The Economics and Management of Flood Risk in Germany

  • Volker Meyer
  • Reimund SchwarzeEmail author
Part of the Future City book series (FUCI, volume 12)


Assessing the economic impacts of flooding is a crucial part of identifying appropriate flood risk management options as required by the EU flood management directive. This chapter describes methods for assessing economic flood damage. To begin, some fundamental issues are discussed: Which types of economic flood damage should be taken into account? What kind of information is necessary in general for assessing flood damage in monetary terms, and what is the general procedure for calculating economic flood damage? Having clarified these questions, the methodological challenges posed by economic flood risk management are described. This includes the indirect impacts, i.e. induced loss to customers and suppliers of good and services damaged by floods, and intangible impacts, i.e. the impacts of flooding on mortality and morbidity and the environment. Ways to deal with the persistent uncertainty in damage and risk assessments are discussed in the following chapter. The findings in this chapter will be evaluated in relation to flood risk management practices in Germany, based on examples from Saxony.


Flood damage Intangible and indirect effects Risk assessment Data requirements Prioritisation methods 


  1. Apel H, Aronica GT, Kreibich H, Thieken AH (2009) Flood risk analyses – how detailed do we need to be? Nat Hazards 49(1):79–98CrossRefGoogle Scholar
  2. Bateman I, Carson R, Day B, Hanemann WM, Hanley N, Hett T, Jones-Lee M, Loomes G, Mourato S, Ozdemiroglu E, Pearce DW, Sugden R, Swanson S (2003) Guidelines for the use of stated preference techniques for the valuation of preferences for non-market goods. Edward Elgar Publishing, CheltenhamGoogle Scholar
  3. Birol E, Karousakis K, Koundouri P (2006) Using economic valuation techniques to inform water resources management: a survey and critical appraisal of available techniques and an application. Sci Total Environ 365(1–3):105–122CrossRefGoogle Scholar
  4. Bockarjova M, Steenge AE, van der Veen A (2004) Flooding and consequent structural economic effects: a methodology. In: Flooding in Europe: challenges and developments in flood risk management. Kluwer Academic Publishers, DordrechtGoogle Scholar
  5. Boisvert R (1992) Indirect losses from a catastrophic earthquake and the local, regional, and national interest. In: FEMA (ed) Indirect economic consequences of a catastrophic earthquake. FEMA. National Earthquake Hazard Reduction Program, Washington, DCGoogle Scholar
  6. Boisvert R (1995) Computable general equilibrium modeling for earthquake impact analysis. Report to the Federal Emergency Management Agency. Cornell University, IthacaGoogle Scholar
  7. Bolton N, Kimbell L (1995) The economic and demographic impact of the Northridge earthquake. In: Annual meeting of the population association of AmericaGoogle Scholar
  8. Brans JP, Mareschal B (2005) Promethee methods. In: Figueira J, Greco S, Ehrgott M (eds) Multiple criteria decision analysis: state of the art surveys. International series in operations research & management science, vol 78. Springer, New York, pp 163–196CrossRefGoogle Scholar
  9. Brookshire DS, McKee M (1992) Other indirect costs and losses from earthquakes: issues and estimation. In: FEMA (ed) Indirect economic consequences of a catastrophic earthquake. FEMA, National Earthquake Hazards Reduction Program, Washington, DCGoogle Scholar
  10. Brouwer R, Schaafsma M (2009) The economics of flood disaster management in the Netherlands. In: Guha Sapir P, Santos I, Borde A (eds) Natural disasters: do they cost the earth? Earthscan Publications, UKGoogle Scholar
  11. Carroll N, Frijters P, Shields MA (2009) Quantifying the costs of drought: new evidence from life satisfaction data. J Popul Econ 22(2):445–461CrossRefGoogle Scholar
  12. Cavailhes J, Foltete J-C, Joly D, Tritz C (2009) GIS based hedonic pricing of landscape. Environ Res Econ 44(4):571–590. CrossRefGoogle Scholar
  13. Chao P.T., Floyd J.L., Holliday W. (1998) Empirical studies of the effect of flood risk on housing prices, Institute for Water Resources - U.S. Army Corps of Engineers, IWR REPORT 98-PS-2Google Scholar
  14. Cochrane HC (1997) Indirect economic losses. In: Development of standardized earthquake loss estimation methodology, Vol. II. National Institute for Building Sciences, Washington, DCGoogle Scholar
  15. Daun CM, Clark D (2000) Flood risk and contingent valuation willingness to pay studies: a methodological review and applied analysis. Institute for Urban Environmental Risk Management. Marquette University, MilwaukeeGoogle Scholar
  16. DEFRA (2004) The appraisal of human-related intangible impacts of flooding, environment agency flood and coastal defense, R&D technical report FD2005/TRGoogle Scholar
  17. DEFRA (2007) The costs of the summer 2007 floods in England. Project: SC070039/R1Google Scholar
  18. DKKV (eds) (2015) Das Hochwasser im Juni 2013: Bewährungsprobe für das Hochwasserrisikomanagement in Deutschland. DKKV-Schriftenreihe 53, Bonn (in German)Google Scholar
  19. DVWK (1985) Ökonomische Methoden von Hochwasserschutzwirkungen (Economic methods for flood impacts). Deutscher Verband für Wasserwirtschaft und Kulturbau, Arbeitsmaterialien zum methodischen Vorgehen, DVWK-Mitteilungen (in German)Google Scholar
  20. Ellison R, Milliman JW, Roberts RB (1984) Measuring the regional economic effects of earthquakes and earthquake predictions. J Reg Sci 24(4):559–579. CrossRefGoogle Scholar
  21. European Union (2007) Directive 2007/60/EC of the European Parliament and of the Council of 23 October 2007 on the Assessment and the Management of Flood Risks (OJ L 288, 6.11.2007). Accessed 2 May 2018
  22. FLOODsite Consortium (2005) Language of risk – project definitions. FLOODsite project report T32-04-01Google Scholar
  23. FLOODsite Consortium (2007) Evaluating flood damages: guidance and recommendations on principles and methods. FLOODsite project report T09-06-01Google Scholar
  24. Georgescu-Roegen N (1981) The entropy law and the economic process, 4th edn. Havard University Press, Cambridge, MA/LondonGoogle Scholar
  25. Gigerenzer G, Brighton H (2009) Homo Heuristicus: why biased minds make better inferences. Top Cogn Sci 1(1):107–143. CrossRefGoogle Scholar
  26. Guimares P, Hefner FL, Woodward DP (1993) Wealth and income effects of natural disasters: an econometric analysis of Hurricane Hugo. Rev Reg Stud 23(2):97–114Google Scholar
  27. Hallegatte S, Hourcade J-C, Dumas P (2007) Why economic dynamics matter in assessing climate change damages: illustration on extreme events. Ecol Econ 62(2):330–340. CrossRefGoogle Scholar
  28. Hallegatte S, Hourcade J-C, Dumas P (2007) Why economic dynamics matter in assessing climate change damages: illustration on extreme events. Ecol Econ 62(2):330–340. CrossRefGoogle Scholar
  29. Hamilton MJ (2007) Coastal landscape and the hedonic price of accommodation. Ecol Econ 62(3–4):594–602CrossRefGoogle Scholar
  30. Hanley N, Spash C (1993) Cost benefit analysis and the environment. Edward Elgar Publishing, CheltenhamGoogle Scholar
  31. Hanley N, Wright RE, Adamowicz WL (1998) Using choice experiments to value the environmental. Environ Resour Econ 11(3–4):413–428. CrossRefGoogle Scholar
  32. Hartje V, Meyer I, Meyerhoff J (2001) Kosten einer möglichen Klimaanderung auf Sylt. In: Daschkeit A, Schottes P (eds) Klimafolgen für Mensch und Küste. Sylt, BerlinGoogle Scholar
  33. Hensher D, Shore N, Train K (2006) Water supply security and willingness to pay to avoid drought restrictions. Econ Rec 82:56–66. CrossRefGoogle Scholar
  34. IKSE (International Commission for the Protection of the Elbe) (2004) Dokumentation des Hochwassers vom August 2002 im Einzugsgebiet der Elbe (Documentation of the August 2002 floods in the Elbe catchment). Magdeburg (in German)Google Scholar
  35. IKSR (2001) Übersichtskarten der Überschwemmungsgefährdung und der möglichen Vermögensschäden am Rhein. International Commission for the Protection of the Rhine, Abschlußbericht: Vorgehensweise zur Ermittlung der hochwassergefährdeten Flächen, Vorgehensweise zur Ermittlung der möglichen VermögensschädenGoogle Scholar
  36. Jia H, Pan D, Wang JA, Zhang WC (2016) Risk mapping of integrated natural disasters in China. Nat Hazards 80(3):2023–2035. CrossRefGoogle Scholar
  37. Kimbell L, Bolton N (1994) The impact of the Northridge earthquake on the economies of California and Los Angeles. Seismic Safety Commission of the State of California, BurbankGoogle Scholar
  38. Klaus J, Schmidtke RF (1990) Bewertungsgutachten für Deichbauvorhaben an der Festlandsküste – Modellgebiet Wesermarsch (Evaluation methods for dike construction projects in main land coastal regions). Untersuchungsbericht an den Bundesminister für Ernährung, Landwirtschaft und Forsten. Bonn (in German)Google Scholar
  39. Kok M, Huizinga HJ, Vrouwenfelder ACWM, Barendregt A (2004) Standard method 2004. Damage and casualties caused by flooding. Client. Highway and Hydraulic Engineering DepartmentGoogle Scholar
  40. Leiter A, Pruckner G (2007) Dying in an Avalanche: Current Risks and Valuation, Working paper. University of Innsbruck, AustriaGoogle Scholar
  41. Leschine TM, Wellman K, Green TH (1997) The economic value of wetlands role in flood protection in western Washington. Washington State Department of Ecology, Ecology, Olympia, pp 97–100Google Scholar
  42. Markantonis V, Meyer V, Schwarze R (2012) Valuating the intangible effects of natural hazards, review and analysis of the costing methods. Nat Hazard Earth Syst Sci 12:1633–1640. CrossRefGoogle Scholar
  43. Martin-Ortega J, González-Eguino M, Markandya A (2012) The costs of drought: the 2007-2008 case of Barcelona. Water Policy 14:539–560CrossRefGoogle Scholar
  44. Messner F, Penning-Rowsell E, Green C, Meyer V, Tunstall S, van der Veen A (2007) Guidelines for socio-economic flood damage evaluation. FLOODsite-report T09-06-01Google Scholar
  45. Meyer V, Becker N, Markantonis V, Schwarze R, van den Bergh J, Bouwer L et al (2013) Assessing the costs of natural hazards – state-of-the-art and knowledge gaps. Nat Hazard Earth Syst Sci 13:1351–1373CrossRefGoogle Scholar
  46. Müller U (2010) Hochwasserrisikomanagement. Theorie und Praxis (Flood risk management-theory and practice). Springer-Vieweg+Teubner Verlag, Wiesbaden (in German)Google Scholar
  47. Müller U (2013) Implementation of the flood risk management directive in selected European countries. Int J Disaster Risk Sci 4(3):115–125. CrossRefGoogle Scholar
  48. Munich R (2004) Topics – annual review: natural catastrophes 2004. Münchener Rückversicherungs-Gesellschaft, MünchenGoogle Scholar
  49. Munich R (2014) Topics geo natural catastrophes 2013. Münchener Rückversicherungs-Gesellschaft, MünchenGoogle Scholar
  50. Olschewski R, Bebi P, Teich M, Wissen HU, Grêt-Regamey A (2011) Avalanche protection by forests - a choice experiment in the Swiss Alps. Forest Policy Econ., Available online 12 Nov 2011, ISSN 1389-9341,. CrossRefGoogle Scholar
  51. Pattanayak SK, Kramer RA (2001) Worth of watersheds: a producer surplus approach for valuing drought mitigation in Eastern Indonesia. Environ Dev Econ 6:123–146CrossRefGoogle Scholar
  52. Pearce DW, Turner K (1990) Economics of natural resources and the environment. Johns Hopkins University Press, BaltimoreGoogle Scholar
  53. Penning-Rowsell EC, Johnson C, Tunstall S, Tapsell S, Morris J, Chatterton J, Coker A, Green C (2003) The Benefits of flood and coastal defence: techniques and data for 2003. Flood Hazard Research Centre, Middlesex University, LondonGoogle Scholar
  54. Rose A (2004) Defining and measuring economic resilience to disasters. Disaster Prev Manag Int J 13(4):307–314CrossRefGoogle Scholar
  55. Rose A, Benavides J (1997) Inter-industry models for analyzing the economic impact of earthquakes and recovery policies: illustrative examples [7/93; revised 11/93]. In: Jones B (ed) Advances in social science analysis of earthquakes. National Center for Earthquake Engineering Research, BuffaloGoogle Scholar
  56. Saint-Geours N, Grelot F, Bailly JS, Lavergne C (2015) Ranking sources of uncertainty in flood damage modelling: a case study on the cost-benefit analysis of a flood mitigation project in the Orb Delta, France. J Flood Risk Manag 8(2):161–176. CrossRefGoogle Scholar
  57. Sayers P, Hall J, Dawson R, Rosu C, Chatterton J, Deakin R (2002) Risk assessment of flood and coastal defences for strategic planning (RASP) – a high level methodology. In: DEFRA conference for coastal and river engineers, September 2002Google Scholar
  58. Schanze J (2006) Flood risk management – a basic framework. In: Schanze J, Zeman E, Marsalek J (eds) Flood risk management – hazards, vulnerability and mitigation measures. Springer, Ostrov, pp 149–167CrossRefGoogle Scholar
  59. Smith K, Ward R (1998) Floods – physical processes and human impacts, Chichester, New YorkGoogle Scholar
  60. Socher M, Sieber HU, Müller G, Wundrak P (2006) Verfahren zur landesweiten Priorisierung von Hochwasserschutzmaßnahmen. Hydrol Wasserbewirtsch 50(3):123–130Google Scholar
  61. Umweltbundesamt (2007) Ökonomische Bewertung von Umweltschäden. Methodenkonvention zur Schätzung externer Umweltkosten. Accessed 4 Nov 2010
  62. van der Veen A, Logtmeijer C (2005) Economic hotspots: visualizing vulnerability to flooding. Nat Hazards 36(1–2):65–80CrossRefGoogle Scholar
  63. West CT (1996) Indirect economic impacts of natural disasters: policy implications of recent research and experience. In: Proceedings of analyzing economic impacts and recovery from urban earthquakes: issues for policy makers. Conference presented by earthquake engineering research institute and federal emergency management agency, Pasadena, CaliforniaGoogle Scholar
  64. West CT, Lenze DC (1994) Modeling the regional impact of natural disaster and recovery: a general framework and an application to Hurricane Andrew. Int Reg Sci Rev 17(2):121–150CrossRefGoogle Scholar
  65. WWF (2007) Fünf Jahre nach der Elbeflut (Five years after the Elbe flood), WWF Germany, Frankfurt am Main (in German)Google Scholar
  66. Yamano N, Kajitani Y, Shumuta Y (2007) Modeling the regional economic loss of natural disasters: the search for economic hotspots. Econ Syst Res 19(2):163–181CrossRefGoogle Scholar
  67. Zhai G, Ikeda S (2006) Flood risk acceptability and economic value of evacuation. Risk Anal 26:683–694. CrossRefGoogle Scholar
  68. Zhang D-L, Lin Y, Zhao P, Yu X, Wang S et al (2013) The Beijing extreme rainfall of 21 July 2012: “right results” but for wrong reasons. Geophys Res Lett 40:1426CrossRefGoogle Scholar
  69. Zhongmin X, Guodong C, Zhiqiang Z, Zhiyong S, Loomis J (2003) Applying contingent valuation in China to measure the total economic value of restoring ecosystem services in Ejina region. Ecol Econ 44:345–358. Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Department of EconomicsHelmholtz Centre for Environmental Research – UFZLeipzigGermany
  2. 2.European University ViadrinaFrankfurt (Oder)Germany

Personalised recommendations