Economic Assessment of Mitigating Damage of Flood Events: Cost–Benefit Analysis of Flood-Proofing Commercial Buildings in Umbria, Italy

Wouter Botzen, Érika Monteiro, Francisco Estrada, Giulia Pesaro and Scira Menoni
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Érika Monteiro: Vrije Universiteit Amsterdam
Giulia Pesaro: Politecnico di Milano
Scira Menoni: Politecnico di Milano

The Geneva Papers on Risk and Insurance - Issues and Practice, 2017, vol. 42, issue 4, No 3, 585-608

Abstract: Abstract Floods are among the costliest natural disasters worldwide. Integrated flood risk management approaches involving both public and private measures have been proposed to cope with trends in flood risk. These approaches are hampered by a lack of information about the cost-effectiveness of private flood damage mitigation measures. This study examines the economic desirability of flood-proofing different types of commercial buildings in Umbria, which is a flood-prone region in Europe. A cost–benefit analysis (CBA) is applied, which uses empirical information on flood damages to a variety of commercial activities. The CBA accounts for a diversity of uncertainties, including those of flood damage statistics and related flood-proofing benefits derived from bootstrap methods. Results show that, on average, dry flood-proofing is economically attractive for certain categories of commercial buildings. The flood probability and uncertainty of damage are key factors driving CBA results. Implications of our findings for policymakers and insurers are discussed.

Keywords: climate risk; cost–benefit analysis; flood risk; risk prevention; uncertainty (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1057/s41288-017-0065-0

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