A number of key stakeholders from public and private sectors as well as experts from the academia participated in a lively discussion on the issue of disaster risk management and financing disaster losses at a workshop in Brussels on 6 October. The event was organised by the International Institute for Applied Systems Analysis (IIASA). During the workshop, the ENHANCE partners presented the results of recent research conducted in the context of the project.
The diverse views on disaster risk management, and financing disaster losses in particular, have been highlighted by recent policy developments, including the European Commission’s consultation on the Green Paper on the Insurance of Man-Made Natural Disasters as well as the European Solidarity Fund (EUSF) reform process.
Under the umbrella of the ENHANCE project, experts at IIASA, together with partners, have assessed the financial vulnerability of the European Union to flood risk and investigated its disaster risk financing framework. Their study, “Increasing stress on disaster-risk finance due to large floods”, has been published in the journal Nature Climate Change.
The researchers found that we can expect floods to increase much more dramatically than current estimates have shown. They assess that annual average losses from extreme floods in the EU could increase from €4.9bn to €23.5bn by the middle of the century. In addition, more destructive, high magnitude floods are likely to increase in frequency from an average of once every 16 years to once every 10 years by 2050. Moreover, present annual average claims from flood risk to the EUSF are projected to increase more than threefold by 2050, putting greater strains on the fund’s financing capacity. Two-thirds of the predicted increase in flood damage will be caused by human development, one-third by climate change.
Speaking at the workshop, Stefan Hochrainer-Stigler from the IIASA underlined the unique pan-European approach of the study, which for the first time accounted for the correlation between floods in different countries, rather than considering river basins as independent entities. This kind of accurate information on the joint probability of flood losses will be key for developing effective risk reduction mechanisms and strategies.
The second part of the presentation looked at reducing the heightened risk. The results indicate that adaptation is largely feasible. Among others, the risks could be managed by pursuing a combination of measures aimed at improving physical flood protection standards; increased insurance penetration; and expanding the budget of the EUSF. The consortium has developed a first map of current flood protection standards for all river basins.
Special attention at the workshop was given to discussion of the European Solidarity Fund. An introduction to the role, performance and recent reforms of the fund was done by Johannes Wachter from the European Commission DG REGIO. In addition, the ENHANCE partners from the IIASA announced the results of another study by the Institute, “The European Union Solidarity Fund: an assessment of its recent reforms”, officially published on 6 October. The study presents recommendations on enhancing the solidarity, risk reduction potential and robustness of the fund, taking into account of the reforms adopted in 2014. The proposed measures include increasing member state contributions and engaging in risk transfer, changing the rules for disbursing aid, and shifting EUSF financing to regular EU budget practice.
The workshop also saw speakers from the insurance sector as well as from the European Commission DG ECHO, presenting the insurance industry perspective as well as disaster risk financing beyond the EUSF, respectively. In addition, the event heard two country perspectives (Romania and Austria) on the issue of financing flood risk.
Links to full papers:
Jongman, B, S Hochrainer-Stigler, et. al. (2014). Increasing stress on disaster risk finance due to large floods. Nature Climate Change (letter).
Hochrainer-Stigler S, Linnerooth Bayer J, Lorant A (2015). The European Union Solidarity Fund: an assessment of its recent reforms. Mitigation and Adaptation Strategies for Global Change.
Know more about ENHANCE case studies on flood risk:
UK Flood risk and insurance implications for MSPs
Testing the Solidarity Fund for Romania and Eastern Europe
Flood Risk Management for Rotterdam Port Infrastructure
Climate variability & technological risk in the Po basin