Economic losses from natural disasters in 2023 amounted to an estimated USD 280 billion, with floods accounting for USD 51.6 billion, according to a report by the Swiss Re Institute. As climate change exacerbates extreme weather events and urban expansion increases asset values in high-risk areas, flood risks are expected to rise.
The Swiss Re Institute study highlights that protective measures such as dykes, dams, and flood gates can be significantly more cost-effective than post-disaster rebuilding. The financial benefits of these measures can exceed reconstruction costs by up to ten times.
Veronica Scotti, Chairperson Public Sector Solutions at Swiss Re, emphasized the importance of investing in climate adaptation: "Investments in climate adaptation, such as flood preparedness, not only promote economic stability and create jobs but also help keep people safe. Yet there is chronic underfunding."
The study suggests that quantifying the financial benefits of flood adaptation measures is crucial for facilitating public-private investment and addressing funding gaps. It indicates that grey infrastructure like dykes and levees can reduce coastal flood damage effectively. Globally, their benefits may outweigh costs by two to seven times and even up to ten times in flood-prone regions.
In less populated areas, nature-based solutions such as barrier island restoration or foreshore vegetation are noted as equally effective. Policy interventions like land use restrictions also enhance the value of flood prevention efforts.
The report concludes that all forms of flood interventions benefit both insurers and policyholders when maintained properly. Collaboration between public and private sectors is encouraged to facilitate risk adaptation strategies aimed at preventing future losses.
For further insights, the full report titled "Resilience or rebuild? The costs and benefits of climate adaptation measures for flood" is available for download.