The macroeconomic impacts of future river flooding in Europe

Abstract

The economic impacts of disasters can reach far beyond the affected regions through interconnected transboundary trade flows. As quantification of these indirect impacts is complex, most disaster risk models focus on the direct impacts on assets and people in the impacted region. This study explicitly includes the indirect effects via regional economic interdependencies to model economic disaster losses on a continental scale, exemplified by river flooding in Europe. The results demonstrate that economic implications go beyond the direct damages typically considered. Moreover, we find that indirect losses can be offset by up to 60% by economic actors through finding alternative suppliers and markets within their existing trade relations. Towards the future, increases in economic flood losses (up to 350%) can be expected for all global warming scenarios. Indirect losses rise by 65% more compared to direct asset damages due to the increasing size of future flood events, making it more difficult to offset losses through alternative suppliers and markets. On a sectoral level, future increases in losses are highest for commercial services (∼980%) and public utilities (∼580%). As the latter are predominately affected through cascading effects, this highlights how interdependencies between economic actors could amplify future disaster losses.

Uncertainty and Bias in Global to Regional Scale Assessments of Current and Future Coastal Flood Risk

“…For example, this has been estimated to account for 40% of the total damages in the case of Hurricane Katrina (Hallegatte, 2008 ). Longer term macroeconomic effects of disasters can be both positive and negative (Lazzaroni & van Bergeijk, 2014 ), and one major uncertainty thereby is the economic dynamics of recovery after the event (Koks et al., 2019 ). We do not consider these effects here, because their assessment relies on wider assumptions on the whole economy, which cannot be covered in this study.…”

Estimation of Direct and Indirect Economic Losses Caused by a Flood With Long‐Lasting Inundation: Application to the 2011 Thailand Flood

“…It is difficult to include transboundary effects in the AIM/CGE model, because modeling the effects requires data on the economics actually affected and unaffected by the flood. Some studies (e.g., Koks et al, 2019) developed models to account for transboundary and cross‐country effects in Europe using data consisting of multiregional supply‐use tables and bilateral trade in the region. However, no such detailed data set is available for our target region.…”

“…Such estimations on continental and global scales are difficult due to the limited availability of data on capital and labor for each sector. At continental and global scales, the indirect economic losses have been estimated using a computable general equilibrium (CGE) model (Ciscar et al, 2011; Dottori et al, 2018) and a deterministic loss‐propagation model (Koks et al, 2019; Willner et al, 2018). For example, Dottori et al (2018) estimated welfare losses using a CGE model and found that welfare losses will increase with increases in human losses, and economic damage with increased global warming.…”

Integration of GIS-Based Multicriteria Decision Analysis and Analytic Hierarchy Process for Flood-Hazard Assessment in the Megalo Rema River Catchment (East Attica, Greece)

“…They represent approximately one-third of all global hazardous events, and the number of extreme flood incidences has significantly increased over the past few decades [2]. Every year this type of hazard causes a significant loss of life and property [3] and severely affects the natural and human environment as well as the development of an area [4].…”