Social vulnerability in cost-benefit analysis for flood risk management

Jarl Kind*, W. J.Wouter Botzen, Jeroen C.J.H. Aerts

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

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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.

Original languageEnglish
Pages (from-to)115-134
Number of pages20
JournalEnvironment and Development Economics
Volume25
Issue number2
Early online date7 Oct 2019
DOIs
Publication statusPublished - Apr 2020

Keywords

  • cost-benefit analysis
  • equity
  • flood risk management
  • natural disasters
  • social resilience
  • social vulnerability
  • social welfare

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