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Understanding the Economics of Flood Risk Reduction: A Preliminary Analysis

Authors: Kate Hawley; Marcus Moench; Lea Sabbag

Flood disaster impacts are growing significantly as population levels increase, development occurs in flood plains, and populations shift to urban centers. The purpose of this desk review is to explore literature on the costs and benefits of the flood risk reduction strategies being implemented by cities, local agencies, and national authorities. Using available information, we develop an overall framework for differentiating the factors that affect returns in various contexts and the critical assumptions underlying evaluation of these returns. One of our main insights was in regards to the variability and range of economic returns on flood risk reduction investments. Despite the variability that can occur in such analyses, a few key flood mitigation strategies stood out that we detail further in this review: flood plain restoration, flood proofing of residential infrastructure, and an early warning system. In addition, we detail the gaps present in the literature on the costs and benefits of flood risk reduction. We found gaps present in behavioral response modification and exposure reduction/property modification, preparedness, lives saved, and psychological trauma. These findings can be viewed in significant detail within the full desk review.


Citation: Hawley, K., Moench, M., & Sabbag, L. (2012). Understanding the economics of flood risk reduction: A preliminary analysis. Boulder, CO: Institute for Social and Environmental Transition-International. 

Funded By:  U.N. Office for Disaster Risk Reduction (UNISDR)