Report of Ghent

workshop

Common Implementation Strategy Working Group F on Floods: Thematic Workshop

Report on proceedings & key recommendations

25-26 October 2010

Ghent, Belgium

Floods and Economics: appraising, prioritising and financing flood risk management

measures and instruments

Floods and Economics: appraising, prioritising and financing flood risk management

measures and instruments

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 2

Status Box: 2nd draft version (1.0) – September 2011 Status: Draft Report of the WG F thematic Workshop “Floods and Economics: appraising, prioritising and financing flood risk management measures and instruments”. This document can be read independently but is closely linked to the “resource document”. A preliminary version of this resource document “Scoping paper on Flood Related Economics” was available before the workshop and will be updated based on input from participants and the results of the questionnaire. The view represented in this report does not necessarily represent the views of all participants or the organisations they represent. Next steps: Comments on draft report by international organising committee, participants and members of WG F Preparation of final version (to be endorsed by WG F end of 2011)

Key messages (final document) will be presented for information to SCG and Water Directors, and will be endorsed by WG F. Working Group F on Floods Thematic Workshop “Floods and Economics: appraising, prioritising and financing flood risk management measures and instruments” 25-26 October 2010 Ghent, Belgium This workshop took place back-to-back with the WG F-8 meeting on 27-28 October 2010 in Ghent (day 1) and Brussels (day 2). The workshop was organised during the Belgian EU Presidency 01/07/2010-31/12/2010. Report on proceedings & key recommendations Report to: WG F on Floods: First draft: March 2011 Final version: to be endorsed on WG F meeting October 2011 Contact details: Filip Raymaekers Flemish Environment Agency (VMM) – Division of Operational Water Management T: +32 2 553 21 30 E: f.raymaekers@vmm.be Wouter Vanneuville Department of Mobility and Public Works – Flanders Hydraulics Research T: +32 3 224 61 51 E: wouter.vanneuville@mow.vlaanderen.be This publication can be cited as follows: Floods and Economics: appraising, prioritising and financing flood risk management measures and instruments, Working Group F on Floods, Thematic Workshop 25-26/10/2010, Ghent, Belgium.

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 3

Table of contents Table of contents 3 Executive summary 4 1 Introduction 5

1.1 Background 5 1.2 Objectives and output 6 1.3 Workshop structure 6 1.4 Report structure 7

2 Report of the different workshop sessions 8 2.1 Opening, Keynote, Results of former WG F workshops and the WFD&Economics Workshop 8 2.2 Resource document and questionnaire 8 2.3 Presentations on experiences with vulnerability assessment, appraising and prioritising flood risk measures (part 1) 9 2.4 Break-out sessions: Governance, operational, economic and WFD Issues 10

2.4.1 Governance Issues 10 2.4.2 Economic Issues 11 2.4.3 Operational Issues 11 2.4.4 WFD Issues 13

2.5 Presentations on experiences with vulnerability assessment, appraising and prioritising flood risk measures (part 2) 14 2.6 Methods for flood damage and risk assessment and appraisal of FRM measures 15 2.7 Dijle case 15

2.7.1 Introduction to the Break-out sessions 15 2.7.2 Break-out session part 1: Vulnerability and risk assessment 15 2.7.3 Break-out session part 2: Prioritisation of measures 16

2.8 Presentations on financing mechanisms, financing scenarios and EU funding 17 2.9 Plenary discussion on insurance and EU funding 18

2.9.1 Insurance 18 2.9.2 EU funding 19

3 Workshop conclusions and recommendations 20 Appendix A: Workshop program 25 Appendix B: list of participants 29 Appendix C: Planning and organisation 37

C.1 International Planning Committee 37 C.2 Local Organising Committee 37 C.3 Consultancy 37

Appendix D: Break-out sessions on Monday – Questions 38 D.1 Governance Issues 38 D.2 Economic Issues 38 D.3 Operational Issues 38 D.4 WFD Issues 38

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Executive summary As part of a series of workshops looking at the implementation of Directive 2007/60/EC on the assessment and management of floods risks (or Floods Directive, FD), the EC CIS Working Group F (WG F) agreed on a 2-day thematic workshop in Ghent, Belgium, on the subject of “Floods and Economics: appraising, prioritising and financing flood risk management measures and instruments”. The workshop took place during the Belgian EU Presidency of the second half year of 2010 on 25

th

and 26th of October. The event was organised back to back with WG F meeting 8 on the 27

th (Ghent)

and 28th (Brussels) of October.

The event was co-organised by the Coordination Commission on Integrated Water Policy (CIW, the competent authority for the Floods Directive and the Water Framework Directive in Flanders), the Flemish Environment Agency (VMM), the Department of Mobility and Public Works (MOW) and the European Commission. The workshop had more than 60 participants. There were Member State (MS) representatives (17 countries) from EU and EEA countries, representatives of the international river and sea commissions, stakeholder groups as WWF and the insurance sector and the EU institutions (DG ENV, JRC and EEA). Some scientists were invited to the workshop as well. On the first day the focus was on appraising flood risk, the break out sessions of the second day were mainly about prioritising and the last half day financing of measures was discussed. A detailed program can be found in Appendix A. All sessions started with plenary presentations, followed by parallel break-out discussion groups and a plenary feedback of the discussions. A general conclusion from the workshop is that many MS have built up adequate methodologies and decision frameworks to compare different flood risk management options and to select the most appropriate measures, based on economic assessment of flood risks and of measures to reduce the flood risks. There are however new challenges to take on board in the assessments. The Floods Directive implies not only to look at consequences on the economy but also at consequences on human health, the environment and cultural heritage. The close link between the Floods Directive and the Water Framework Directive, the possible impacts of climate change and expected evolutions of population and wealth in circumstances of restricted budgets will influence the decisions and the selection of different flood risk management strategies. This report is a summary of the many observations, open questions and recommendations made during the workshop. Besides this report there’s a resource document containing examples of good practice which will be handled as a ‘living document’ by WG F. The answers of the extensive questionnaire are incorporated in this resource document as well. All workshop documents (abstracts, presentations, full papers and the resource document) can be found on the EU CIRCA website: http://circa.europa.eu/Members/irc/env/wfd/library?l=/framework_directive/thematic_documents/flood_management/information_exchange/documents_information/economics_25-26102010&vm=detailed&sb=Title The information is available on the workshop’s website as well: http://eu2010.vmm.be/water/events/floods-and-economics

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1 Introduction The Working Group F on Floods (WG F) of the European Commission (EC), under the umbrella of the Common Implementation Strategy (CIS) fort the Water Framework Directive (2000/60/EC, WFD) and the Floods Directive (2007/60/EC) and its working programme, has planned, as part of its mandate, the organisation of thematic workshops on specific issues regarding the implementation of the Floods Directive on the assessment and management of flood risks. In this framework, a workshop on 25-26 October 2010 on “Floods and Economics: appraising, prioritizing and financing flood risk management measures and instruments” was set up. It was co-organised by:

- the Coordination Commission on Integrated Water Policy (CIW) - the Flemish Environment Agency (VMM) - the Department of Mobility and Public Works (MOW) - the European Commission (DG ENV)

The workshop was organised back to back with the 8th

WG F meeting on 27 (Ghent) and 28 (Brussels) October 2010. During the second half year of 2010, Belgium was having the EU presidency. An international planning committee was composed with members from the European Commission, Belgium (Flanders), France, Germany, the Netherlands and Sweden. Before the workshop a resource document “Scoping Paper on flood related economics” was prepared for the EC (DG Environment) and a questionnaire was sent to all members of WG F. The results of the questionnaire, together with examples given during the workshop in the presentations and discussions will be used to update the resource document.

1.1 Background The main objective of the Floods Directive (FD) is the assessment and the management of risks. The aim is to reduce the risk of (adverse) consequences for human health and life, ecology, cultural heritage and economic activities (preamble 3 of the FD). A three step approach is defined in the FD:

- preliminary flood risk assessment (by 22/12/2011); - flood hazard maps and flood risk maps (by 22/12/2013); - flood risk management plans (by 22/12/2015).

Contrary to other WG F workshops, the topic of this workshop is a cross cutting theme. Economics cannot be addressed to one specific stage in the assessment of flood risks, nor is it related to a specific type of floods. Economics and related terms however occur throughout the different chapters of the directive (non exhaustive list): Preamble 12: […] as well as a valuable basis for priority setting and further technical, financial and political decisions regarding flood risk management, it is necessary to provide for the establishing of flood hazard maps and flood risk maps showing the potential adverse consequences associated with different flood scenarios

- Preamble 15: The solidarity principle is very important in the context of flood risk management.

- Preamble 17: […] use the mutual potential for common synergies and benefits, having regard to the environmental objectives of Directive 2000/60/EC, ensuring efficiency and wise use of resources […]

- Preamble 18: […]on appropriate ‘best practice’ and ‘best available technologies’ not entailing excessive costs in the field of flood risk management.

- Art. 5 § 1: […]identify those areas for which they conclude that potential significant flood risks exist or might be considered likely to occur

- Art. 6 § 5 b): type of economic activity of the area potentially affected

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- Art. 7 § 2: Member States shall establish appropriate objectives for the management of flood risks […], focusing on the reduction of potential adverse consequences of flooding for human health, the environment, cultural heritage and economic activity, […]

- Art. 7 § 3: Flood risk management plans shall take into account relevant aspects such as costs and benefits […]

- Art. 7 § 4: In the interests of solidarity, flood risk management plans established in one Member State shall not include measures which, by their extent and impact, significantly increase flood risks upstream or downstream of other countries in the same river basin or sub-basin, unless these measures have been coordinated and an agreed solution has been found among the Member States […]

- Annex A. I. 4: a summary of the measures and their prioritisation aiming to achieve the appropriate objectives of flood risk management […]

- Annex A. I. 5: a description of the methodology, […], of cost-benefit analysis used to assess measures with transnational effects

- Annex A. II. 1: a description of the prioritisation and the way in which progress in implementing the plan will be monitored

1.2 Objectives and output The workshop aimed at addressing the problems and opportunities of flood related economics in a very broad sense of the term ‘economics’. The objective was to provide examples of good practice of quantifying the effects of flooding and of the existing barriers to adopt such a methodology. These can be on the governance level or on the operational one and has to be seen in relation to the objectives of the WFD. The output of the workshop is summarized in this report, in the resource document ‘Scoping paper on flood related economics’ and is reflected in the abstracts and full papers of the presentations as well. All this information can be found on EU CIRCA website: http://circa.europa.eu/Members/irc/env/wfd/library?l=/framework_directive/thematic_documents/flood_management/information_exchange/documents_information/economics_25-26102010&vm=detailed&sb=Title

1.3 Workshop structure A detailed agenda can be found in Appendix A. The 2-day workshop was structured as follows:

- Day 1: o Results from former WG F workshops and from the WFD Economics Workshop

(October 2010) o Resource document and questionnaire results o Experiences with vulnerability assessment, appraising and prioritising flood risk

measures o Break out sessions on Governance, Economic, Operational and WFD Issues.

- Day 2:

o Methods for flood damage and risk assessment and appraisal of FRM measures o Dijle case study

Vulnerability and risk assessment Prioritisation of measures

o Financing mechanisms, financing scenarios and EU funding The sessions all started with an introduction formed by plenary presentations as an input to break out sessions for discussion. The item of financing mechanisms was discussed in plenary. After each discussion session a synthesis was made in plenary structured in observations, open questions (research / implementation), recommendations and a slide for other relevant information from the discussions. All discussions were facilitated by a discussion leader and a rapporteur.

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1.4 Report structure This report is structured the same way as other workshop reports of WG F are. After this introduction there’s a report of the different sessions, the presentations as well as the discussion groups. A third chapter is summarising the main conclusions and recommendations. In the appendices a workshop program, list of participants and planning and organising committees can be found. This report can be read independently. However there’s a close link to the resource document ‘Scoping paper on flood related economics’ which will be updated including the results of the questionnaire and examples of good practice given during (and after) the workshop. Wherever possible the text will link to the abstract, paper, presentation or document on EU CIRCA: http://circa.europa.eu/Members/irc/env/wfd/library?l=/framework_directive/thematic_documents/flood_management/information_exchange/documents_information/economics_25-26102010&vm=detailed&sb=Title

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2 Report of the different workshop sessions

2.1 Opening, Keynote, Results of former WG F workshops and the WFD&Economics Workshop After a short welcome and introduction by Wouter Vanneuville on behalf of the whole organising committee, Frank Van Sevencoten, chairman of the Coordination Commission on Integrated Water Management, administrator-general of the Flemish Environment Agency and former Flemish Water Director welcomed all participants. He addressed the importance of the topic of the workshop for the activities going on in Flanders for the FD and the WFD, and told us we were in the same room as the first water directors meeting. Mark Adamson gave in his presentation an overview of ‘economic topics’ out of former WG F workshops. Although there are topics issues related to the preliminary flood risk assessment (PFRA) and flood risk mapping, most of the items are related to the flood risk management plans (FRMP). Key issue is the difference of level of detail in the PFRA and FRMP. Maria Brättemark reported about the WFD&Economics workshop one week earlier and 10 years after the approval of the WFD. She made an overview of the different WFD requirements about economics and the relevant Guidance Documents. Main part of the presentation was the key issues mentioned at the WFD&Economics workshop and the key outcomes from this workshop relevant for the Floods and Economics workshop. An elaborated list of options for future work and upcoming challenges makes clear there are several open issues where FD and WFD can be linked.

2.2 Resource document and questionnaire After the coffee break Dominique Van Erdeghem and Lieven De Smet introduced the floods and economics resource document. They are the authors of the Scoping paper on flood related economics, ordered by DG Environment. This document was made available to all participants before the workshop. In their introduction they went through the document and explained the framework:

- assess the flood risk; - identify flood risk reduction measures; - assess flood risk reduction measures; - evaluate and prioritise measures; and - combine measures to a flood risk management plan.

Some definitions and concepts as used in the resource document were highlighted. The resource document is a living document not aiming new research but compiling existing examples of good practice. It will be extended with results from the questionnaire, workshop discussions and other available information. The first results from the questionnaire, containing only the answers from MS received before the workshop were presented by Filip Raymaekers. It was an extensive questionnaire with 38 questions (multiple choice and open questions). Fifteen MS answered before the workshop. The purpose of the questionnaire was to inform the MS about the topic of the workshop and to have an overview of the ongoing practices. Due to the time constraints only multiple choice questions could be processed before the workshop but the examples, questions and remarks given in the open questions will be reflected in the updated resource document. Respondents are most familiar with economic assessments for structural measures. The consequences on the economy and for human health are handled quantitative or monetary in most respondents’ countries contrary to the effects on cultural heritage and ecology where qualitative assessments are the majority. Co-benefits of flooding are rarely taken into account.

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The first results already indicate that measures are financed different amongst Europe, with countries having a substantial part of international financing till countries were almost everything is regionally and locally financed. The total amount of private funding is very limited in most countries. Additional answers on the questionnaires came in after the workshop and will be reflected in the resource document as well.

2.3 Presentations on experiences with vulnerability assessment, appraising and prioritising flood risk measures (part 1) In this session different MS explained their experiences with vulnerability assessment in the PFRA (Ireland), on a micro-scale (Wallonia), to analyse costs and benefits of measures (France) and on-line tools to do so (Switzerland). Abstracts of all presentations in this session can be found in the workshop abstracts document (abstracts 5 till 8). Mark Adamson (abstract 5) presented the “Vulnerability and risk assessment for the PFRA in Ireland”. A full paper about this topic is available on EU CIRCA as well. A first part of the presentation gave an overview of the different flood risk receptors in the stage of the PFRA. The second part was the approach for the vulnerability assessment which is partly subjective but standardised and subject to discussions with experts. For each receptor the importance and susceptibility to damage is defined. In a third stage a risk assessment is done for the individual receptors and cumulative in the areas of risk. The latest part describes the Irish methodology and thresholds for the relevant and important topic of ‘significant’ flood risk together with some preliminary results of application. Benjamin Dewals (abstract 6) followed with a presentation about the Flood Risk analysis in Wallonia: a micro-scale approach. In his presentation an end-to-end flood risk analysis was performed including a hazard and vulnerability analysis to come to quantified damages (expressed in monetary terms). The hazard modelling is process-oriented and 2D hydrodynamic models are used. For the vulnerability assessment different data are used on micro- and meso-scale: cadastral information and detailed vector topographic maps for the micro-scale analysis and CORINE Land Cover for the meso-scale. Some examples were presented to show that a single risk number is not enough to communicate the idea of the concept. The whole curve (probability versus damages) has to be shown to see in which range of flood events a measure is beneficial and eventually where it is counterproductive. A third presentation in this session came from Cédric Peinturier (abstract 7). He explained the Reviewing costs benefits methodologies used in France to optimize FRM. A full paper is available as well. Since 2007, the Ministry in charge of Sustainable Development has established a process to develop the practice of economic analysis in the field of flood risk prevention. This type of analysis will soon be mandatory for asking for public financing of flood risk prevention action plans. In the presentation the background of the method was explained in detail. A large number of damage functions are used, where difference is made in between slow and fast floods. The latest presentation of this session came from Urs Nigg (abstract 8): “EconoMe” An Online-Tool for Cost-benefit calculations of FRM measures in Switzerland. “EconoMe” enables the planning engineers, investors and authorities (at different levels) responsible for avalanche, flood, slide, unconfined debris flow and rock fall processes to carry out comparative cost-effectiveness analyses. The comparability is ensured through the definition of conventions for the requisite parameters. The cost-benefit studies are used to prioritize measures. The presentation started with the theoretical approach explaining the methodology behind the tool. The second part was about the tool itself and the results of some applications. More information is available on www.econome.admin.ch.

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2.4 Break-out sessions: Governance, operational, economic and WFD Issues After lunch the group was split into 4 discussion groups. In a rotation system all groups passed the four discussion tables. Some questions to start from were prepared (Annex D) but of course to add or skip topics.

2.4.1 Governance Issues

This discussion table was facilitated by William Van Berkel and Meike Gierk. The outcome can be summarised as: Statements 1. Economic assessments, and more specifically CBA and MCA, are not the only instruments in the

process of decision making, but they can provide reliable and objective information in the context of FRM, and they can justify and explain decision making and prioritising goals and measures.

2. If CBA is used you have to take notice of the scale and circumstances to what it is applied. For small or relatively cheap measures a CBA can be inefficient (relatively expensive).

3. In some MS CBA is mandatory to get funding. 4. In case the outcome of CBA is negative be aware that this could cause that certain measures will

never be taken into account. 5. CBA delivers information to discuss on a societal level the values that should be protected

(willingness to pay) 6. The biggest part of a catchment sets the criteria for the decisions. Open questions 1. MS are allowed to use their own set(s) of criteria for CBA. Should, for transboundary rivers, a set

of minimum basic criteria for the community within that catchment be considered “mandatory” in particular when they have upstream-downstream issues? In an international context economic assessments help to understand the different criteria used by MS to execute their decision making on goals and measures. This allows MS to agree on differences/analogies in FRM as part of transboundary cooperation. Measures can have positive transboundary influence so we should look upon the possibilities to execute economic assessments along the whole river stretch. This solidarity principle applies between MS but also within MS.

2. How can we strengthen the River Commissions to handle/tackle transboundary issues, or should we keep their mandate limited to information exchange and preparation of decisions made elsewhere?

Recommendations 1. Once measures are agreed they should be kept for the next generation even if the political

direction will change after an election. 2. Funding for transboundary catchments or certain river sections is needed! 3. Make EA for the whole catchment area.

Main items Most statements were about cost-benefit analyses (CBA) and the way they are used or can be used. Several open questions about the transboundary cooperation were raised, also in relation to the solidarity principle. Recommendations are to make an economic assessment for the whole (international) catchment area. Funding to do so will be needed for some catchments or parts of rivers. Once measures are agreed they should be kept even if political directions change later.

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2.4.2 Economic Issues This discussion table was facilitated by Leo De Nocker and Wouter Vanneuville. The outcome can be summarised as: Statements

1. Although many questions remain on how to evaluate impacts on the 4 different types of impact of floods, there are enough examples of good practice available for economic, social, ecologic and cultural heritage impacts.

2. It is not necessary to express all aspects monetary because it is not possible (lack of data, uncertainties) or not wanted.

Open questions

1. What are the most appropriate methods to evaluate economic damage? How to evaluate indirect damage or positive effects?

2. How is impact on people (e.g. mental health) modelled? 3. What is the value of a statistical life (different interpretation by insurers than by other policy

fields)? 4. Ecological impact: is water quality important when it is not related to pollutants? 5. How to aggregate the different categories into risk? 6. What’s an acceptable risk, knowing that it relates to the context?

Recommendations

1. Floods are natural events, so positive effects on ecosystems have to be included in economic assessments.

2. Not all questions on economic assessments (EA) are purely scientific; some have to do with policy choices, so stick to the built-up decision framework.

3. Do not limit social impacts to victims; take also loss of social services into account. 4. Reuse available material from outside the flood community, e.g. climate change reports with

information of impacts on different sectors. 5. If the uncertainty can be explained to policy makers, it can be explained to the public. 6. CBA is a useful tool to raise awareness and can be included in communication. 7. Use a limited number of criteria to aggregate for prioritisation, easy to understand, e.g. 50%

economic, 50% intangibles (social, environmental, cultural). 8. Work together with the insurance sector: when more information becomes available in the

public domain it can provide “ammunition” for the MS 9. Make use of the probability of the ‘loss event’ in stead of hydrologic probability 10. Take into account that systems do change over time.

Main items Expression in monetary terms: to be taken into consideration by WG F, as it can be an interpretation of Art. 7(3), Para 3 and Annex I.5 re. Costs and benefits. Main questions are about the methods of risk assessment, especially for the different impacts (human health, ecology, cultural heritage and economic activities) and how to combine them. What’s an acceptable risk? Many of these aspects are reflected in the Resource Document as well. The recommendations are multiple and deal with the methodology (uncertainty, CBA, potential positive effects) as well as the process (involvement of insurance industry, policy choices) and state that there can be (will be) changes over time.

2.4.3 Operational Issues

This discussion table was facilitated by Filip Raymaekers and Lieven De Smet. The outcome can be summarised as:

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Statements

1. The difficulty of economic assessments (EA) on strategic level is that FRMPs include many different types of actions including non structural measures. There is only few experience with EA of non structural measures.

2. Many floods on local level are difficult to assess economically on strategic level of FRMP (e.g. pluvial floods may happen anywhere, anytime).

3. EA are able to define objectives like levels of legal protection or the limits of the role of different actors.

4. There is no unique approach for EA and solutions strictly based on EA are not always the best. Many measures are a reaction on past floods; in that case the role of EA is limited.

5. Risk based management does not necessarily lead to higher safety levels in all areas, even sometimes to lower levels.

6. There is lack of data on (indirect) effects of floods on economic activities on national or EU level. There is lack of economic indicators for recovery from flooding.

7. The solidarity principle, meaning taking into account transboundary effects, also applies within the country itself. If different countries apply different lifetimes for the same measures, it may lead to different outcomes.

8. A time frame of 100 years is often used for CC scenarios, but this is considered as too long for policy objectives or life span of measures, so a time frame of 50 years is more appropriate. In the case lifetime of investments is longer, the rest value of investments can be taken into account.

9. The choice of the discount rate (3.5 or 4%, decrease after x years or not…) has in practice a much higher influence on the outcomes of EA than the selection of the time frame.

10. The possibilities for cost recovery of measures depend on who takes the initiative (national/local – different scale level).

Open questions

1. The main questions for economists are: What are the potential economic damages of flooding? Are FRM measures economically feasible? Will measures work?

2. Should EA be focused on national objectives of risk reduction or on economic objectives for each location (role of spatial boundaries)?

3. How far will MS define their objectives: maintain actual level of risk or go further? 4. What are the effects of flood warnings on risk reduction? 5. Are there long term effects of floods on competitiveness? 6. How should insurance systems enhance source related measures?

Recommendations

1. Establish multi-purpose objectives in FRM – not just flood reduction (integrated FRM). 2. Make use of EA on strategic level to reach the best mix of measures (right balance of

prevention, protection, preparedness, mitigation, recovery, depending on the physical and social context).

3. Take as basis for objectives future scenarios for FRM (climate change, land use change, population growth, wealth growth…) in stead of reaction on past events.

4. The minimal objective (2015 or 2021) should be no further growth of risk (maintaining actual risk) taking into account future scenarios.

5. To take into account future scenario’s there is a need for data to monetise them, otherwise assessments on qualitative level are necessary.

6. There is an urgent need for EA of non developed flood prone areas under high spatial pressure (living in the countryside – neighbourhood of water – harbour/industry developments). If there is no possibility for legal constraints, build at least guidelines for LUP authorities.

7. EA should deliver mechanisms for compensation of transboundary effects related to the solidarity principle. [COMMENT: Is there a further need to develop this issue, and other transboundary issues raised herein, ref. Art. 8(5)?]

8. Exchange good practices in the application of the solidarity principle, since finding common criteria for EA to support this principle is very difficult.

9. Take also external effects of floods into account in EA. 10. In selecting measures look at who will bear the costs (authority, insurance fees, resilience

measures). [COMMENT: See above ref. cost-recovery]

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11. Make a national methodology for mandatory CBA/MCA to apply for funding of programmes (C/B ratio, types of measures, return periods, spatial boundaries…).

12. Take into account existing information like results of the Floodsite project and former WG-F workshops.

13. Decrease the uncertainties in EA in order to cope with critics of the public, because the principle of cost recovery will become necessary for future financing instruments.

Main items Statements were made about the time frame and different types of data (lack of data, how to choose the discount rate). There’s is no unique approach and local actions are difficult to assess economically on a strategic level. The cost-recovery of measures is depending on the scale (and thus of who’s taking the initiative. The solidarity principle is multi-levelled: international but also transboundary within countries and regions. The open questions are often related to the objectives and how insurance can be involved. Multi-purpose objectives are recommended (see also below link with WFD). Start from prognoses for the future (climate change, economic growth, demography ...) and include already existing information. Several items from the statements and open question came up in the recommendations as well: cost recovery, solidarity principle, involvement of other partners than water managers, ...

2.4.4 WFD Issues

This discussion table was facilitated by Maria Brättemark and Annelies Haesevoets. The outcome can be summarised as: Statements

1. Institutional integration between the competent authorities helps identifying synergies, including in economic assessments, which is easier for small size countries.

2. Institutional cooperation should be improved. 3. The beneficiary of FRM is less easy to identify than the traditional water service user, which

makes synergies more difficult. 4. It is not the negative effect of FRM measures on WFD but the ADVERSE effect. 5. This can also be looked the other way around: adverse effects of WFD on FRM measures. 6. Look at SUDS (sustainable urban drainage systems) as good practice for multiple synergies. 7. Synergies can be found in hydromorphological measures and natural flood risk measures.

Open questions

1. How to integrate the measures of WFD and FD (positive and negative effects)? 2. Can WFD and FD always be looked at separately? 3. How to focus on a more strategic view on the synergies between the two directives? 4. Is it possible to compensate the negative impact of flood measures at another location?

Recommendations

1. Seek measures with multiple benefits to make it easier to find funding and to avoid conflicts between the two directives.

2. Take WFD aspects into account, when you do your CBA for the FD. 3. Define the impact of flood measures on the ecosystem (ex. Strategic Environmental

Assessment) 4. Increase the acceptability for taking into account value of ecosystem services. 5. Maximise synergies between art.5 WFD and art. 6 FD to optimise coordination; exchange

information.

Main items All information listed above can be used as an input for the WFD-FD link document, currently under preparation by WG F.

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Statements are made about institutional cooperation or integration of both processes. The adverse effects from measures in one directive on the other directive have to be seen as a 2-way approach. The questions raise the item of integration of measures for both directives and synergies on a strategic level. It is proposed to avoid conflicts and find funding by selecting measures with multiple benefits and take WFD measures into account in the FD cost-benefit analysis. Define the impact of ecosystems and the value of ecosystem services.

At the end of the day (after the presentations described in chapter 2.5) short plenary presentations of the outcomes of all 4 discussion tables were given.

2.5 Presentations on experiences with vulnerability assessment, appraising and prioritising flood risk measures (part 2) After the break a new session with plenary presentations started. Based on case studies the evaluation of FRM alternatives (Finland) and flood protection standards (the Netherlands) were illustrated. Guidelines and tools for CBA (Switzerland) as well as economic assessment for implementing FRM (Germany) and a social CBA approach (Flanders) completed this session. Abstracts of all presentations in this session can be found in the workshop abstracts document (abstracts 9 till 13). Olli-Matti Verta presented Finish Research with “Multi-Criteria Decision Analysis (MCDA) in the evaluation of the flood risk management alternatives – the Kokemäenjoki River Basin case”. A full paper of this work is available as well. Based on a case study a method was shown to make an economic analysis in the stage of the PFRA. Potential evaluation criteria and how to weight them were explained. The second presentation was from Jarl Kind about “Efficient Flood Protection Standards based on cost benefit analysis”. The cost-benefit analysis uses a dynamic model to determine an optimal investment strategy in dike reinforcement. This strategy minimises the discounted investment cost and residual flood damages over a longer time horizon where economic growth and climate change affect the level of flood risk. Final results weren’t available at the time of presentation, but ample attention will be given on difficult subjects such as the valuation of immaterial damages (including the value of statistical life), indirect damages and the issue of discounting. The underlying methodology is showed in this presentation. The Austrian presentation was given by Peter Hanisch. His work – “Introduction of new Guidelines and Tools for Cost Benefit Analysis (CBA)” – is explained into further detail in a full paper as well. The presentation gives an overview of the legal framework to work within and the different components in the CBA. The lessons learned or experiences with the new CBA analysis guideline since 2008 were explained. These can help to identify the approaches and methodologies which should be homogenized among the European countries and which parameters should be left to be established on a regional level. The 4

th presentation was given by Ann Kathrin Buchs. She’s an economist explaining the “Economic

Assessment for Implementing Flood Risk Management – case study of Lower Saxony – lessons learned from WFD”. For this topic a full paper is available on CIRCA. These lessons learned show that the requirement for economic assessments as e.g. the cost-efficiency of measures has to be approached in a broader context, not only with the application of theoretical methods as the cost-benefit-analysis. The constitution of institutions, structures and processes and the mechanisms that influence their actions play an important role to support and ensure an efficient outcome of FRM. The presentation contains several ideas for further proceeding. Leo De Nocker, who assisted in organising the workshop presented “The use of social cost-benefit analysis for flood protection analysis in Flanders”. Costs, benefits and co-benefits for different

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 15

alternatives and how to quantify them were explained using the Sigmaplan for the river Scheldt as a case study. This presentation can be seen as part of the introduction for the break out sessions of the second day where a similar case study was discussed with the participants. Shortly before the workshop there was the request from Pierre Strosser to present his work about Linking ecosystems goods and services and the Floods Directive: Food for thoughts. There was no possibility to add this presentation about ecosystems to the program any more, but the presentation is available on CIRCA. As said at the end of chapter 2.4 the results of the break-out sessions were presented to the plenary at the end of the first day of the workshop.

2.6 Methods for flood damage and risk assessment and appraisal of FRM measures The second day of the workshop started with the point of view of scientists on the theme. The first was Edmund Penning-Rowsell (FHRC Middlesex). He gave an overview of 40 years of flood damage research at Middlesex University. Some theoretical frameworks were presented with illustrations to make the concept visible. Methods changed over time, not only due to new research insights but also because ‘the real world’ is changing so new inventories for damage have to be made, changing the depth-damage curves as well. Lots of attention was given to health effects of flooding and emergency costs. Several times the dynamics of flood damage calculations over time was shown. A second presentation came from Jose Barredo (JRC). Flood damage functions for EU member states has “Flood risk mapping using Corine land cover datasets” as a sub-title. This presentation gave an overview of the work done on a EU wide scale. The idea is to set up a flood damage functions database for EU countries based on Corine Land Cover and with water depth as the only hazard parameter. The idea is to provide this information to MS who don’t have this information available for the moment, not to replace the existing national and regional systems (often with much more detail). Also for (international) catchment wide studies these data can be beneficiary. The latest presentation of this session was given by Reimund Schwarze (UFZ) about ConHaz (Cost of natural Hazards) project (abstract available on CIRCA). Based on the vision of ConHaz possible evolutions of economic welfare in potentially flooded areas were explained. Based on the exchange of information during this workshop Wouter Vanneuville presented the Ghent workshop results on a ConHaz meeting about flooding (November 2010) in London.

2.7 Dijle case

2.7.1 Introduction to the Break-out sessions

Marc Van Dyck introduced the Dijle case study to the participants. They got an introduction to the area and some basic characteristics related to economic flood damage, social flood impact, cultural heritage and the ecological impact. The different alternatives (groups of measures) were explained as well as the CBA en MCA analysis. The rest of the morning was dedicated to 2 break-out sessions. The participants were divided into 4 groups and stayed in the same group for both discussions.

2.7.2 Break-out session part 1: Vulnerability and risk assessment

After lunch each group presented some highlights of the discussions. Below is the summarised outcome of the 4 discussion groups.

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 16

Statements 1. For the purpose of FRMPs, maps are important for public participation, but they should not be

too complicated and easy to understand for the public. Detailed information is not always available. People are mainly interested whether their property will flood or not, so a minimal level of detail is necessary.

2. Maps with social impacts: critical social infrastructure and effects on transport and other networks and utilities should be presented to stakeholders.

3. Map with environmental impact: most MS consider risk of potential contaminated flood waters, potential pollutants and link to WFD; ecological impacts of flooding are considered as too detailed.

4. Cultural heritage already in place for hundreds of years may not significantly be affected. Some MS estimate cultural heritage with a higher vulnerability (intangible affects) in order to get a higher protection level.

5. An additional overlay with calculated damages and other maps are necessary in the process of decision support, but these should not necessarily be shown to the public.

6. It is very important to include maps for different frequencies and to combine the vulnerabilities or damages with the hazards to produce a risk map (at least 3 return periods); statistics of probabilities change over time.

7. It might be interesting to have an extra overlay with the damages you are addressing to. Open questions

1. Is it possible to get an acceptable outcome when stakeholders discuss on relative weights of criteria (subjective)?

2. How to define and valuate impacts on social, environmental and cultural receptors? Recommendations

1. General comment: do not focus the resource document on data rich areas alone. 2. Maps to be shown to the public should focus on the areas of potential significant flood risk. It is

important to show comparable numbers (like numbers of houses and people affected), and they should be harmonised as much as possible.

3. A MCA with the different impacts (economic, cultural, social, environmental) is needed to assess risk.

4. Integration of the impacts of several return periods is needed to assess the risk. 5. Focus on the key elements (criteria from the Directive). 6. Maps will have to be INSPIRE compliant. The commission and MS should prevent that

INSPIRE will overrule the flood mapping process.

2.7.3 Break-out session part 2: Prioritisation of measures

Statements

1. Most MS use CBA as prioritisation method while MCA is rarely used. 2. In MCA the weighting is also a political issue. 3. Co-benefits are difficult to estimate and there is not much experience with quantification and

valuation. 4. There are different views on how to take into account fatalities. In some MS fatalities are not

accounted for in CBA because any life is considered to have equal importance regardless of the number of inhabitants. In other MS the number of potential fatalities is extremely important and has a high influence in the outcome of economic assessments. Some MS have objections against monetising human lives. An alternative would be to assess the number of potential victims, and to use it as a criterion in a MCA which is best suited to combine monetary and non monetary impacts.

5. There are many ways to manipulate the results of CBA and MCA. Decision makers are able to change the weights to meet their goals. Assigning weights is very subjective.

6. Uncertainty as being inherent to decision making and looking into the future should be highlighted.

7. CBA/MCA is used for starting the discussion. 8. Take care not to include emotional aspects in the basic figures.

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 17

9. MS use different criteria. Comparable numbers are most probably number of properties and number of people. But once you start to valuate these things in order to include them in CBA, the comparability becomes less.

10. There was a remark on the proposed scenarios. Mostly the solution is a mix of measures, due to limitation of budget and space (‘not in my backyard’). The tools should be able to manage these interactions.

Open questions

1. Is it possible to get an acceptable outcome when stakeholders discuss on relative weights of criteria (subjective)?

2. How to define and valuate impacts on social, environmental and cultural receptors? Recommendations

1. Ecosystem services can be used to indicate co-benefits between WFD and FD. 2. Use the criteria of the PFRA and of risk maps in MCA to make it more consistent and to avoid

double work 3. The policy makers have to give the importance to the different parameters. 4. Keep it simple when you communicate results: don’t use 13 parameters, rather 4. Take those

parameters out that don’t influence the result. 5. Use scores rather than values in MCA. 6. A MCA should be adaptable (change the parameters that could be changed within the next

years). The MCA tool could be used to propose different scenarios that are based on different weights of the criteria and propose them in this way to the politicians, in order to make the impact of these changes transparent.

7. Collapse or failure of infrastructure and services should also be part of the scenario’s.

Main items During the discussion same open questions came up in both parts of the discussion. They cannot be seen totally independent from each other. Statements about vulnerability and risk assessment handle the role of stakeholders and ‘the right level of detail for the right end user’. Some information is too detailed but e.g. critical infrastructure is missing in the maps used for the case study. Environmental impact is often seen in relation to contaminated water. This is a relevant issue for the interpretation of Art. 6 §5 c). For the prioritisation the CBA is much more common than the MCA approach, where the weighting is seen as a political issue as well. (in the basic figures, emotions have to be excluded). Fatalities are handled in very different ways amongst the MS. There is little experience with co-benefits. General recommendation not to focus on areas where lots of data are available only. The resource document has to provide information about floods and economics for data poor regions as well. Comparable numbers have to be shown in reported maps. In practice: focus on the criteria from the directive as key elements and make maps INSPIRE compliant to avoid (role for EU COM) overruling of the flood mapping process. Score the MCA rather than use values and make as much as relevant parameters adaptive to simulate future scenarios. Extreme events like collapse of infrastructure also has to be in the scenarios. But keep it simple when you communicate! Ecosystem services can be used to indicate co-benefits between WFD and FD.

2.8 Presentations on financing mechanisms, financing scenarios and EU funding The latest part of the workshop focussed on financing and funding. It started with 2 presentations: one about insurance and one about EU funding.

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 18

Carmen Bell (CEA, abstract number 18) presented the European insurance industry’s experience. The presentation is accompanied by a paper available on CIRCA. Floods economics is central to the European insurance industry. There is no one-size-fits-all solution and the overarching principle indisputably is “responsibility sharing” as it increases risk awareness, reduces moral hazard and enhances risk reduction measures. Effective flood risk management requires coordinated action, aiming at an optimal combination of stakeholder’s expertise and strengths where ex-ante financing schemes can boost efficiency. The latest presentation in the workshop came from Maria Brättemark (DG ENV) about EU funding and gave an overview of some key instruments and questions for the future but not worked-out plans for the post 2013 era. Funding mechanisms described are: cohesion policy funding, rural development policy, Pre-Accession and Neighbourhood policy, Civil protection financial instrument, EU solidarity fund, Life and Critical infrastructure financial instrument. A draft catalogue and some overview per instrument are given at the end.

2.9 Plenary discussion on insurance and EU funding After the presentations described in paragraph 2.8 there was a plenary discussion.

2.9.1 Insurance Statements

1. Risk assessments by the insurance industry can be questioned: insurers have no engineering capacity, e.g. for taking into account the effects of structural defences.

2. Insurers need insight in the effects of FRM measures on the risk. 3. The insurance industry is specialised in payouts for damage relief. 4. Exchange of data from the water managers is a matter of survive for the insurers: they don’t

want to loose their clients. 5. The role of insurers is to transfer risk to many; the exclusion of individuals from insurance

seems to be contradictory. However, there may be reasons why a particular individual cannot be insured. It could be a result of their risk portfolio, which factors in several things (eg price of assets at risk, age of housing structure, failure to adapt structure to legally-enforced building or land codes).

6. Uninsurable risk means beyond financial capacities of (re)insurers. 7. Increase in risk leads to higher premiums in the long term, this is not always caused by a

single flood event. Open questions

1. What should be the role of the insurance industry as stakeholder? 2. Can insurers play a role in relief for intangible effects of flooding?

Recommendations

1. Work on good relations with the insurance industry. 2. Look for transparency in both directions: exchange of information, also on which risks are

uninsurable. 3. Take care of transparency for the public: make as much as possible data public. 4. The possible consequences of climate change should strengthen the need for collaboration. 5. Lessons learned from the New Orleans event: the lack of channel maintenance and

engineering negligence was seen as the responsibility of the administration; insurers can only play a role when risk can be calculated.

6. Engage stakeholders like land use planners and water power plant managers in the exchange of information on risks.

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2.9.2 EU funding Statements

1. The actual GDP criterion for ERDF funding limits the application to very few countries. 2. Water retention measures in many cases conflict with agricultural interests.

Open questions

1. What is the role of EU funding in different MS? 2. What will be the new role of ERDF Pillar II in the EU2020 strategy? 3. Will GDP stay the critical criterion for ERDF funding? What are the reference MS to determine

the 85% of GDP limit? 4. Will ERDF be opened for ALL MS? 5. Will there be a role for CC adaptation strategy (EU2020)? 6. ETC is now restricted to overall EU borders. Will it be extended to the solidarity principle

between ALL MS? 7. Cross Compliance is already partially implemented for the WFD. Will it be implemented for the

FD? 8. Only 20% of EU budget has been used by 09/2010. What are the causes?

Recommendations

1. Implement multiple benefits of measures in CAP. 2. Promote ‘green infrastructure’ and win-win measures.

Filip Raymaekers presented the main topics from the discussion immediately after it. Some closing remarks were made by Wouter Vanneuville (for the organisation) and Maria Brättemark (DG ENV). On the reception in the town hall of Ghent there were speeches form Daniel Termont (Mayor of Ghent) and Philip D’Hondt (Flemish Water Director).

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3 Workshop conclusions and recommendations 1. The importance of economic assessments (EA) in decision support In the process of decision making in flood risk management, EA is not the only instrument, but EU Member States recognise the key role of it in flood risk analysis and in selecting and prioritising measures to manage flood risks. EA can provide reliable information for politicians and stakeholders, and they can justify and explain prioritisation of measures and allocation of resources to execute them. Member States clearly plan to intensify their efforts in this field. There is no unique approach for the use of EA in decision support, and it is recognised that solutions strictly based on economic analysis are not always the best. In some countries cost-benefit analysis is necessary to apply for funding of measures, in other countries it is only used for starting the discussion. When measures are developed as a reaction on past floods, the role of EA is limited. 2. The solidarity principle In an international context economic assessments help to understand the different criteria used by Member States (MS) to execute their decision making on goals and measures. This allows MS to agree on differences/analogies in FRM as part of transboundary cooperation. Measures can have positive transboundary influence so we should look upon the possibilities to execute economic assessments along the whole river stretch and for the whole catchment area. This solidarity principle applies between MS but also within MS. Risk based management does not necessarily lead to higher safety levels in all areas, even sometimes to lower levels. MS are allowed to use their own set(s) of criteria for cost-benefit analysis. There is no consent that, for transboundary impacts, a set of minimum basic criteria for the community within that catchment should be considered “mandatory”. Since finding common criteria for EA to support this principle could be very difficult, it is recommended to exchange good practices in the application of the solidarity principle. EA should deliver mechanisms for compensation of transboundary effects related to the solidarity principle, and transboundary cooperation should be supported by appropriate funding. 3. Synergies with the Water Framework Directive It is recognised that both directives (FD and WFD) are interlinked and can not always be looked at separately. Institutional integration between the competent authorities of both directives helps identifying synergies, including in economic assessments, which is easier for small size countries. Institutional cooperation should be improved, with more focus on a strategic view on the synergies between the two directives. Two difficulties in finding synergies were raised: the fact that the beneficiary of flood risk management is less easy to identify than the traditional water service user, and the fact that some flood risk related measures can have positive effects on WFD objectives, while others will have adverse impacts. This can also be looked the other way around: WFD objectives could hamper the development of appropriate FRM measures. Synergies between art. 5 of the WFD and art. 6 of the Floods Directive should be maximised to optimise coordination, and information and experiences with this coordination should be exchanged. In doing economic assessments for the Floods Directive, WFD aspects should be taken into account. Synergies can be found in hydromorphological measures and natural flood risk measures. Floods are natural events, so positive effects on ecosystems have to be included in quantitative (monetary) assessments. Working on measures with multiple benefits makes it easier to find funding and to avoid conflicts between the two directives. Strategic Environmental Assessments can define the impact of flood measures on the ecosystem; the inclusion of ecosystem services in the economic assessments of flood risk management however can indicate co-benefits between the FD and the WFD. The acceptability for taking into account value of ecosystem services should be increased. Sustainable urban drainage systems (SUDS) can be looked at as good practice for multiple synergies. 4. The role of politics Not all aspects of economic assessments are purely scientific, some have to do with policy choices. The built-up decision framework, as well as measures already decided based upon this framework, should be kept over a longer period, regardless of changes in political direction after elections.

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5. Long-term aspects Future scenario’s for FRM (climate change, land use change, population growth, wealth growth,…) should be taken as basis for reaching objectives, in stead of reaction on past events. To take into account future scenario’s there is a need for data to monetise them, otherwise assessments on qualitative level are necessary. It was discussed if floods could have long term effects on competitiveness. 6. Time horizon A time frame of 100 years is often used for climate change scenarios, but this is considered as being too long for policy objectives or life span of measures, so a time frame of 50 years would be more appropriate. In the case lifetime of investments is longer, the rest value of investments can be taken into account. 7. Discount rate The choice of the discount rate (3.5 or 4%, decrease after x years or not,…) has in practice a much higher influence on the outcomes of EA than the selection of the time frame. 8. Uncertainty Uncertainty is inherent to decision making and looking into the future. This should be highlighted to policy makers. If the uncertainty can be explained to policy makers, it can be explained to the public. It is recommended to decrease the uncertainties in EA in order to cope with critics of the public, because the principle of cost recovery will become necessary for future financing instruments. 9. Public participation For the purpose of FRMPs, maps are important for public participation, but they should not be too complicated and easy to understand for the public. These maps should focus on the areas of potential significant flood risk. Detailed information is not always available. People are mainly interested whether their property will flood or not, so a minimal level of detail is necessary. It is important to show comparable numbers (like numbers of houses and people affected), and they should be harmonised as much as possible. Stakeholders can discuss on relative weights of criteria in the decision frameworks, but it is questioned that it always leads to an acceptable outcome. In communicating criteria and results, the number of parameters should be limited, e.g. to the 4 types of impact (economic, social, environmental, cultural). 10. Economic assessments (EA) on strategic level It is recommended to make use of EA on strategic level to reach the best mix of measures, meaning the right balance of prevention, protection, preparedness, mitigation and recovery measures, depending on the physical and social context. Flood risk management plans (FRMP) should be the framework for these strategic decisions. FRMPs will include many different types of actions including non structural measures, and the limited experience with EA of non structural measures is a difficulty to overcome. In addition, many floods on local level are difficult to assess economically on strategic level of FRMP (e.g. pluvial floods may happen anywhere and at any time). It was also concluded that EA on strategic level are able to support protection of non developed flood prone areas under high spatial pressure, induced by preferences of living in the countryside and in the neighbourhood of water, and industrial or harbour developments. Prevention of inappropriate development is essential in order to safeguard downstream areas from flooding. If there is no possibility for legal constraints, at least guidelines for land use planning should be developed. 11. Mapping In addition to the requirements of the directive, additional overlays with calculated damages and other maps are necessary in the process of decision support, but these additional maps should not necessarily be shown to the public. Maps will have to be INSPIRE compliant. The commission and MS should prevent that INSPIRE will overrule the flood mapping process. 12. Social consequences Social impacts should not be limited to number of people affected or number of victims, also loss of social services should be taken into account. It is recommended that maps to communicate with

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 22

stakeholders show critical social infrastructure and effects on transport and other networks and utilities. Questions remain on how impact on mental health could be taken into account. There are different interpretations of the value of a statistical life between insurers and other policy fields, and different views on how to take into account fatalities. In some MS fatalities are not accounted for in CBA because any life is considered to have equal importance regardless of the number of inhabitants. In other MS the number of potential fatalities is extremely important and has a high influence in the outcome of economic assessments. Some MS have objections against monetising human lives. An alternative would be to analyse the number of potential victims, and to use it as a criterion in a MCA or so-called extended CBA, which is best suited to combine monetary and non monetary impacts. 13. Environmental consequences Most MS consider risk of potential contaminated flood waters, potential pollutants and link to WFD objectives as being most important for environmental consequences. Ecological impacts of flooding are not yet taken into account by most MS, they question if consequences of flooding on the environment are relevant when they are not related to pollutants. 14. Cultural consequences Some MS estimate cultural heritage with a higher vulnerability (intangible effects) in order to get a higher protection level. Others indicate that cultural heritage already in place for hundreds of years may not significantly be affected by flooding. 15. Risk analysis Although many questions remain on how to evaluate impacts on the 4 different types of impact of floods, there are enough examples of good practice available for economic, social, ecologic and cultural heritage impacts. It is not necessary to express all aspects monetary because it is not possible (lack of data, uncertainties) or not wanted. The aggregation of the different categories of impacts into risk is the most questioned problem. As a solution it is proposed to use a MCA with a limited number of criteria to aggregate, easy to understand, e.g. 50% economic, and 50% intangibles (social, environmental, cultural). These are also the key elements of the Directive to focus on. Integration of the impacts of several return periods (at least 3) is needed to assess the risk, so it is very important to include maps for different frequencies and to combine the vulnerabilities or damages with the hazards to produce a risk map. MS indicated the importance of certain aspects to take into account in risk analysis: external effects of floods, and the fact that systems (both statistical probabilities as well as assets at risk) do change over time. Collapse or failure of infrastructure and services should also be part of the scenarios. It is recommended to use the probability of the ‘loss event’ in addition to hydrologic probability. 16. Availability of data Reported problems on lack of data are in the field of (indirect) effects of floods on economic activities on national or on EU level and regarding economic indicators for recovery from flooding. In more general terms it was mentioned that this resource document should not focus on data rich areas alone. It is recommended to use as much as possible existing information like results of the Floodsite project and former WG-F workshops, and to reuse available material from outside the flood community, e.g. climate change reports with information of impacts on different sectors. 17. Objectives of flood risk management A first observation is that spatial boundaries play an important role in developing objectives and economic assessments to reach these objectives: economic objectives for an individual location can differ from national objectives of risk reduction. A problem of defining acceptable risk is that it relates to the context, but it is recognised that economic assessments are able to define national objectives like levels of legal protection or appropriate boundaries for the role of different actors (spatial planners, water managers, insurers).It is questioned how far MS will define their objectives: maintain actual level of risk or go further? The minimal objective should be no further growth of risk (maintaining actual risk) taking into account future scenarios like climate and socio-economic changes. Finally it is recommended to establish multi-purpose objectives in FRM, leading to integrated FRM, and not just flood risk reduction.

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18. Analysis of measures Most solutions will consist of a mix of measures, due to limitations of budget and space to develop risk reduction measures. The tools should be able to manage these interactions. The effects of non structural measures like flood warnings on risk reduction are more difficult to evaluate. 19. Cost-benefit analysis In some MS CBA is mandatory to get funding. Sometimes the outcome of CBA will be negative. The consequence is that certain measures will never be taken into account. If CBA is used one should take notice of the scale and circumstances to what it is applied. For small or relatively cheap measures a CBA can be inefficient (relatively expensive).CBA is a useful tool to raise awareness and can be included in communication. By monetising social preferences (willingness to pay), CBA is able to deliver information to discuss on a societal level the values that should be protected. Co-benefits are difficult to estimate and there is not much experience with quantification and valuation. Care should be taken not to include emotional aspects in the basic figures. MS use different criteria in their decision frameworks. Comparable numbers are most probably number of properties and number of people. But once these assets are valuated in order to include them in CBA, the comparability becomes less. An observation is that the biggest part of a catchment sets the criteria for the decisions. 20. Multi-criteria analysis It is recognised that the weighting in MCA is a way of engaging stakeholders, but it is also a political issue. The policy makers should decide on the importance of the different parameters. Assigning weights is very subjective, and also a way to manipulate the results of MCA, like there are also many ways to manipulate results of a CBA. As a result of this inherent subjectivity, there are no right or wrong weights for the evaluation criteria. People representing different interest groups have different perspectives and values and thus it is natural that they may give different weights for the criteria. One advantage of MCA is that it can explicitly describe these differences. It would be a good practice to use a few criteria weight profiles in the evaluation of alternatives. These profiles can be based on stakeholder opinions or they can be hypothetical and represent different potential perspectives (generated by experts) to the decision situation. The MCA tool could be used to propose different scenario’s that are based on different weights of the criteria and propose them in this way to the politicians, in order to make the impact of these changes transparent. This can be seen as one way to do the sensitivity analysis and to analyse the importance of the criteria weights to the outcome of the process. A MCA should be adaptable, by changing the parameters that could be changed within the next years. It is recommended to use a MCA to score the different impacts (economic, cultural, social, environmental) in order to combine them into global risk assessments. The use of the same criteria as the ones of the PFRA and of the risk maps will make this process more consistent and will avoid double work. 21. Combining CBA and MCA Although most MS use CBA as prioritisation method, while MCA is rarely used, it is recommended to integrate both CBA and MCA, in order to combine all monetary and non-monetary expressed impacts of floods and of measures to reduce flood risks. 22. Financing and cost recovery In selecting measures it is important to look at who will bear the costs: the authority for risk reduction measures, or the public for insurance fees or resilience measures. Authorities are interested in economic risk, while private persons look at financial risk. The possibilities for cost recovery of measures depend on who takes the initiative. There is a clear difference between national and local authorities who work on different scale levels. 23. Insurance systems In the workshop it was stated that the insurance industry is specialised in payouts for damage relief. Risk assessments by the insurance industry were discussed: insurers have no engineering capacity, e.g. for taking into account the effects of structural defences. For this reason they need insight in the effects of FRM measures on the risk. Exchange of data from the water managers is a matter of survive for the insurers: they don’t want to loose their clients.

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The role of insurers is to transfer risk to many; the exclusion of individuals from insurance seems to be contradictory. However, there may be reasons why a particular individual cannot be insured. It could be a result of their risk portfolio, which factors in several things (e.g. price of assets at risk, age of housing structure, failure to adapt structure to legally-enforced building or land codes). Insurers can only play a role when risk can be calculated; in the case of the New Orleans event the lack of channel maintenance and engineering negligence was seen as the responsibility of the administration. Increase in risk leads to higher premiums on the long term, this is not always caused by a single flood event. Uninsurable risk means risk beyond financial capacities of (re)insurers. It is also questioned that insurers can play a role in relief from intangible effects of flooding, as well in enhancing source related measures. Workshop participants recommended to work on good relations with the insurance industry, and to look for transparency and data exchange in both directions, also on which risks are uninsurable. Also stakeholders like land use planners and water power plant managers should be engaged in the exchange of information on risks. When more information becomes available in the public domain it can provide “ammunition” for the MS. The possible consequences of climate change should strengthen the need for collaboration. Care should be taken for transparency to the public and to make as much as possible data public. 24. EU funding The role of EU funding differs largely between MS (see questionnaire results). The actual GDP criterion for ERDF funding is not clear (what are the reference MS to determine the 85% of GDP limit) and limits the application to very few countries. ERDF Pillar II should play a role in the EU2020 climate change adaptation strategy. It is questioned if GDP will stay the critical criterion in the next funding period from 2014 on. Possible new criteria could be climate change adaptation, the solidarity principle between all MS (ETC is now restricted to overall EU borders), and areas of potential significant flood risk in all MS. Cross Compliance is already partially implemented for the WFD, and it is not clear if it will be implemented for the FD. Water retention measures in many cases conflict with agricultural interests, so it is important to work on measures with multiple benefits and to implement this principle in CAP. In general ‘green infrastructure’ and win-win measures should be promoted by EU funding. Finally there are questions on the reasons why only 20% of available EU budget has been used by September 2010.

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Appendix A: Workshop program

CIS Working Group F Thematic Workshop Floods and Economics

Appraising, prioritising and financing flood risk management measures and instruments

Ghent, 25 - 26 October 2010

followed by 8th Working Group F meeting

27 - 28 October 2010

Programme

Monday 25th October 2010: WG-F Workshop Floods and Economics

Venue Ghent NH Hotel, Bourdon meeting room

09.00 – 10.15 Registration

10.15 – 11.10 Opening, Keynote, Results of former WG-F and WFD&Economics Workshops

Welcome and workshop moderation Wouter Vanneuville, MOW

Keynote address Frank Van Sevencoten, VMM

Summary of economic oriented outputs of former WG-F workshops Mark Adamson, OPW

WFD and Economics Workshop results Maria Brättemark, COM

11.10 – 11.30 Coffee break

11.30 – 12.00 Floods & Economics Resource Document and Questionnaire results

Introduction to Floods & Economics Resource Document Dominique Van Erdeghem, Arcadis Lieven De Smet, HIVA

Questionnaire results Filip Raymaekers, VMM

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 26

12.00 – 13.00 Presentations on experiences with vulnerability assessment, appraising and prioritising flood risk measures

Vulnerability and Risk Assessment for the PFRA in Ireland Mark Adamson, OPW

Flood risk analysis in Wallonia: a micro-scale approach Benjamin Dewals, Ulg

Methods to analyse cost and benefit of FRM measures in France Cédric Peinturier, CGDD

EconoMe - an Online-Tool for cost-benefit calculations of FRM measures Urs Nigg, BAFU

Discussion

13.00 – 14.00 Lunch

14.00 – 15.30 Breakout sessions with 4 discussion themes

Theme 1: Governance issues

Theme 2: Economic issues

Theme 3: Operational issues

Theme 4: Water Framework Directive issues

15.30 – 15.50 Coffee break

15.50 – 17.00 Presentations on experiences with vulnerability assessment, appraising and prioritising flood risk measures

MCDA in the evaluation of FRM alternatives – the Kokemäenjoki case Olli-Matti Verta, ELY-center

Efficient Flood Protection Standards based on cost benefit analysis Jarl Kind, Deltares

Introduction of new Guidelines and Tools for Cost Benefit Analysis Peter Hanisch, Donau Consult

Economic Assessment for implementing FRM – case study of Lower Saxony – lessons learned from WFD

Ann Kathrin Buchs, MECP

The use of social cost-benefit analysis for flood protection analysis Leo De Nocker, VITO

Discussion

17.00 – 17.30 Closing plenary session with wrap-up of breakout sessions and inputs for F&E Resource Document

18.30 – 22.00 Evening Programme

18.30 – 19.45 Guided walk through historic city centre of Ghent

19.45 – 22.00 Diner (Restaurant De Foyer)

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 27

Tuesday 26th October 2010: WG-F Workshop Floods and Economics

Venue Ghent NH Hotel, Bourdon meeting room

09.00 – 10.30 Methods for flood damage and risk assessment and appraisal of FRM measures

Forty years of flood damage research at Middlesex University, UK Edmund Penning-Rowsell, FHRC

Flood damage functions for EU member states – Flood risk mapping using Corine land cover datasets

José Barredo, JRC

ConHaz - Cost of Natural Hazards Reimund Schwarze, UFZ

Discussion

10.30 – 10.55 Introduction to the breakout sessions - Dijle case Marc Van Dyck, Arcadis

10.55 – 11.15 Coffee Break

11.15 – 12.30 Breakout sessions - Dijle case

Breakout sessions part 1: Vulnerability and risk assessment

Breakout sessions part 2: Prioritisation of measures

12.30 – 13.15 Lunch

13.15 – 14.00 Visit to Saint Bavo Cathedral

14.00 – 14.45 Plenary session: results of breakout groups

14.45 – 15.30 Presentations on financing mechanisms, financing scenarios and EU funding

The European insurance industry’s experience Carmen Bell, CEA

EU Funding Maria Brättemark, COM

Discussion

15.30 – 15.50 Coffee break

15.50 – 16.45 Plenary discussion on financing aspects

Theme 1: Resources, cost recovery

Theme 2: Payments for ecosystem services and blue-green services

Theme 3: Insurance systems

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 28

Theme 4: EU funding priorities and procedure

16.45 – 17.00 Plenary session: wrap-up of breakout sessions and discussion on F&E Resource Document

17.00 – 17.30 Closure with main conclusions

17.30 – 22.30 Evening Programme

17.30 – 18.30 Reception City Hall Gent

19.30 – 22.30 Culinary Walking Tour

Wednesday 27th October 2010: 8th meeting of CIS Working Group F

Venue Ghent NH Hotel, Bourdon meeting room

10.00 – 17.30 Working Group F day 1 COM programme

19.00 – 22.00 Evening Programme

Thursday 28th October 2010: 8th meeting of CIS Working Group F

Venue Brussels, COM Centre Borschette

09.00 – 10.00 Bus transfer from Ghent NH Hotel to Brussels COM Centre Borschette

10.00 – 16.00 Working Group F day 2 COM programme

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 29

Appendix B: list of participants

CIS Working Group F workshop Floods and economics: appraising, prioritising and financing FRM measures and instruments

Ghent, 25th & 26

th October 2010

List of Participants –

Family Name First Name Organisation/Address/Country

Adamson Mark Office of Public Works 17-19 Lower Hatch St. Dublin 2 IRELAND

Adler Mary-Jeanne Ministry of Environment and Forests 12 Libertatii Blv ROMANIA

Arangelova Maria Ministry of the Environment and Water 22 Pricess Maria Louiza blv BULGARIA

Balfoort Hans Ministry of Transport, Public works and Water Management PB 20904 THE NETHERLANDS

Barredo José EUROPEAN COMMISSION JRC TP – 261 21020 Ispra ITALY

Bell Carmen CEA European insurance & reinsurance federation Square de Meeus 29 Brussels BELGIUM

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 30

Boris Christophe FEDERATION OF FRENCH INSURES Square de Meeûs 38/40 bureau 425 1000 Brussels BELGIUM

Braskerud Bent Christen Norwegian Water and Energy Directorate Postboks 5091 Majorstuen 0301 Oslo NORWAY

Brättemark Maria EUROPEAN COMMISSION DG ENV.D.1 “Water unit” B – 1049 Brussels BELGIUM

Brejchova Michaela Ministry of the Environment Vrsovicka 65 100 10 Praha CZECH REPUBLIC

Brezina Petr Odra River Board Varenska 701 26 Ostrava CZECH REPUBLIC

Broeckx Steven VITO Research Environmental Economics Boeretang 200 - 2400 Mol BELGIUM

Buchs Ann Kathrin Niedersachsen Ministerium für Umwelt und Klimaschutz Archivstr. 2 30169 Hannover GERMANY

Bussettini Martina Water Protection Department ISPRA Via Curtatone 3 00185 Rome ITALY

Camphuis Nicolas-Gerard CEPRI B.P. 2019 45010 Orleans cedex 01 FRANCE

Cauwenberghs Kris Flemish Environment Agency

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 31

Koning Albert II laan 20 bus 16 1000 Brussel BELGIUM

De Nocker Leo VITO Research Environmental Economics Boeretang 200 2400 Mol BELGIUM

De Roo Ad EUROPEAN COMMISSION DG JRC Via E. Fermi 2749 210027 Ispra ITALY

De Smet Lieven HIVA – K.U.Leuven Research Institute for Work and Society Parkstraat 47 bus 5300 3000 Leuven BELGIUM

de Thysebaert Didier Service Public de Wallonie – DGARNE Avenue Prince de Liège 15 5100 Namur BELGIUM

Deckers Pieter Flanders Hydraulics Research Berchemlei 115 2140 Antwerpen BELGIUM

Dewals Benjamin University of Liege Chemin des Chevreuils 1 Bat52/3+1 4000 Liege BELGIUM

Dhondt Jannie Waterwegen & Zeekanaal nv Lange Kievitstraat 111-113 bus 44 2018 Antwerpen BELGIUM

Garcia de la Fuente Laura University of Oviedo Campus de Mieres, CP 33600 Mieres, Asturias

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 32

SPAIN

Gierk Meike Federal Ministry for Environment, Nature Conservation & Nuclear Safety Robert-Schuman-Platz 3 53175 Bonn GERMANY

Green Colin FHRC Middlesex University Trent Park Bramley Road UNITED KINGDOM

Haesevoets Annelies Flemish Environment Agency Koning Albert II laan 20, b 16 1000 Brussel BELGIUM

Hagberg Jens Swedish Civil Contingencies Agency SE – 651 81 Karlstad SWEDEN

Hanisch Peter Donau Consult Zottl & Erber ZT GmbH Klopstockgasse 34 1170 Wien AUSTRIA

Hanski Minna Ministry of Agriculture and Forestry PO Box 30 FI-00023 FINLAND

Hofstede Jacobus North Sea Coastal Managers Group MLUR-SH, Mercatorstrasse 3 D-24106 Kiel GERMANY

Hornich Rudolf Land Steiermark Stempfergasse 7 8010 Graz AUSTRIA

Kind Jarl Deltares Postbus 85467 3508 AL Utrecht THE NETHERLANDS

Kipgen Robert Administration de la Gestion de l’Eau

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 33

51, rue de Merl LUXEMBOURG

Kremer Michael Donau Consult Zottl & Erber ZT GmbH Klopstockgasse 34 1170 Wien AUSTRIA

Laethem Rob Flemish Environment Agency A. Van de Maelestraat 96 9320 Erembodegem BELGIUM

Linsen Max Rijkswaterstaat Zuiderwagenplein 2 THE NETHERLANDS

Martens Koen Flemish Environment Agency Koning Albert II laan 20 bus 16 1000 Brussel BELGIUM

Martini Frédérique Ministry of sustainable development Arche de la défense 92055 La Défense Cedex FRANCE

Monacelli Giuseppina Water Protection Department ISPRA Via Curtatone 3 00185 Rome ITALY

Moroz Sergiy WWF 168 Av Tervurenlaan 1150 Brussels Belgium

Myhre Marianne Norwegian Water and Energy Directorate Postboks 5091 Majorstuen 0301 Oslo NORWAY

Näslund-Landenmark Barbro Swedish Civil Contingencies Agency SE – 651 81 Karlstad

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 34

SWEDEN

Nigg Urs Federal Office of the Environment Hazard Prevention Division CH-3003 Bern SWITSERLAND

Pedusaar Tiia Ministry of the Environment Narva mnt 7 ESTONIA

Peinturier Cédric Ministry of sustainable development MEEDDM, Tour Voltaire 92055 La Défense Cedex FRANCE

Pene Jean-Philippe Ministry of sustainable development MEEDDM, Arche Nord 92055 La Défense Cedex FRANCE

Penning-Rowsell Edmund Member Flood Hazard Research Centre Member Oxford Water Futures 7, Richmond Road – Oxford OX1 2JJ UNITED KINGDOM

Porter David Rivers Agency Hydebank 4, Hospital Road, Belfast BT8 8JP NORTHERN IRELAND

Raymaekers Filip Flemish Environment Agency Koning Albert II laan 20 bus 16 1000 Brussel BELGIUM

Schmid-Breton Adrian International Commission for the Protection of the Rhine Kaiserin-Augusta-Anlagen 15 D-56068 Koblenz GERMANY

Schwarze Reimund Climate Service Center (CSC) at Helmholtz Center Geesthacht (HZG) Bundesstr. 45 GERMANY

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 35

Socher Martin Sächsisches Staatsministerium für Umwelt & Landwirtschaft - Wilhelm-Buck-Strasse 2 D- 01097 Dresden GERMANY

Stiefelmeyer Heinz Federal Ministry of Agriculture, Forestry, Environment and Water Management Marxergasse 2 1030 Vienna AUSTRIA

Szentivanyi Arpad Central Directorate for Water & Environment Marvany u. 1/C 1012 Budapest HUNGARY

Trouw Koen Coastal division of the Flemish Comm Vrijhavenstraat 3 8400 Oostende BELGIUM

Van Berkel William Ministry of Transport, Public Works and Civil Aviation PB 20904 THE NETHERLANDS

Van Dyck Marc ARCADIS Belgium Posthoflei 12 2600 Berchem BELGIUM

Van Erdeghem Dominique ARCADIS Belgium Posthoflei 12 2600 Berchem BELGIUM

Vanneuville Wouter Department of Mobility & Public Works Flanders Hydraulics Research Berchemlei 115 2140 Antwerpen BELGIUM

Verta Olli-Matti Centre for Economic Development, Transport and Environment Lemminkäisenkatu 14-18 B 20101 Turku FINLAND

Viavattene Christophe FHRC

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 36

Middlesex University Trent Park Bramley Road UNITED KINGDOM

Wehrli André EUROPEAN ENVIRONMENT AGENCY Kongens Nytorv 6 DK – 1050 Copenhagen Denmark

Wlodarczyk Agata National Water Management Authority Grzybowska Str. 80/82 00-844 Warsaw POLAND

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 37

Appendix C: Planning and organisation Thanks a lot everybody who participated in the discussions, filled in the questionnaires, took notes during discussions, presented interesting topics, facilitated the discussions and organised lunches, dinners, walking tours and so much more ... Wouter and Filip

C.1 International Planning Committee Mark Adamson Maria Brättemark Meike Gierk Frédérique Martini Barbro Näslund-Landenmark Filip Raymaekers William Van Berkel Wouter Vanneuville

C.2 Local Organising Committee Katrien Bosman Patrick Dewit Viki Kruyniers Great to have them in your theme! Filip Raymaekers Wouter Vanneuville And all involved colleagues at CIW, VMM and MOW

C.3 Consultancy Besides our colleagues (Annelies Haesevoets, Rob Laethem, Pieter Deckers, ...), the organising committee got support from:

VITO, the Flemish Agency for Technology Research (Leo De Nocker, Steven Broeckx)

HIVA, the Higher Institute for Labour Studies of the Catholic University of Leuven (Lieven De Smet)

Arcadis, as a consultant of DG ENV they prepared the resource document. They are a subcontractor of the Flemish Environment Agency (VMM) in the Interreg IV B NWE FloodResilienCity project (www.floodresiliencity.eu). The Dijle case study (second day) comes from this EU project. (Marc Van Dijck, Dominique Van Erdeghem)

WG F Thematic Workshop: “Floods and Economics” Ghent -2nd draft 38

Appendix D: Break-out sessions on Monday – Questions

D.1 Governance Issues

1. How are economic assessments used and/or accepted as being part of decision support in Flood Risk Management (FRM)?

2. For what reasons could economic assessments be considered to be mandatory? 3. How are economic assessments used by politicians for their decision making? 4. At what phase should an economic assessment be carried out and who is responsible for it? 5. What minimal resources (knowledge, experience, man power) are needed to carry out

economic assessments? 6. At which state of the process and how are stakeholders involved in vulnerability and risk

assessment? 7. How and when are they involved in decisions of appraisal and prioritisation of measures? 8. How to deal with economic assessments if measures have transnational impact? 9. What are possible common aspects on EU level of economic assessments?

D.2 Economic Issues

1. Which element, impact category, method or issue indicated on the attached list would you like to learn more about or see discussed at this workshop?

2. In your opinion, what is/are the most important area(s) where economic assessment could and should be used more?

3. In your opinion, what is the most important obstacle that limits a further use of economic assessment for FRM? Can it be taken away by more research, data gathering, information?

4. For what items, monetary valuation is appropriate or not, and should be used more or better not?

5. What are the key indicators or evaluation criteria to be used for economic assessment? 6. To which extent are generic issues related to economic assessment (time horizon, discount

rates,…) and information on costs to be improved/get more consensus on, to allow a further use of economic assessment in FRM?

7. Do you have a good example or suggestion for one of these items?

D.3 Operational Issues

1. How far in detail do economic assessments have to go on strategic level (e.g. level of the river basin) or on operational level?

2. How is the concept of vulnerability and risk assessment (impact of flooding) in the flood risk management plans linked with appraisal and prioritisation of measures (impact of measures)?

3. What kind of benefits of flooding could be part of vulnerability and risk assessment, and how are benefits of measures other than risk reduction taken into account in appraisal of measures as part of the FRM plans?

4. What kind of scenarios should be taken into account (baseline and long-term scenarios like climate change and land use change)?

5. What are the largest gaps in knowledge to implement economic assessments in flood risk management plans?

D.4 WFD Issues 1. What are possible synergies between economic assessments of FRM and economic

assessments of the Water Framework Directive (WFD)? 2. How can assessments of ecosystem services (denitrification, C-, N-, P- sequestration,…) be

part of FRM economic assessments? 3. How should be dealt with negative effects of FRM measures on WFD objectives?