18th October

The economics of flooding - why do floods affect so many people?

Tom McDermott, UCC

Mc Dermott

Recent events have demonstrated again the cost and misery associated with exposure to flooding. At the same time, a growing awareness of rising sea levels and climate change is adding to the challenge for policy-makers in relation to managing flood risk.

A recent study on the effects of flooding in cities worldwide shows that low elevation urban areas concentrate a greater density of economic activity, in spite of their much greater exposure to flooding. Furthermore, in the aftermath of large urban floods, economic activity tends to return to flood-prone low lying areas, rather than relocating to safer areas.

Extreme rainfall during December resulted in widespread flooding across Ireland and the UK, affecting thousands of people. Sadly this is just one example of a major global problem.

Over the past 30 years, flooding globally has killed more than 500,000 people and has displaced more than 650 million people.

As we witnessed in recent weeks, floods cause misery and involve substantial economic costs. UK estimates are already running to billions of pounds, while in Ireland the final costs will likely be in the tens if not hundreds of millions of euros.


In a new study published by the Centre for Economic Performance at the London School of Economics, my co-authors and I examine why so many people are hit by floods year after year. In particular, we ask whether urban populations respond to large-scale floods by moving to safer areas.

We study the effects of more than 50 large floods that displaced at least 100,000 people each and affected over 1,800 cities in 40 countries worldwide from 2003 to 2008.

We find, not surprisingly, that low-lying urban areas are hit much more often by large floods – some three to four times more often than other parts of cities. We also find that these areas concentrate a higher density of economic activity.

Also, when cities are hit by large floods, these vulnerable low-lying areas sustain more damage; but like the rest of the flooded cities, they recover rapidly and economic activity does not appear to move to safer locations.

So why do so many people live in flood prone areas? And when these places are hit by devastating floods, why do people not move to safer locations?

Part of the problem is historical: many towns and cities were built near rivers and coastlines in order to benefit from the trading advantages of being near waterways. With modern efficient land and air transportation, some of these historical benefits are less important today.

Once established however, cities don’t tend to move, while rising sea levels and a changing climate are putting more of these cities’ residents at risk of flooding.

Developer responsibility

But history is not the only reason why flood-prone locations are overpopulated; there is also a more modern problem. Since the responsibility for building and maintaining flood defences and compensating flood victims often falls to government, private developers can build on cheap flood-prone land without taking full account of the cost of their actions.

As a result, too many homes are built in areas that are prone to flooding. Once built, people will move in ― especially in a market where so many are struggling to afford a place to live ― and the population exposed to flooding will continue to grow.Solutions are neither cheap nor politically easy. More investment in flood defence is clearly required, particularly to protect densely populated areas. But flood defences are expensive, and may not be suitable in every case.

The best response would be to limit our exposure to flooding in the first place. In some places, where there is a risk of repeated flooding, relocation may be the least costly option in the long run.

Understandably people are reluctant to abandon their homes once they have invested time and money in a location. Essentially, once development of a flood plain is allowed, the risk is locked in for the long term. This pattern of long-term exposure, along with the fact that much of the cost of flooding tends to fall on governments, puts further emphasis on the need for tighter restrictions on the development of flood prone areas, in order to avoid ever-increasing exposure and spiralling costs of flooding.

The full research paper is available at: http://cep.lse.ac.uk/_new/publications/abstract.asp?index=4873

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