Risk management has reduced vulnerability to floods and droughts globally1,2, yet their impacts are still increasing3. An improved understanding of the causes of changing impacts is therefore needed, but has been hampered by a lack of empirical data4,5. On the basis of a global dataset of 45 pairs of events that occurred within the same area, we show that risk management generally reduces the impacts of floods and droughts but faces difficulties in reducing the impacts of unprecedented events of a magnitude not previously experienced. If the second event was much more hazardous than the first, its impact was almost always higher. This is because management was not designed to deal with such extreme events: for example, they exceeded the design levels of levees and reservoirs. In two success stories, the impact of the second, more hazardous, event was lower, as a result of improved risk management governance and high investment in integrated management. The observed difficulty of managing unprecedented events is alarming, given that more extreme hydrological events are projected owing to climate change3.
The sustainability of water utility companies is threatened by non-stationary drivers, such as climate and anthropogenic changes. To cope with potential economic losses, instruments such as insurance are useful for planning scenarios and mitigating impacts, but data limitations and risk uncertainties affect premium estimation and, consequently, business sustainability. This research estimated the possible economic impacts of business interruption to the Sao Paulo Water Utility Company derived from hydrological drought and how this could be mitigated with an insurance scheme. Multi-year insurance (MYI) was proposed through a set of “change” drivers: the climate driver, through forcing the water evaluation and planning system (WEAP) hydrological tool; the anthropogenic driver, through water demand projections; and the economic driver, associated with recent water price policies adopted by the utility company during water scarcity periods. In our study case, the evaluated indices showed that MYI contracts that cover only longer droughts, regardless of the magnitude, offer better financial performance than contracts that cover all events (in terms of drought duration). Moreover, through MYI contracts, we demonstrate solvency for the insurance fund in the long term and an annual average actuarially fair premium close to the total expected revenue reduction.
Abstract. As the adverse impacts of hydrological extremes increase in many regions of
the world, a better understanding of the drivers of changes in risk and
impacts is essential for effective flood and drought risk management and
climate adaptation. However, there is currently a lack of comprehensive,
empirical data about the processes, interactions, and feedbacks in complex
human–water systems leading to flood and drought impacts. Here we present a
benchmark dataset containing socio-hydrological data of paired events, i.e. two floods or two droughts that occurred in the same area. The 45 paired events occurred in 42 different study areas and cover a wide range of socio-economic and hydro-climatic conditions. The dataset is unique in
covering both floods and droughts, in the number of cases assessed and in
the quantity of socio-hydrological data. The benchmark dataset comprises (1) detailed review-style reports about the events and key processes between the two events of a pair; (2) the key data table containing variables that assess the indicators which characterize management shortcomings, hazard, exposure, vulnerability, and impacts of all events; and (3) a table of the indicators of change that indicate the differences between the first and second event of a pair. The advantages of the dataset are that it enables comparative analyses across all the paired events based on the indicators of change and allows for detailed context- and location-specific assessments based on the extensive data and reports of the individual study areas. The dataset can be used by the scientific community for exploratory data analyses, e.g. focused on causal links between risk management; changes in hazard, exposure and vulnerability; and flood or drought impacts. The data can also be used for the development, calibration, and validation of socio-hydrological models. The dataset is available to the public through the GFZ Data Services (Kreibich et al., 2023, https://doi.org/10.5880/GFZ.4.4.2023.001).
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