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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: [email protected]
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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

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