Standard approach to flood risk management appears to disadvantage the most vulnerable
Published: 25 April 2017
Not everyone suffers to the same extent from damage. People living in slums, for example, may have only 50 euros a month to spend. They will be hit much harder in relative terms by flood damage amounting to 1000 euros than residents of a luxury estate who earn 5000 euros a month. People with low incomes find it more difficult to recover from disasters and cope with the financial repercussions than higher-income groups. This would justify a larger weighting for damage in less prosperous areas and better protection against natural disasters than those currently in place.
However, the models currently used in practice by aid agencies and governments often lead to precisely the opposite conclusion. That is because every euro of damage is weighted exactly the same, however prosperous the local inhabitants may or may not be. In this approach, the calculated financial damage is higher in relatively rich areas with relatively expensive homes than in slums. These models suggest that it is best to invest most in measures that limit damage in relatively rich neighbourhoods.
The difference between the financial and social welfare value of damage is the core of the paper ‘Accounting for risk aversion, income distribution and social welfare in cost-benefit analysis for flood risk management‘ by economist Jarl Kind of Deltares, who questioned the standard approach to investment in flood risk management late last year. The paper was published in WIREs Climate Change.
Assessment in practice
Deltares is now taking the research a step further by assessing Kind’s approach to social risk in practice. In Colombo (Sri Lanka) and Ho Chi Minh City (Vietnam), a study will be conducted – taking income differences between specific neighbourhoods into account – to see whether different measures to manage flood risk would be taken in other locations than is currently the case. And indeed, the initial results indicate that better and more protection measures seem to be taken for more prosperous areas than for areas where more vulnerable groups live.
In Cebu (Philippines), the study is focusing on vulnerable groups that actually have little or no access to water. What if additional water supplies are made available for groups who, for example, currently obtain their water from a river? Will this increase in the water supply for vulnerable groups lead to greater social welfare than if the same water were to be available for groups who are better off?
Sustainable Development Goals
‘Describing how the distribution of wealth affects the returns on specific measures for flood risk management makes it possible to intervene where the damage hits hardest,’ argues Jarl Kind. This is the first time that social welfare has been adopted as a parameter for the return on measures for flood risk management. Deltares hopes that the study will contribute to the work of the UN, financial institutions such as the World Bank, and of local and national governments to achieve the Sustainable Development Goals as soon as possible.