Disaster Risk Management as early adaptation. Lessons learned, policy recommendations, and guidance

Disaster events at the European and global scales impose significant costs on the public and private sectors. These costs are bound to increase with projected shifts in intensity, duration, and frequency of climate-related extremes such as floods and droughts. As well, non-climatic drivers, such as exposed people and assets, and their vulnerability are important drivers behind rising costs from climate-related disaster events. In light of these concerns, work package 5 of the ECONADAPT project presented a policy case study of climate risk management, providing comparative analysis of adaptation and disaster risk management for EU member countries. The analysis addressed both short- to longer-term changes in the frequency, severity and duration of extreme weather events resulting from climate change, but focussed strongly on riverine floods risk as the dominant climate-related risk in Europe and globally. The first task and deliverable of this work examined how European countries currently make decisions regarding the selection and design of risk management options at different scales. The second tasks focussed on the domain of public finance and fiscal planning, and how climate risk concerns could be considered iteratively in decision-making processes. This final deliverable D5.3 synthesises lessons learned, policy recommendations, and provides some guidance. It is broken down into 3 challenges and related policy questions, which the research identified and tackled: (i) How to make the economic case at various governance scales? (ii) What is the experience of decision-making on investment into disaster risk management, particularly in light of climate change and uncertainties? (iii) What are useful tools and methods to support public sector risk management decisions in light of multiple stresses on public finance? Assessing the economic case for adaptation to extreme events at different scales We identify a strong case for sustained investment into disaster risk management (DRM) as early climate adaptation (CCA): an inventory of cost-benefit studies shows that the benefits over the lifetime of projects are substantially larger than the costs, which means that indeed DRM investments pay back. Also, almost three-quarters of the assessments of DRM investments collected in our database pay attention to climate-change aspects (sea level rise, rising riverine flood risk, changing precipitation patterns, etc.). What is more, we conclude that the narrow case for DRM investment (as part of early adaptation) can and is enhanced if further criteria relevant for the stakeholders are considered in decision-support, such as efficiency of options (how well is risk reduced), acceptability of investments, flexibility of implemented projects to accommodate climatic and socio-economic change and equity implications. Decision-making on DRM as early adaptation The evidence generated regarding the decision-making approaches on DRM shows some complexity at national, regional and local levels depending on the specific context and decision-making level. Some countries are actively factoring-in the effects of future climate change into flood risk management strategies. interactions with a changing climate becomes available, this CRM framework can inform the required iterative update of current learning and CRM practice within a learning loop framework. Useful tools for considering multiple stresses and criteria in public and fiscal climate risk management We find that the concept and method of risk layering integrated with a scenario-led participatory approach holds high appeal for many areas of disaster risk policy and management to work towards developing comprehensive risk management portfolios building on risk prevention, preparedness, risk financing and risk absorption. Also, applying the approach in a participatory environment can support negotiating roles and responsibilities for public and private sector players through formalised dialogue or informal role-play and other participatory exercises. The climate risk scorecard and stochastic debt-assessment illustrate the importance of fiscal mainstreaming of climate risk in EU member countries. Focusing on increased flood risk in EU countries, economic risk of climate extreme events, relative to the size of economic and public finance resources available, is estimated to be high in a number of countries. At the same time, these countries also face the need for fiscal consolidation in the medium to longer-term, thus making proactive risk management especially important for these countries. At the EU level, longer-term fiscal planning has thus far focused on incorporating the increased cost of ageing-related expenditure, whereas climate-related costs are only just beginning to be analysed. Unlike ageing cost estimates, which are projected using common underlying assumptions and shared widely with public and relevant institutions, climate related fiscal cost considerations still lacks such harmonized estimation methodology. As this report illustrates, shared socioeconomic pathways scenarios (SSPs) provide a useful framework for linking inter-related dimensions of demography, climate change and other socioeconomic trajectories, and this kind of approach will likely be effective in linking various fiscal policy concerns and designing appropriate fiscal risk managing policies under changing climate and socioeconomic trends. As EU member states strive for fiscal consolidation, sustainable growth and climate risk management in coming years, mainstreaming of climate risk into fiscal planning is becoming increasingly important.