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Economic evaluation of structural and non-structural flood risk management measures: examples from the Mulde River

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Abstract

The concept of flood risk management, promoted by the EU Floods Directive, tries to mitigate flood risks not only by structural, hydraulic engineering measures, but also by non-structural measures, like, e.g., land-use planning, warning and evacuation systems. However, few methods currently exist for the economic evaluation of such non-structural measures and, hence, their comparison with structural measures. The objective of this paper is to demonstrate the potential benefits of employing a wider range of economic appraisal methods for flood projects, in particular, it provides examples and applications of methodologies which may be employed to evaluate non-structural measures and their transaction costs. In two case studies at the Mulde River, Germany, two non-structural measures, a resettlement option and a warning system, are evaluated and compared with structural alternatives with regard to their effectiveness, cost-effectiveness and efficiency. Furthermore, a simple approach is tested in order to show the transaction costs of these measures. Case study results show that the choice of evaluation criteria can have a major impact on the assessment results. In this regard, efficiency as an evaluation criterion can be considered as superior to cost-effectiveness and effectiveness as it is also able to consider sufficiently the impacts of non-structural measures. Furthermore, case study results indicate that transaction costs could play an important role, especially with non-structural measures associated with land-use changes. This could explain why currently these kinds of measures are rarely selected by decision makers.

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Notes

  1. In the following referred to as “1/100-protection goal”. For single buildings and temporal settlements a protection against floods up to an exceedance probability of 1/25 is recommended, for agricultural areas only against floods with an exceedance probability up to 1/5.

  2. Using the normal model as described above the result would be a reduction of AAD of 11,200 EUR. However, like Parker et al. (2007) argue, damage savings would be reduced if the flood level reaches the second storey, to where inventory items are normally evacuated. For Grimma this would be the case for events higher than the 1/200-event, approximately. Assuming absolutely no damage savings for events higher than the 1/200-event, the reduction effect of the warning system would be only 6,700 EUR. As no further empirical information is available we assume for a mean estimate a scenario of a linear decline of the damage savings between the 1/200 (effective warning) and 1/500-event (no damage savings) which would result in a reduction of AAD of 8,200 EUR.

  3. Contract from 1995 between The Free State of Saxony and the MIBRAG mbH in which the conditions for the resettlement of the village Heuersdorf are defined (http://www.heuersdorf.de/Heuersdorfvertrag.pdf). The Municipality of Heuersdorf did not accept this contract.

  4. This value might be quite high for Erlln, but like examples of compensation in the context of brown coal mining (Heuersdorf–Vertrag) show, owners are often compensated by higher rates than their actual property value. The decline of property value in the endangered region is adjusted in order to ensure that people can afford a comparable property in the region.

  5. Again, all these figures are calculated only for the mean AAD estimate.

  6. In order to keep it simple all these figures are only calculated for the mean AAD estimate.

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Acknowledgments

We would like to thank two anonymous reviewers as well as Professor Dennis Parker for their very helpful comments and recommendations on earlier versions of this paper. The work described in this paper was supported by the project Flood-ERA of the CRUE ERA-NET Funding Initiative on FRM Research (ERAC-CT-2004-515742) as well as by the European Community’s Sixth Framework Programme through the grant to the budget of the Integrated Project FLOODsite (Contract GOCE-CT-2004-505420). This paper reflects the authors’ views and not those of the European Community, of the CRUE ERA-NET or the respective Funding bodies involved.

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  1. Helmholtz Centre for Environmental Research, UFZ, Leipzig, Germany

    Volker Meyer & Christian Kuhlicke

  2. Flood Hazard Research Centre, Middlesex University, London, UK

    Sally Priest

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  1. Volker Meyer
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  3. Christian Kuhlicke
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Correspondence to Volker Meyer.

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Meyer, V., Priest, S. & Kuhlicke, C. Economic evaluation of structural and non-structural flood risk management measures: examples from the Mulde River. Nat Hazards 62, 301–324 (2012). https://doi.org/10.1007/s11069-011-9997-z

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