Shifting from asset damage to well-being loss within flood risk management

Abstract

Floods can be a cause of poverty. Poverty itself magnifies the impact of floods as poor people are more vulnerable and less resilient. Traditional flood risk assessments (FRAs) focus mostly on asset damages. Yet, poor people own little assets and are often highly exposed to floods. Consequently, traditional FRAs often conclude that it is inefficient to protect the poor and are thus biased against flood risk reduction measures protecting them. The aim of this study is to evaluate FRRIs in a CBA based on the social welfare flood risk reduction benefits. A framework to assess the social welfare flood risk through a Monte Carlo approach is presented herein. A case study illustrates that it is not yet reliable to economically evaluate FRRIs based on the monetized social welfare benefits in CBAs. In addition, a targeted social protection scenario emphasizes the potentially high social welfare benefits that can be realized through risk transfer. Therefore, poverty reduction through risk transfer mechanisms should be considered as a holistic approach to foster socioeconomic growth as such risk transfer mechanisms build socioeconomic resilience in the face of natural disasters. It could have a considerable impact on the lives of people living in vulnerable areas.