How the risk reduction process works and where economics fits in
Most professionals working in this area who have a knowledge of flood risk management will know that the the process of risk reduction starts with an assessment of risk. In this respect we have to acknowledge that there are different types of flooding (fluvial; pluvial; coastal; groundwater; surface water flooding) and each form of risk needs to be understood in order to implement measures for its reduction.
Once risk has been assessed there is a process whereby we compare the magnitude of this risk with the magnitude of the investment required to reduce it. Conventionally this is a form of Benefit Cost Analysis, or Cost Effectiveness Analysis, or Multi-Criteria Analysis. Each of these is an economic approach, designed for different circumstances (primarily whether there is a legislative override, or whether or not benefits can be calculated). In the case of Benefit Cost Analysis, most professionals will be aware that we need to compare the discounted value of future benefits (largely flood losses avoided in the future) with the discounted value of the costs over the lifetime of any flood risk management measure or scheme.
This can be quite a complicated economic analysis, involving a great deal of data, calculation and interpretation. The objective is to determine whether the investment made (which generally comes from the taxpayer) shows a return in the form of commensurate risk reduction in the future, and properly done any analysis should be transparent and comprehensive. In general, in England and Wales, such an analysis is undertaken by the Environment Agency, often supported by consultants or others.
Information here about the possible benefits of investments
This website gives more information on the benefits of flood risk management measures, and should contribute to systematic calculations of these benefits with which the user can compare costs and benefits of alternative flood risk management measures or standards. A detailed case study is provided to show the stages through which such an assessment has to pass in order for it to be comprehensive and transparent.
No information is provided here on the costs of flood risk management measures, because that is not the domain of the Flood Hazard Research Centre at Middlesex University. Such information needs to be provided by others, primarily through the Environment Agency. The same applies to hydrological data, hydrographic data concerning sea conditions liable to lead to flooding, flood frequency and duration, etc.
How all of this relates to Partnership Funding
In the year 2011 a new regime was implemented by the Department of Environment Food and Rural Affairs for the funding of flood risk management measures in England and Wales. This regime is termed “Partnership Funding“, and is designed to increase the number of flood risk management measures implemented by seeking and including contributions towards the funding of those measures from local communities and others.
The information contained in this website contributes to that process by allowing the quantification of the benefits of those measures designed to reduce flood risk, which is an essential part of the formula which allocates Flood Defence Grant in Aid from central government to particular schemes. As is well known, this formula may allocate 100% of the costs of certain schemes, or less than that, depending primarily on the economic benefits achieved by the measures of schemes as outcomes of those interventions.
What this dataset does not provide are the financial benefits to local communities from their contributions towards scheme costs, because the Multi-Coloured Manual approach has always been to quantify the economic loss to the nation from flooding, rather than a financial loss to individuals or bodies who may be at risk. The Handbook section of website contains appropriate financial information (available under Licence).
