A JRC co-authored article published yesterday in Nature Climate Change investigates the financial risks posed by large-scale floods across the EU. The authors advocate increasing adaptation efforts, which should focus on enhancing flood protection measures and risk financing mechanisms in a harmonised way.
The impacts of large-scale floods are rising due to socio-economic development, and their frequency and intensity are showing signs of increase due to climate change, as seen in the pan-European floods of 2002 and 2013.
The study estimates the damages expected to be caused by flood events, taking climate change and socio-economic development into account. In particular, as floods are highly interlinked across different parts of the EU, the study focuses on the trans-boundary nature of such events, which can occur in different countries at the same time. For the sake of accuracy, the study also carried out and validated the first continent-wide estimates of flood protection standards for all 1,007 EU sub-basins.
Expected average annual flood losses in the EU, estimated at €4.9 billion/year for the period 2000-2012, were projected to potentially increase to €23.5 billion by 2050. About two-thirds of the modelled risk increase is attributed to socio-economic growth, one-third to climate change. The extent of damages incurred by the 2013 European floods (approximately €12 billion), which are currently expected to occur once in 16 years, are projected to occur once in 10 years by 2050.
Under current insurance coverage, average annual modelled insured losses are expected to increase from €1.6 billion (for 2000-2012) to €4.6 billion by 2050. Total flood insurance claims with a once-in-200-years probability are expected to increase from €116 billion in 2013 to €236 billion in 2050. Average uninsured losses, estimated at €3.3 billion in the period 2000-2012 (67% of total losses), are projected to increase by a factor of 4 by 2050, which is significantly higher than the projected GDP-growth factor of 2.9.
The article discusses various options for loss sharing and risk reduction. Increasing total flood insurance cover in the EU from 30% to 50% could lead to a reduction in average annual uninsured losses of over €10 billion (approx. 60%) in 2050, but this is subject to the ability and willingness of households to pay. While expanding the EU Solidarity Fund could help, this could put unfeasible pressure on the EU budget and lead to reduced national government responsibility and insurance incentives. The authors encourage investing in flood protection measures as the most realistic way to reduce flood losses, which could potentially lead to significant reductions in annual losses by 2050, but point out that such measures involve considerable construction and maintenance costs. Given the social and climate uncertainties involved, the authors recommend that, rather than aiming for optimal solutions, flood protection investments should aim for acceptable protection levels under the current and future climate.