CONHAZ – Costs of Natural Hazards
Efficiently reducing natural hazard risks requires a thorough understanding of the costs of natural hazards. However, the current methods assessing the costs of different natural hazards employ a diversity of approaches for different hazards and impacted sectors. This impedes ascertaining comprehensive and comparable cost figures.
The EU project CONHAZ aimed at compiling and synthesising current knowledge on cost assessment methods considering natural hazards ranging from droughts, floods and coastal hazards to Alpine hazards, as well as different impacted sectors and cost types (i.e. direct tangible damages, losses due to business interruption, indirect damages, intangible effects, and costs of risk mitigation). It provided the first comprehensive overview on the current best practice of cost assessment methods.
Furthermore, CONHAZ identified remaining knowledge gaps. Among others it was shown that the application of cost assessment in practice is often incomplete and biased, i.e. that the focus is on direct costs, while intangible and indirect effects are rather rarely considered. Furthermore, there are still high uncertainties in all parts of cost assessment, related to insufficient or aggregated data sources, or lack of appropriate models.
Based on the identified knowledge gaps the project developed key recommendations for research and practice (see table 1) which have been discussed and weighted for relevance at a synthesis conference with more than 60 experts from science, policy, insurance companies and consultancies.
- Cost assessments are often incomplete and biased. In order to receive a complete picture of the costs of natural hazards, not only direct costs but also costs due to business interruption, indirect and intangible/non-market costs as well as the costs of risk mitigation should be considered.
- Although considerable improvements have been made over the last decades there are still high uncertainties in all parts of cost assessment, related to, among others, insufficient or aggregated data sources, or lack of appropriate models. In any appraisal it is therefore important to identify the main sources of uncertainty at an early stage and try to reduce or handle them. Remaining uncertainties in cost estimates should be documented and communicated to decision makers.
- One of the main sources of uncertainty in the ex ante estimation of the costs of natural hazards is the lack of sufficient data. A framework for supporting data collection should be established on the European level, both for object-specific ex post damage data (event analysis) and risk mitigation costs. Such a framework should ensure minimum data quality standards to facilitate the development and consistency of European and national databases.
- In general, there is a need for a better understanding of the damaging processes to model them appropriately.
- Regarding direct damages multi-parameter damage models are needed that better capture the variety of damage influencing parameters..
- With regard to indirect costs more research is needed to understand and to model how markets function outside equilibrium, in particular the dynamics of return to equilibrium after a hazardous event, the associated social and institutional interactions and how agent expectations are formed in situations of high uncertainty.
- For intangibles costs more research is needed especially on the physical impacts of natural hazards on environment and health.
- With regard to the costs of risk mitigation special emphasis should be given to a better estimation of the costs of non-structural measures.
- More research is needed on the effects of climate and socio-economic change on the future costs of natural hazards and costs from adaptation to these changes and how such findings can be integrated in the cost assessment approaches. In this respect, the exchange of knowledge between the natural hazard risk community and the climate change community should be improved.
- There is a need for appropriate tools and guidance as well as knowledge transfer to support decision makers with integrating cost assessment figures into their decision making process. Such tools or frameworks should communicate and consider uncertainties in cost figures and ensure the transparency of the decision rules.
Eight complementary studies are carried out, addressing the different cost categories and different hazards. Four of these eight resulting reports present methodological aspects across impacted sectors concerning cost types, including:
The other four reports on different hazard types apply this knowledge for
The main results from these studies are synthesised in a Final Synthesis Report (WP 9, Meyer et al. 2012), (600.4 KB) comprising key findings on current practices and knowledge gaps, and recommendations for practice/policy and for research.
Further synthesis publications:
Kreibich H, van den Bergh J, Bouwer L, Bubeck P, Ciavola P, Green C, Hallegatte S, Logar I, Meyer V, Schwarze R, Thieken A (2014): Costing natural hazards. Nature Climate Change 4, 303–306
Meyer V, Becker N, Markantonis V, Schwarze R, van den Bergh J, Bouwer L, Bubeck P, Ciavola P, Daniel V, Genovese E, Green C, Hallegatte S, Kreibich H, Lequeux Q, Logar I, Papyrakis E, Pfurtscheller C, Poussin J, Przyluski V, Thieken A, Viavattene C (2013): Assessing the Costs of Natural Hazards - State-of-the-art and Knowledge Gaps, Nat. Hazards Earth Syst. Sci., 13, 1351-1373
- Helmholtz Centre for Environmental Research - UFZ
- University of Innsbruck
- Société de Mathématique Appliquée aux Sciences Sociales
- Middlesex University, Flood Hazard Research Centre
- German Research Centre for Geosciences - GFZ
- University of Ferrara
- Institute of Environmental Science and Technology, Universitat Autònoma de Barcelona
- Institute for Environmental Studies, Vrije Universiteit Amsterdam