Hostname: page-component-848d4c4894-2pzkn Total loading time: 0 Render date: 2024-05-12T00:53:05.469Z Has data issue: false hasContentIssue false
  • English
  • Français

Social vulnerability in cost-benefit analysis for flood risk management

Published online by Cambridge University Press:  07 October 2019

Jarl Kind Open the ORCID record for Jarl Kind [Opens in a new window] ,
W. J. Wouter Botzen  and
Jeroen C. J. H. Aerts
Jarl Kind*
Affiliation:
Department of Flood Risk Management, Deltares, Utrecht, The Netherlands
W. J. Wouter Botzen
Affiliation:
Institute for Environmental Studies, VU University Amsterdam, The Netherlands Utrecht University, School of Economics, Utrecht, The Netherlands Risk Management and Decision Processes Centre, Wharton School, University of Pennsylvania, Philadelphia, PA, USA
Jeroen C. J. H. Aerts
Affiliation:
Institute for Environmental Studies, VU University Amsterdam, The Netherlands
*
*Corresponding author. E-mail: jarl.kind@deltares.nl
Get access Rights & Permissions [Opens in a new window]

Abstract

Traditional cost-benefit analyses (CBAs) of flood risk reduction measures usually ignore distributions of damages over populations, which disadvantages the poor. Instead, a CBA based on social welfare includes individual social vulnerability through relative impacts on consumption. If vulnerabilities are high, floods are catastrophic and cause poverty, migration or indirect deaths, and risk reductions have high social welfare values. For non-catastrophic risks, social welfare values of risks are relatively higher for vulnerable low-income households. We present a framework to integrate social vulnerability into CBAs, and show how financial protection reduces social flood vulnerability and provides welfare benefits. A case study illustrates that traditional CBAs underestimate the social welfare value of flood risk reduction measures, up to a factor of 30. Data on financial protection is however scarce, which hampers estimation of the social welfare value in practice. A solution is to increase financial protection of individuals, in addition to offering physical flood protection.

Keywords

social vulnerabilitysocial resiliencecost-benefit analysisflood risk managementequitysocial welfarenatural disasters
Type
Research Article
Information
Environment and Development Economics , Volume 25 , Issue 2 , April 2020 , pp. 115 - 134
Copyright
Copyright © Cambridge University Press 2019

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Adler, MD and Posner, EA (2006) New Foundations of Cost-Benefit Analysis. Cambridge, MA: Harvard University Press.Google Scholar
Anttila-Hughes, JK and Hsiang, SM (2013) Destruction, disinvestment, and death: economic and human losses following environmental disaster. SSRN Working Paper. Available at http://dx.doi.org/10.2139/ssrn.2220501.CrossRefGoogle Scholar
Arrow, KJ and Lind, RC (1970) Uncertainty and the evaluation of public investment decisions. American Economic Review 60, 364–378.Google Scholar
Boardman, A, Greenberg, D, Vining, AR and Weimer, DL (2014) Cost-Benefit Analysis: Concepts and Practice, 4th Edn. Harlow, Essex: Pearson Education Limited.Google Scholar
Chinh, DT, Bubeck, P, Dung, NV and Kreibich, H (2016) The 2011 flood event in the Mekong Delta: preparedness, response, damage and recovery of private households and small businesses. Disasters 40, 753–778.CrossRefGoogle Scholar
Cutter, SL, Emrich, CT, Morath, DP and Dunning, CM (2013) Integrating social vulnerability into federal flood risk management planning. Journal of Flood Risk Management 6, 332–344.CrossRefGoogle Scholar
Demirgüç-Kunt, A, Klapper, L, Singer, D, Ansar, S and Hess, J (2018) The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. Washington DC: World Bank Group. Available at https://doi.org/10.1596/978-1-4648-1259-0.CrossRefGoogle Scholar
Doorn, N, Gardoni, P and Murphy, C (2018) A multidisciplinary definition and evaluation of resilience: the role of social justice in defining resilience. Sustainable and Resilient Infrastructure 4(3): 112–123. Available at https://doi.org/10.1080/23789689.2018.1428162.CrossRefGoogle Scholar
European Commission (2014) Guide to Cost-Benefit Analysis of Investment Projects, Economic Appraisal Tool for Cohesion Policy 2014–2020. Brussels, Belgium: European Commission.Google Scholar
Frontier Economics (2013) The Economics of Climate Resilience: Appraising flood management initiatives–a case study. A report prepared for Defra and the devolved administration. Available at http://randd.defra.gov.uk/Default.aspx?Module=More&Location=None&ProjectID=18016.Google Scholar
Hallegatte, S (2006) A cost-benefit analysis of the New Orleans Flood Protection System. AEI-Brookings Joint Center for Regulatory Studies. Regulatory Analysis 06-02. Available at https://hal.archives-ouvertes.fr/hal-00164628.Google Scholar
Hallegatte, S, Green, C, Nicholls, RJ and Corfee-Morlot, J (2013) Future flood losses in major coastal cities. Nature Climate Change 3, 802–806.CrossRefGoogle Scholar
Hallegatte, S, Bangalore, M and Vogt-Schilb, A (2016) Assessing socioeconomic resilience to floods in 90 countries. World Bank Policy Research Working Paper No. 7663. The World Bank, Washington, DC. Available at https://ssrn.com/abstract=2781020.CrossRefGoogle Scholar
Hallegatte, S, Vogt-Schilb, A, Bangalore, M and Rozenberg, J (2017) Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters. Washington, DC: World Bank.Google Scholar
HM Treasury (2011) The Green Book: Appraisal and Evaluation in Central Government. London: TSO.Google Scholar
Huizinga, J, de Moel, H and Szewczyk, W (2017) Global flood depth-damage functions. Methodology and the database with guidelines. Luxembourg: Publications Office of the European Union. Available at https://ec.europa.eu/jrc/en/publication/global-flood-depth-damage-functions-methodology-and-database-guidelines.Google Scholar
Kaufman, N (2014) Why is risk aversion unaccounted for in environmental policy evaluations? Climatic Change 125, 127–135.CrossRefGoogle Scholar
Kind, J (2014) Economically efficient flood protection standards for the Netherlands. Journal of Flood Risk Management 7, 103–117.CrossRefGoogle Scholar
Kind, J, Botzen, WJW and Aerts, JCJH (2017) Accounting for risk aversion, income distribution and social welfare in cost-benefit analysis for flood risk management. WIREs Climate Change 8, 1–20.CrossRefGoogle Scholar
Krug, EG, Kresnow, M, Peddicord, JP, Dahlberg, LL, Powell, KE, Crosby, AE and Annest, JL (1999) Retraction: suicide after natural disasters. New England Journal of Medicine 340, 148–149.CrossRefGoogle ScholarPubMed
Lamond, J and Penning-Rowsell, E (2014) The robustness of flood insurance regimes given changing risk resulting from climate change. Climate Risk Management 2, 1–10.CrossRefGoogle Scholar
Lanjouw, P, Marra, M and Nguyen, C (2013) Vietnam's evolving poverty map: patterns and implications for policy. Policy Research Working Paper No. 6355, World Bank, Washington, DC.CrossRefGoogle Scholar
Lawless, RM (2005) Bankruptcy filing rates after a major hurricane. Nevada Law Journal 6, 7–20.Google Scholar
Mechler, R, Czajkowski, J, Kunreuther, H, Michel-Kerjan, E, Botzen, W, Keating, A, McQuistan, C, Cooper, N and O'Donnell, I (2014) Making Communities More Flood Resilient: The Role of Cost Benefit Analysis and Other Decision-Support Tools in Disaster Risk Reduction. Zurich Flood Resilience Alliance. Available at http://opim.wharton.upenn.edu/risk/library/ZAlliance-decisiontools-WP.pdf.Google Scholar
Miller, TR (2000) Variations between countries in values of statistical life. Journal of Transport Economics and Policy 34, 169–188.Google Scholar
Munich Re (2018) TOPICS Geo Natural catastrophes 2017. Available at https://www.munichre.com/content/dam/munichre/global/content-pieces/documents/302-09092_en.pdf.Google Scholar
Nabangchang, O, Allaire, M, Leangcharoen, P, Jarungrattanapong, R and Whittington, D (2015) Economic costs incurred by households in the 2011 Greater Bangkok flood. Water Resources Research 51, 58–77.CrossRefGoogle Scholar
Naqvi, AA and Rehm, M (2014) A multi-agent model of a low income economy: simulating the distributional effects of natural disasters. Journal of Economic Interaction and Coordination 9, 275–309.CrossRefGoogle Scholar
Pearce, D, Atkinson, G and Mourato, S (2006) Cost-Benefit Analysis and the Environment, Recent Developments. Paris: OECD Publishing.Google Scholar
Peduzzi, P (2017) Flooding: prioritizing protection? Nature Climate Change 7, 625–626.CrossRefGoogle Scholar
Reynaud, A, Nguyen, MH and Aubert, C (2017) Is there a demand for flood insurance in Vietnam? Results from a choice experiment. Environmental Economics and Policy Studies 20, 593–617.CrossRefGoogle Scholar
Rose, A (2017) Defining and Measuring Economic Resilience from a Societal, Environmental and Security Perspective. Singapore: Springer.CrossRefGoogle Scholar
Royal Haskoning DHV and Deltares (2013) Ho Chi Minh City Flood and Inundation Management, Final Report. Volume 2, IFRM Strategy, Annex 2: CBA Based on Flood Risk Approach. Unpublished manuscript, Royal Haskoning DHV. Amersfoort, The Netherlands.Google Scholar
Sayers, P, Penning-Rowsell, EC and Horritt, M (2018) Flood vulnerability, risk, and social disadvantage: current and future patterns in the UK. Regional Environmental Change 18, 339–352.CrossRefGoogle Scholar
SCFC (2012) The social-economical impacts of urban inundation to households and businesses in Ho Chi Minh City. Technical report, unpublished manuscript. The Steering Center for Flood Control Program HCMC, Viet Nam.Google Scholar
Scussolini, P, Tran, TVT, Koks, E, Diaz-Loaiza, A, Ho, PL and Lasage, R (2017) Adaptation to sea level rise: a multidisciplinary analysis for Ho Chi Minh City, Vietnam. Water Resources Research 53, 841–857.CrossRefGoogle Scholar
Somanathan, E (2006) Valuing lives equally: distributional weights for welfare analysis. Economic Letters 90, 122–125.CrossRefGoogle Scholar
Squire, L and van der Tak, HG (1992) Economic Analysis of Projects, Seventh printing. World Bank Research Publication. Baltimore: John Hopkins University Press.Google Scholar
Stokkel, IMM (2015). Social protection for disaster risk management: opportunities for Myanmar. Myanmar social protection notes series; note 6. Washington, DC: World Bank Group. Available at http://documents.worldbank.org/curated/en/961751468189538832/Social-protection-for-disaster-risk-management-Opportunities-for-Myanmar.Google Scholar
The H. John Heinz III Center for Science, Economics and the Environment (2000) The Hidden Costs of Coastal Hazards, Implications For Risk Assessment and Mitigation. Washington, DC: Island Press.Google Scholar
Tol, RSJ (2014) Climate Economics, Economic Analysis of Climate, Climate Change and Climate Policy. Cheltenham, UK: Edward Elgar Publishing.Google Scholar
UNISDR (2011) Global Assessment Report on Disaster Risk Reduction. United Nations Office for Disaster Risk Reduction (UNISDR). Oxford, UK: Information Press. Available at https://www.unisdr.org/we/inform/publications/19846.Google Scholar
UNISDR (2015) Making Development Sustainable: The Future of Disaster Risk Management. Global assessment report on disaster risk reduction. Geneva, Switzerland: United Nations Office for Disaster Risk Reduction (UNISDR). Available at https://www.preventionweb.net/english/hyogo/gar/2015/en/home/index.html.Google Scholar
Ward, PJ, Jongman, B, Aerts, JCJH, Bates, PD, Botzen, WJW, Diaz Loaiza, A, Hallegatte, S, Kind, JM, Kwadijk, J, Scussolini, P and Winsemius, HC (2017) A global framework for future costs and benefits of river-flood protection in urban areas. Nature Climate Change 7, 642–646.CrossRefGoogle Scholar
Weitzman, ML (2009) On modeling and interpreting the economics of catastrophic climate change. Review of Economics and Statistics 91, 1–19.CrossRefGoogle Scholar
Winsemius, H, Jongman, B, Veldkamp, T, Hallegatte, S, Bangalore, M and Ward, P (2018) Disaster risk, climate change, and poverty: assessing the global exposure of poor people to floods and droughts. Environment and Development Economics 23, 328–348.CrossRefGoogle Scholar
Wisner, B (2013) Vulnerability as concept, model, metric, and tool. Available at http://naturalhazardscience.oxfordre.com/view/10.1093/acrefore/9780199389407.001.0001/acrefore-9780199389407-e-25.Google Scholar
World Bank (2010) Vietnam – Weathering the Storm: Options for Disaster Risk Financing in Vietnam. Washington, DC: World Bank. Available at http://documents.worldbank.org/curated/en/569191468108554653/Vietnam-Weathering-the-storm-options-for-disaster-risk-financing-in-Vietnam.Google Scholar
Xu, K, Evans, DE, Kawabate, K, Zeramdini, R, Klavus, J and Murray, CJL (2003) Household catastrophic health expenditure: a multicountry analysis. Lancet 362, 111–117.CrossRefGoogle ScholarPubMed
Zakour, MJ and Gillespie, DF (2013) Community Disaster Vulnerability, Theory, Research, and Practice. New York: Springer.CrossRefGoogle Scholar
Zerbe, RO Jr and Bellas, AS (2006) A Primer for Benefit-Cost Analysis. Cheltenham, UK: Edward Elgar Publishing Limited.Google Scholar