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How Flood Damages to Public Infrastructure Affect Municipal Budget Indicators

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  • Christian Unterberger

    (University of Graz)

Abstract

Countries’ economic activity as well as their fiscal position are vulnerable to climate- and weather related extreme events. Existing research shows that effects on GDP may be either positive or negative, while fiscal implications are clearly negative. Current literature focuses on fiscal implications at the national level. Predicted increases in climate- and weather related extreme events, though, are regionally highly variable. Hence, information concerning the regional vulnerability to specific extreme events is a vital input for adaptation policies. To answer this information demand, this article looks at how flood damages to public infrastructure affect four budget figures (current income balance, asset management balance, financial transaction balance, and the annual result), exploring the case of Upper Austrian municipalities. Based on a dynamic model and a sample of 442 municipalities from 2009 to 2014 it is found that damages to public infrastructure have a negative impact on municipalities’ current income balance and their annual result. This indicates a weakening of municipalities’ financial situation. To increase municipalities’ budgetary resilience with regards to public flood damages, municipalities can revert to stricter land use regulation and precautionary measures such as wet- or dry-flood proofing, or to flood insurance.

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  • Christian Unterberger, 2018. "How Flood Damages to Public Infrastructure Affect Municipal Budget Indicators," Economics of Disasters and Climate Change, Springer, vol. 2(1), pages 5-20, April.
    • Handle: RePEc:spr:ediscc:v:2:y:2018:i:1:d:10.1007_s41885-017-0015-0
    DOI: 10.1007/s41885-017-0015-0
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    1. Ilan Noy & Christopher Edmonds, 2019. "Increasing fiscal resilience to disasters in the Pacific," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 97(3), pages 1375-1393, July.
    2. Viviana Pappalardo & Daniele La Rosa, 2023. "Spatial Analysis of Flood Exposure and Vulnerability for Planning More Equal Mitigation Actions," Sustainability, MDPI, vol. 15(10), pages 1-22, May.
    3. Patrick Doupe & Leo Dobes & Frank Jotzo, 2019. "Improving Understanding of Flood Risk: the Effects of Lowering the Cost of Accessing Flood Risk Information," Economics of Disasters and Climate Change, Springer, vol. 3(2), pages 101-117, July.
    4. Qing Miao & Michael Abrigo & Yilin Hou & Yanjun (Penny) Liao, 2023. "Extreme Weather Events and Local Fiscal Responses: Evidence from U.S. Counties," Economics of Disasters and Climate Change, Springer, vol. 7(1), pages 93-115, March.
    5. Jerch, Rhiannon & Kahn, Matthew E. & Lin, Gary C., 2023. "Local public finance dynamics and hurricane shocks," Journal of Urban Economics, Elsevier, vol. 134(C).
    6. Ilan Noy & Toshihiro Okubo & Eric Strobl & Thomas Tveit, 2023. "The fiscal costs of earthquakes in Japan," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(5), pages 1225-1250, October.
    7. Timo Assmuth & Tanja Dubrovin & Jari Lyytimäki, 2020. "Human health in systemic adaptation to climate change: insights from flood risk management in a river basin," Environment Systems and Decisions, Springer, vol. 40(3), pages 427-443, September.
    8. Unterberger, Christian & Hudson, Paul & Botzen, W.J. Wouter & Schroeer, Katharina & Steininger, Karl W., 2019. "Future Public Sector Flood Risk and Risk Sharing Arrangements: An Assessment for Austria," Ecological Economics, Elsevier, vol. 156(C), pages 153-163.
    9. Tanvir Pavel & Pallab Mozumder, 2019. "Household Preferences for Managing Coastal Vulnerability: State vs. Federal Adaptation Fund," Economics of Disasters and Climate Change, Springer, vol. 3(3), pages 281-304, October.
    10. Raluca Maran, 2023. "Drivers of sovereign catastrophe bond issuance: an empirical analysis," SN Business & Economics, Springer, vol. 3(6), pages 1-20, June.

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