Essays on the economic impacts of floods and landslides

Abstract: This thesis consists of an introduction and four self-contained papers addressing aspects that are important for how the negative societal effects of natural disasters can be handled, using floods and landslides in the Gothenburg region in Sweden as examples. In paper I the valuation of the benefits of reducing the negative effects of floods, namely, property damage, traffic disturbances and water supply security, were analysed, using a choice experiment.  To understand what motivates individuals to contribute towards reducing the negative effects of floods, the impact of individual differences in personality traits were also analysed. Data was collected via a web panel, the final sample consisted of 809 responses. The results showed that individuals’ were willing to pay to reduce the societal costs of floods, and that personality traits helped to explain heterogeneity in preferences. People scoring high on the personality trait including empathic and altruistic characteristics increased the individuals’ probability to support policies aimed at reducing the negative impacts of floods. These results indicate that further investments in flood risk reducing measures should be taken and that public support might increase if policy makers emphasize the welfare gained by society as whole, when designing flood management policies. In paper II the preferences for reducing the negative effects of floods, elicited in paper I, were compared to the preferences of public officials involved in flood risk management. Citizens will have to bear the consequences in the future, of decisions made by governments today. Therefore, it can be argued that decisions should reflect citizens’ preferences. By asking citizens and public officials to respond to identical choice-experiment surveys, it was possible to analyse whether priorities and monetary valuations of the negative effects of floods, namely, property damage, traffic disturbances and water supply security, differed. The overall finding was that public officials and citizens preferences were quite similar, and that both citizens and public officials were willing to pay to reduce the negative effects of floods. The results imply that decisions made within the public sector will likely not differ substantially from citizens’ preferences. In paper III the trade-offs between the distributional aspects and aspects of economic efficiency in in four selected European countries compensation systems for damages caused by floods, namely Sweden, England, France and the Netherlands, were analysed. These countries differ in terms of the level of flood risk, influenced by the physical conditions, as well as in philosophical standpoint of what constitutes a just distribution of compensation following a flood. These aspects has come to affect the costs and benefits of the trade-off between availability and affordability on the one hand and incentives to promote economically efficient behaviour on the other. Finally, in paper IV individuals’ valuation of reducing the negative impacts of landslides, namely, impacts on life, impacts on the environment, impacts on infrastructure, and impacts on important societal services, were analysed, using the choice experiment method. We also evaluated whether individuals valuations were sensitive to the level of risk of landslides. Data was collected via a web panel, the final data sample consisted of 504 responses. We found that reducing the risk of landslides had an overall a positive impact on individuals’ utility. The results also showed that individuals’ valuations were sensitive to risk: individuals’ willingness to contribute financially to policy programs aimed at reducing the risk of landslides increased when the probability of landslides increased.