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Future public sector flood risk and risk sharing arrangements

  • Climate change, along with socio-economic development, will increase the economic impacts of floods. While the factors that influence flood risk to private property have been extensively studied, the risk that natural disasters pose to public infrastructure and the resulting implications on public sector budgets, have received less attention. We address this gap by developing a two-staged model framework, which first assesses the flood risk to public infrastructure in Austria. Combining exposure and vulnerability information at the building level with inundation maps, we project an increase in riverine flood damage, which progressively burdens public budgets. Second, the risk estimates are integrated into an insurance model, which analyzes three different compensation arrangements in terms of the monetary burden they place on future governments' budgets and the respective volatility of payments. Formalized insurance compensation arrangements offer incentives for risk reduction measures, which lower the burden on public budgets byClimate change, along with socio-economic development, will increase the economic impacts of floods. While the factors that influence flood risk to private property have been extensively studied, the risk that natural disasters pose to public infrastructure and the resulting implications on public sector budgets, have received less attention. We address this gap by developing a two-staged model framework, which first assesses the flood risk to public infrastructure in Austria. Combining exposure and vulnerability information at the building level with inundation maps, we project an increase in riverine flood damage, which progressively burdens public budgets. Second, the risk estimates are integrated into an insurance model, which analyzes three different compensation arrangements in terms of the monetary burden they place on future governments' budgets and the respective volatility of payments. Formalized insurance compensation arrangements offer incentives for risk reduction measures, which lower the burden on public budgets by reducing the vulnerability of buildings that are exposed to flooding. They also significantly reduce the volatility of payments and thereby improve the predictability of flood damage expenditures. These features indicate that more formalized insurance arrangements are an improvement over the purely public compensation arrangement currently in place in Austria.show moreshow less

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Metadaten
Author:Christian Unterberger, Paul Hudson, W. J. Wouter Botzen, Katharina Schroeer, Karl W. Steininger
URN:urn:nbn:de:kobv:517-opus4-424629
DOI:https://doi.org/10.25932/publishup-42462
ISSN:1866-8372
Parent Title (English):Postprints der Universität Potsdam : Mathematisch-Naturwissenschaftliche Reihe
Subtitle (English):an assessment for Austria
Series (Serial Number):Postprints der Universität Potsdam : Mathematisch-Naturwissenschaftliche Reihe (634)
Document Type:Postprint
Language:English
Date of first Publication:2019/02/21
Year of Completion:2018
Publishing Institution:Universität Potsdam
Release Date:2019/02/21
Tag:adaptation; climate change; flood risk; insurance; public sector; risk reduction
Issue:634
Pagenumber:11
Source:Ecological Economics 156 (2019), pp. 153–163 DOI 10.1016/j.ecolecon.2018.09.019
Organizational units:Mathematisch-Naturwissenschaftliche Fakultät
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
5 Naturwissenschaften und Mathematik / 57 Biowissenschaften; Biologie / 570 Biowissenschaften; Biologie
Peer Review:Referiert
Publication Way:Open Access
Licence (German):License LogoCreative Commons - Namensnennung, 4.0 International