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Social vulnerability in cost-benefit analysis for flood risk management

Author

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

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.

Suggested Citation

  • Kind, Jarl & Botzen, W. J. Wouter & Aerts, Jeroen C. J. H., 2020. "Social vulnerability in cost-benefit analysis for flood risk management," Environment and Development Economics, Cambridge University Press, vol. 25(2), pages 115-134, April.
    • Handle: RePEc:cup:endeec:v:25:y:2020:i:2:p:115-134_2
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    Cited by:

    1. Risa Nakamura & Akiyuki Kawasaki, 2022. "Quantitative Evaluation of Flood Control Measures and Educational Support to Reduce Disaster Vulnerability of the Poor Based on Household-level Savings Estimates," Economics of Disasters and Climate Change, Springer, vol. 6(2), pages 355-371, July.
    2. Pollack, Adam & Helgeson, Casey & Kousky, Carolyn & Keller, Klaus, 2023. "Transparency on underlying values is needed for useful equity measurements," OSF Preprints kvyxr, Center for Open Science.
    3. M. A. Aalst & E. Koomen & H. L. F. Groot, 2023. "Vulnerability and Resilience to Drought and Saltwater Intrusion of Rice Farming Households in the Mekong Delta, Vietnam," Economics of Disasters and Climate Change, Springer, vol. 7(3), pages 407-430, November.

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