or Eijgenraam (2006), multiple flood scenarios have to be constructed for dike ring areas, combined with probabilistic methods to assess the likelihood of the different flooding scenarios actually occurring (Vrijling, 2001). Another potential field of application is flood insurance. ...
This paper presents a model developed in the Netherlands for the estimation of damage caused by floods. The model attempts to fill the gap in the international literature about integrated flood damage modelling and develop an integrated framework for the assessment of both direct hazard-induced damages and indirect economic damages such as the interruption of production flows outside the flood affected area, as well as loss of life due to flooding. The scale of damage assessment varies from a specified flood-prone area in a river basin or a coastal region to the country's entire economy. The integrative character of the presented model is featured by the combination of information on land use and economic data, and data on flood characteristics and stage-damage functions, where the geographical dimension is supported by modern GIS to obtain a damage estimate for various damage categories. The usefulness of the model is demonstrated in a case study estimating expected flood damage in the largest flood-prone area in the Netherlands.
... More recently, more attention is paid to the (reduction of the) consequences of flooding. In connection to that, also the concept of risk has received renewed attention in the Netherlands (Brouwer and Kind, 2005). ...
... For most parts of the country more than one flood scenario is possible, and this may lead to a wide range of variation in damage estimates. To manage the high level of uncertainty and provide a feasible range of values for flood risks derived from the model for reliable use in CBA of flood protection scenarios as in Jonkman et al. (2004), Brouwer and van Ek (2004), Brouwer and Kind (2005) or Eijgenraam (2006), multiple flood scenarios have to be constructed for dike ring areas, combined with probabilistic methods to assess the likelihood of the different flooding scenarios actually occurring (Vrijling, 2001). Another potential field of application is flood insurance. ...
... Nonmonetary impacts were treated with particular attention starting from the year 2000 with the Room for Rivers project, by providing cost estimates needed to restore or compensate for ecosystem service loss (Bos & Zwaneveld, 2017). CBA represents an invaluable tool when choosing among competing alternatives (Brouwer & Kind, 2005). Initial Delta works analysis, for example, involved comparing the CBA of Delta works vs. raising and strengthening existing dikes along the waterways. ...
... For less populated areas, safety standards of 1/1250 to 1/4000 years are required. These standards are the highest in the world (Brouwer & Kind, 2005;Kind, 2014). ...
My research goal for the PIRE program was to understand and quantify the flood risk to above ground storage tanks (AST) in the Port of Rotterdam since consequences of AST failure can be catastrophic for the surrounding environment and communities, and the economy. Furthermore, I also wanted to understand the flood risk mitigation approach adopted in the Netherlands to gain insights on how AST flood risk can be managed in the Netherlands. For hurricane risk assessment of ASTs, I used physics-based fragility to estimate the vulnerability of ASTs subjected to inundation depths corresponding to different return periods. The NSF PIRE program components such as meetings with experts and stakeholders helped me understand the flood risk management philosophy in the Netherlands. Site visits and other interactions with experts and students from various disciplines also helped me broaden my perspective on flood risk management using a holistic multidisciplinary approach.
... The design standard of the barrier and subsequent cost estimates are based on a protection level of 1/10,000 years (Jonkman et al. 2015). This is commonly used protection level for storm surge barriers in the Netherlands for highly densely populated areas and is the highest in the world (Brouwer and Kind 2005;Kind 2014). Thus far, the US Army Corps of Engineers (USACE) has employed a design standard 1/100 years for flood control structures, and while for densely populated areas the exceedance standards of 1/500 years have been recommended, they have not been operationalized in practice (Galloway et al. 2006). ...
Understanding socioeconomic consequences of natural disasters both locally and nationally is critical in assessing and informing mitigation strategies to combat future catastrophic threats. We develop a state-level computable general equilibrium model and assess the vulnerability of state and US national economies to surge events affecting coastal communities and strategic industrial assets including petroleum and chemical manufacturing in the south-eastern region of Texas. In addition to enumerating these impacts, our model also assesses loss avoidance associated with one kind of adaptation strategy, a storm surge suppression system, that has been proposed for the region to address growing concerns over storm surge inundation. Our results indicate persistent and adverse long-term impacts of storm surge events on the economies of Texas and the USA without the surge suppression system. Importantly, while neighboring states may temporarily benefit from substitution effects and reallocation of resources, the majority of states will suffer welfare losses as a result of surge-induced impacts in Texas. Adjusting impacts by storms’ return probabilities, the average annualized decline in Texas Gross State Product is approximately 0.05% in 2066, corresponding to $5 billion, while welfare and personal income will decline by 0.05% and 0.04%, respectively. Model simulations with the storm suppression system indicate moderation in negative impacts. Our research provides a modeling framework for assessing economic impacts of disasters and further contributes to estimating ripple effects on national and regional economies.
... Verontreinigde drinkwaterbron bij Sunda Kelapa, Jakarta, Indonesië.– hydro-solidarity – dat tegenwoordig wereldwijd wordt toegepast om aan te geven dat water een collectief goed is waar mensen ook gemeenschappelijk zorg voor moeten dragen[25,75,86,87].[16]. Het probleem van het toepassen van kosten-batenanalyse in risico ...
... Klijn et al. 2007). Any avoided damages due to management measures can then be included in a cost-benefit analysis to evaluate the net benefit of such measures (Brouwer and Kind 2005;Pearce and Smale 2005;Heidari 2009;Miyata and Abe 1994). Table 4 shows absolute and proportional changes in the damage estimate per 10-cm change in inundation depth. ...
With the recent transition to a more risk-based approach in flood management, flood risk models-being a key component in flood risk management-are becoming increasingly important. Such models combine information from four components: (1) the flood hazard (mostly inundation depth), (2) the exposure (e.g. land use), (3) the value of elements at risk and (4) the susceptibility of the elements at risk to hydrologic conditions (e.g. depth-damage curves). All these components contain, however, a certain degree of uncertainty which propagates through the calculation and accumulates in the final damage estimate. In this study, an effort has been made to assess the influence of uncertainty in these four components on the final damage estimate. Different land-use data sets and damage models have been used to represent the uncertainties in the exposure, value and susceptibility components. For the flood hazard component, inundation depth has been varied systematically to estimate the sensitivity of flood damage estimations to this component. The results indicate that, assuming the uncertainty in inundation depth is about 25 cm (about 15% of the mean inundation depth), the total uncertainty surrounding the final damage estimate in the case study area can amount to a factor 5-6. The value of elements at risk and depth-damage curves are the most important sources of uncertainty in flood damage estimates and can both introduce about a factor 2 of uncertainty in the final damage estimates. Very large uncertainties in inundation depth would be necessary to have a similar effect on the uncertainty of the final damage estimate, which seem highly unrealistic. Hence, in order to reduce the uncertainties surrounding potential flood damage estimates, these components deserve prioritisation in future flood damage research. While absolute estimates of flood damage exhibit considerable uncertainty (the above-mentioned factor 5-6), estimates for proportional changes in flood damages (defined as the change in flood damages as a percentage of a base situation) are much more robust.
... Safety levels are highest along the coast in the western part of the country, because this is where most of the economic activities take place and big cities are found such as Rotterdam, The Hague and Amsterdam. Safety levels are also higher because of the shorter warning period for flood disasters from sea (hours) compared to flood disasters from rivers land inwards (days) (Brouwer and Kind 2005; Beckers and De Bruin 2011). The expected material damage costs along the coast in the provinces of North and South Holland where these cities are located are about 33.2 billion Euros, and are substantially higher than along the rivers Rhine and Meuse land inwards, where the expected damage costs vary between 5 million and 22 billion Euros depending on the specific dike enclosure (Kind 2011). ...
The main objective of this study is to simulate household choice behavior under varying climate change scenarios using choice experiments. Economic welfare measures are derived for society’s willingness to pay (WTP) to reduce climate change induced flood risks through private insurance and willingness to accept compensation (WTAC) for controlled flooding under varying future risk exposure levels. Material flood damage and loss of life are covered in the insurance policy experiment, while the WTAC experiment also captures the economic value of immaterial flood damage such as feelings of discomfort, fear and social disruption. The results show that WTP and WTAC are substantial, suggesting a more prominent role of external social damage costs in cost-benefit analysis of climate change and flood mitigation policies.
... For general discussion of CBA see, e.g., Brouwer and Pearce (2005), Hanley and Spash (1993), Hansjürgens (2004), Turner (1990), andYoung (2005). For applications in the context of natural hazard management see Brouwer and Kind (2005), MAFF (1999), Pearce and Smale (2005), Thöni, Leiter, andWeck-Hannemann (2009), Turner, Burgess, Hadley, Coombes, andJackson (2007), or Meyer, Priest, and Kuhlicke (2012). ...
The case study research developed over the past 4 years (2012-2016) has provided a significant contribution to our knowledge regarding climate change adaptation at the local level in Europe, and across the world. By case study we refer to empirical analysis of climate change adaptation in real life contexts (Yin, 1994). Europe is equally a supra case study, with ambitious mitigation targets for the coming decades and with highly vulnerable areas to climate change impacts. The research project leading to this book took on a particular focus on understanding the link (i.e., synergistic, contradicting, conflicting, or missing) between top-down strategies and bottom-up experiences. To this end, an initial broad overview of case study examples around the world was carried out, followed by in-depth analyses of 23 diverse case studies across European regions and sectors (Table 3.1) and 4 international case studies outside Europe. The initial screening included 139 case examples from 19 countries (91 were European and 45 were non-European cases) around the world.
The case study screening led to the identification of the core research needs and challenges for local adaptation, as well as informed and provided a baseline for comparison case studies. Since European cases were found to be more easily comparable and considered sufficiently representative of local adaptation efforts, the project’s
case study research was centered in 23 in-depth case studies
carried out across Europe and clustered in European regions and Metasector groups (Table 3.1).
This chapter draws on case study results to provide an analytical discussion of the core issues studied, namely: an overview of local climate impacts, vulnerabilities, risks, and adaptation options; a characterization of the main methodologies developed to design and assess adaptation plans and measures, including in-depth participatory approaches and comprehensive economic assessments; a critical discussion of the main barriers and opportunities for implementation; and the presentation of a new tool for evaluating adaptation processes.
... 74, translated). The overview of cost-benefit analysis and flood control in the Netherlands byBrouwer and Kind (2005) starts with the analysis by Tinbergen of the Delta Works and do not mention the work by Van Dantzig and the analysis in the 1901 act for enclosure of the Zuiderzee. 9 For example, this role was entirely absent in specialized Dutch water works histories, likeVen (2004) andHam (2007 and, and in the major historic overviews of Dutch economic and spatial development (e.g.Zanden and Riel,2000 andWoud, 1987; history professor Van der Woud confirmed by email that he did not know that such a cost-benefit analysis existed). ...
The Netherlands is a global reference for flood risk management. This reputation is based on a mix of world-class civil engineering projects and innovative concepts of water governance. For more than a century, cost-benefit analysis has been important for flood risk management and water governance in the Netherlands. It has helped to select the most effective and efficient flood risk projects and to coordinate and reconcile the interests of various policy areas, levels of government and private stakeholders. This paper provides for the first time an overview of this well-developed practice. This includes the cost-benefit analysis in the 1901 act for enclosure of the Zuiderzee, van Dantzig’s famous formula for the economically optimal strength of dikes and a whole set of cost-benefit analyses for More room for rivers and the Delta Program for the next century. Dutch practice illustrates how cost-benefit analysis can support and improve flood risk management and water governance; other countries may learn from this. Rough calculations indicate that investing in cost-benefit analysis has been a highly profitable investment for Dutch society.
... Near the border with Germany, the fl ood return period is once every 1,250 years. Th e western part of the country is the most densely populated and includes large cities like Rotterdam, Th e Hague, and Amsterdam, where Dutch economic activity is concentrated (Brouwer and Kind 2005). Hence, the safety levels are relatively higher in this part of the country. ...
A cost-benefit analysis of flood disaster managementin the Netherlands is presented in the context of climate change. The costs and benefits of potential emergency measures in designated flood disaster areas are examined. Benefit to cost ratios based on material damage costs are modified based on the assessment of public risk aversion, measured through public willingness to accept compensation (WTAC) for controlled flooding should the designated emergency areas actually be employed in situations of disaster flooding. The estimated WTAC value is an economic indicator of the expected welfare loss due to fear, stress, and social disruption and should be added to the material damage costs of controlled flooding. WTAC is substantial, varying roughly between €185,000 and €370,000 per household per flood event, depending on flood probability and inundation depth, but also on respondent characteristics,such as evacuation history,trust in existing flood emergency plans, fear of flooding and subjective risk perception
... The construction of physical infrastructure is capital intensive and involves long-term costs, although it is often characterized by high benefit-to-cost ratios [Brouwer and Kind (2005) estimated these in the range between 0.4 and 4.1 for The Netherlands]. Infrastructure projects often entail high up-front (set-up) costs but also provide durable long-lived benefits in terms of risk mitigation. ...
The literature on the costing of mitigation measures for reducing impacts of natural hazards is rather fragmented. This paper provides a concise overview of the current state of knowledge in Europe on the costing of mitigation measures for the reduction of natural hazard risks (droughts, floods, storms and induced coastal hazards as well as alpine hazards) and identifies knowledge gaps and related research recommendations. Furthermore, it provides a taxonomy of related mitigation options, classifying them into nine categories: (1) management plans, land-use planning, and climate adaptation; (2) hazard modification; (3) infrastructure; (4) mitigation measures (stricto sensu); (5) communication in advance of events; (6) monitoring and early warning systems; (7) emergency response and evacuation; (8) financial incentives; and (9) risk transfer (including insurance). It is found that the costing of mitigation measures in European and in other countries has almost exclusively focused on estimating direct costs. A cost assessment framework that addresses a range of costs, possibly informed by multiple stakeholders, would provide more accurate estimates and could provide better guidance to decision makers. (C) 2014 American Society of Civil Engineers.
... For general discussion of CBA see e.g.Hanley and Spash (1993),Hansjürgens (2004),Brouwer and Pearce (2005),Young (2005). For applications in the context of natural hazard management seeMAFF (1999),Brouwer and Kind (2005), Pearce and Smale R (2005), Turner et al. (2007), BMLFUW (2008), Thöni et al. (2009) or Meyer et al 2011. ...
CONHAZ project final report
With the recent transition to a more risk-based approach in flood management, flood risk models—being a key component in flood
risk management—are becoming increasingly important. Such models combine information from four components: (1) the flood hazard
(mostly inundation depth), (2) the exposure (e.g. land use), (3) the value of elements at risk and (4) the susceptibility
of the elements at risk to hydrologic conditions (e.g. depth–damage curves). All these components contain, however, a certain
degree of uncertainty which propagates through the calculation and accumulates in the final damage estimate. In this study,
an effort has been made to assess the influence of uncertainty in these four components on the final damage estimate. Different
land-use data sets and damage models have been used to represent the uncertainties in the exposure, value and susceptibility
components. For the flood hazard component, inundation depth has been varied systematically to estimate the sensitivity of
flood damage estimations to this component. The results indicate that, assuming the uncertainty in inundation depth is about
25cm (about 15% of the mean inundation depth), the total uncertainty surrounding the final damage estimate in the case study
area can amount to a factor 5–6. The value of elements at risk and depth–damage curves are the most important sources of uncertainty
in flood damage estimates and can both introduce about a factor 2 of uncertainty in the final damage estimates. Very large
uncertainties in inundation depth would be necessary to have a similar effect on the uncertainty of the final damage estimate,
which seem highly unrealistic. Hence, in order to reduce the uncertainties surrounding potential flood damage estimates, these
components deserve prioritisation in future flood damage research. While absolute estimates of flood damage exhibit considerable
uncertainty (the above-mentioned factor 5–6), estimates for proportional changes in flood damages (defined as the change in
flood damages as a percentage of a base situation) are much more robust.
KeywordsFloods–Flood risk–Flood damage–Flood damage assessment–Uncertainty–Sensitivity
The concept of flood risk management, promoted by the EU Floods Directive, tries to mitigate flood risks not only by structural, hydraulic engineering measures, but also by non-structural measures, like, e.g., land-use planning, warning and evacuation systems. However, few methods currently exist for the economic evaluation of such non-structural measures and, hence, their comparison with structural measures. The objective of this paper is to demonstrate the potential benefits of employing a wider range of economic appraisal methods for flood projects, in particular, it provides examples and applications of methodologies which may be employed to evaluate non-structural measures and their transaction costs. In two case studies at the Mulde River, Germany, two non-structural measures, a resettlement option and a warning system, are evaluated and compared with structural alternatives with regard to their effectiveness, cost-effectiveness and efficiency. Furthermore, a simple approach is tested in order to show the transaction costs of these measures. Case study results show that the choice of evaluation criteria can have a major impact on the assessment results. In this regard, efficiency as an evaluation criterion can be considered as superior to cost-effectiveness and effectiveness as it is also able to consider sufficiently the impacts of non-structural measures. Furthermore, case study results indicate that transaction costs could play an important role, especially with non-structural measures associated with land-use changes. This could explain why currently these kinds of measures are rarely selected by decision makers.
Flood protection infrastructures such as storm surge barriers, levees, and dikes play important roles in reducing flood impacts on coastal communities. However, construction of a new structure remains a contentious public policy decision partly because it requires sizable investment to address infrequent disasters. In the United States, with a growing federal budget deficit, committing scarce resources to the construction of large flood infrastructures necessitates a comprehensive cost-benefit analysis (CBA). Using the Houston-Galveston region in Texas as a case study, this chapter reviews a framework to assess benefits associated with a storm surge barrier in terms of avoided damage to residential property and revenue loss to minimize cessation of petrochemical manufacturing operations. Integrating outputs of storm surge, property loss estimation model, and economic models (input–output and computable general equilibrium), this chapter demonstrates important benefits associated with the surge barrier not only for the Houston-Galveston communities, but also for the entire Texas state and the US economy. The chapter draws experience from cost-benefit analysis in the Netherlands and discusses several important aspects that can inform barrier design and CBA for the proposed coastal spine.
The Netherlands is a global reference for flood risk management. This reputation is based on a mix of world-class civil engineering projects and innovative concepts of water governance. For more than a century, cost-benefit analysis has been important for flood risk management and water governance in the Netherlands. It has helped to select the most effective and efficient flood risk projects and to coordinate and reconcile the interests of various policy areas, levels of government and private stakeholders. This paper provides for the first time an overview of this well-developed practice. This includes the cost-benefit analysis in the 1901 act for enclosure of the Zuiderzee, van Dantzig’s famous formula for the economically optimal strength of dikes and a whole set of cost-benefit analyses for More room for rivers and the Delta Program for the next century. Dutch practice illustrates how cost-benefit analysis can support and improve flood risk management and water governance; other countries may learn from this. Rough calculations indicate that investing in cost-benefit analysis has been a highly profitable investment for Dutch society.
The paper aims to diagnose whether it is justified in investment appraisal to apply a separate treatment (in terms of the value of the discount rate) for close-in-time versus distant-in-time project effects as well as for effects applying to close-in-space versus distant-in-space beneficiaries. The analysis rests on a survey asking Polish citizens to state their indifference points between lives saved now and in the future (with delays from 10 to 150 years to capture temporal distance) for two separate projects: saving lives in Poland (geographically close) and in Latvia (geographically remote). The findings suggest that while time distance can be perceived as a rationale to apply separate (lower) DRs which increase the weight of time-distant impacts in project’s NPV, outcomes distant in space should be treated as equally important to geographically close impacts, thus extending the analysis beyond national borders.
JEL: H43, D61, D64
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The creation of the English-language version of these publications is fi nanced in the framework of contract No. 607/P-DUN/2018 by the Ministry of Science and Higher Education committed to activities aimed at the promotion of education.
This paper models two commonly adopted regulatory polices (the minimum requirement regulation vs. subsidy) on port adaptation investment to mitigate the damage caused by climate change-related disasters. The ambiguity of the disaster occurrence probability and the decision makers’ attitudes towards risk are explicitly modelled. It is found, under the minimum requirement regulation, ports balance the option of increasing their adaptation vs. reducing their economic activities. In comparison, subsidies promote adaptation without introducing any incentive for ports to reduce outputs, but they can be less efficient than minimum requirement regulations in addressing market failures, such as that caused by a spill-over externality. The ambiguity of disasters changes the optimal designs of minimum requirement regulation and subsidy policy but does not change their relative ranking qualitatively. Decision makers’ risk attitudes also play important roles. Higher degrees of pessimism (more risk aversion) lead to lower port outputs but can also increase the level of port adaptation to achieve full insurance against disaster loss. Higher degrees of pessimism also make the government more conservative to intervene in the ports’ adaptation and thus less likely to impose the two regulatory policies. Our analysis also explains why it is justified for the government to withhold intervention under ambiguity, and also shows that the ambiguity does not necessarily bring worse expected social welfare.
Heavily urbanised areas located in the low-lying deltas of Asia have been identified as being especially vulnerable to climate-related impacts (IPCC 2007). It has been predicted that coastal cities in East and South Asia will face an increase in the exposure of population and assets to flooding (Nicholls et al. 2008). Climate change projections suggest the possibility of an increase in the frequency and intensity of floods in these areas. At the same time, urban growth will increase the value of potential flood damages and vulnerability in the region. Given these changing disaster risks, coastal cities will need to revisit their long-term disaster risk management strategies with special consideration to flood protection investments and urban development plans. A balance will need to be found between the potential increases in flood damages and the economic benefits from growth in areas vulnerable to floods over the next decades. This paper presents an economic analysis of investments in flood protection infrastructure to mitigate increased disaster risk due to climate change and urbanisation based on hydrologic, engineering, and socio-economic considerations. The analysis is applied in the Ho Chi Minh City province of Vietnam, an area that is growing rapidly and is also subject to flooding. Probabilistic cost-benefit analysis is used to study the economic viability of alternative infrastructure designs for flood protection. The analysis improves upon traditional disaster risk planning by taking into account future changes in flood frequencies due to climate change and changes urban development due to economic growth. The framework presented illustrates the potential to incorporate economic methods in the evaluation of investments for disaster risk reduction and climate change adaptation.
The public benefits of agricultural wildlife management are estimated by means of the contingent valuation method. Households are asked for their willingness to pay for wildlife preservation measures taken by farmers. Corresponding with the survey's three-stage budgeting structure, a non-linear recursive model is used to test the study's construct validity. Since the method is not undisputed and rapidly evolving, the outcomes of the study are accompanied by an extensive discussion of the way the method is applied. A rough cost-benefit analysis indicates that current policy towards management agreements is justified based on the neo-Paretian welfare criterion. Copyright 1998 by Oxford University Press.