Economic aspects

Floods are a natural phenomenon, with both negative and positive impacts, and, generally, should not be considered a hindrance to economic development. Recurrent and extreme flooding, however, pose grave risks to development and have negative impacts on lives, livelihoods and economic activity and can cause occasional disasters.

The possibilities to manage floods are manifold. The concept of integrated flood management calls for a combination of structural and non-structural flood mangement measures which aim at minimizing loss of life from flooding while maximizing the net benefits derived from flood plains.

Net benefits are the overall benefit a society derives from:

  • using flood plains (such as agricultural output and other economic activities)
  • minus the overall cost of using the flood plains (flood damages, cost of flood protection, habitat loss etc.).

Which combination of options can provide the maximum positive impact on people’s welfare can be approached through economic analysis. Economic analysis provides a rationality for taking action because it provides some perspectives on the scale of impact and feasibility. The expected benefits of the interventions can be evaluated along with the possible costs, to facilitate discussion in the decision-making process.

Two different kinds of economic analysis used within integrated flood management are:

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Economic aspects