Flood Prevention, Adaptation Outperforms Recovery and Rebuilding

Proactive flood adaptation provides stable financial and social benefits, unlike the high costs of post-flood recovery and rebuilding, according to a report by Swiss Re Institute, titled, “Resilience or Rebuild? The Costs and Benefits of Climate Adaptation Measures for Flood.”

Flood is the most common urban natural catastrophe, affecting 58% of cities worldwide, the report states. Governments and public authorities can help manage the impacts of natural catastrophes through risk mitigation actions such as planning, policy development, and infrastructure investment.

Economic Costs of Floods

“Economic losses caused by natural disasters reached an estimated $280 billion in 2023, with $51.6 billion due to floods,” the report states. “Over the past five decades, floods caused almost one third (31%) of natural catastrophe losses.” As a result, focus on flood and climate adaptation measures has grown, with the governments of 85% of countries having some form of climate adaptation planning measures.

Flood Adaptation Measures

“Enhancing protection standards, managing land use, and raising awareness are all effective flood adaptation methods,” according to the report. “Adaptation strategies may involve safeguarding, accommodating, or avoiding flood-prone areas. Flood adaptation measures can be in the form of infrastructure development (grey), nature-based solutions (green), and planning and policy measures.”

The report emphasizes that investing in climate adaptation has three main benefits: reduced future losses; enhanced productivity and innovation; and environmental and social advantages. Meanwhile, government adaptation measures can “safeguard the local community from property damage, enhance human safety, and lessen the stress and impact of interruption and disasters.” The report also states that minimizing flood risk makes insurance more affordable and easier to obtain; however, the payback for insurers is “different from standard investments as returns are ultimately in the form of avoided costs. Quantifying the cost of avoided disaster is challenging, but the benefits of adaptation can be long-term with increased resilience for decades.”

Flood Management: BCRs

Benefit-to-cost-ratios (BCRs), according to the report, “compare the present value of future net economic benefits, discounted for the time value of money and inflation, to upfront adaptation costs.” Swiss Re cites a 2023 assessment for adaptation to flood and heatwaves across a range of global studies and found that the economic benefits of interventions can outweigh the cost in a range between 2:1 and 10:1—and, in some cases, even more.

Coastal flood adaptation investments are another example in which BCRs can be used to measure. “Under a high emissions scenario…coastal floods could cause global economic damage of [$]169-482 billion to 2100. Investing [$]43-203 billion to raise dyke height could reduce these damages by 40%, yielding an average BCR of 2.6, with high regional variability,” states the report.

The report also indicates that policy interventions can have effects similar to those of flood prevention BCRs. “Adherence to the International Building Code (IBC) and the International Residential Code (IRC) for flood resistance in 34% of U.S. jurisdictions is projected to have a BCR of 6.0…[suggesting that] rolling out the codes across the country would yield substantial benefits.”

Coastal Floods and Adaptation

“Without adaptation measures, the projected annual damage from coastal floods could rise by approximately 150 times between 2010 and 2080. No adaptation is not an option,” emphasizes the report. “Every [$]1 billion invested in building coastal flood resilience can lead to a reduction in damages by up to [$]14 billion.”

Grey infrastructure in the form of dykes, floodwalls, and seawalls have been shown to reduce flood damage, erosion losses, and storm damage and provide protection for up to 100 years or more if well-maintained and designed with climate change impacts in mind. According to the report, “dykes and coastal levees are 98% effective worldwide in lowering coastal flood risk, with benefits of [$]493 billion.”

Furthermore, “zoning restrictions help in reducing exposure and can have huge impacts in regions rapidly transitioning from rural to urban,” states the report, while it is less useful on coastlines that are already highly developed.

River Floods and Adaptation

“Grey adaptation measures are effective in regions with dense populations. They can reduce flood damage by nearly 40% and 70% for 1.5 [degree Celsius] and 3 [degree Celsius] climate warming scenarios,” states the report. “Nature-based solutions, including forest restoration, river channel restoration, and riverbed widening, can be good options for reducing risk where landscape is appropriate, as these measures need significant space.” Other advantageous solutions include reinforcing dykes and creating detention areas based on region.

The Role of Insurance and Reinsurance

“The cost of insurance and reinsurance is largely determined by the level of risk,” states the report. “The most effective way to reduce the harm experienced by communities—and by extension to reduce the cost of insurance and reinsurance—is through concrete risk mitigation actions.”

The report notes that a shift in mindset toward prioritizing damage prevention rather than post-catastrophe rebuilding is required. Furthermore, the best flood intervention depends on location and other factors; however, learning from others’ successes can speed up decision-making. Lastly, adaptation measures need to be considered holistically and for the long-term.