Economic implications of multi-layer safety projects for flood protection

Recent experience of large-scale water disasters such as Hurricane Katrina in 2005 and the Great Eastern Japan Earthquake and Tsunami in 2011 has reminded mankind that disasters cannot be ruledout. Unprecedented low-probability events can happen even in the most well monitored areas, causing major social-economic disruption. Failing to prepare for them may imply taking a risk that is not socially acceptable, but how much preparation for disasters can a modern society afford? Looking at flood risk management developments that have lately taken place in the Netherlands, the emergence of a virtual liking for disaster preparation measures is perceptible. Various technical studies have been made available presenting the effectiveness of such measures in the mitigation of expected fatalities and material damage. One of the most popular outlets of this trend is a suggestion in the National Water Plan of the Netherlands (2009) for the future to contemplate investments not only in flood-prevention measures, where the Dutch state has been investing heavily since 1960, but also in measures for the mitigation of losses. The existence of such a compound of measures signifies a socalled multi-layer safety system. Multi-layer safety has raised several discussions about its cost-efficiency. Previous studies have shown that combining flood-prevention with lossmitigating measures is generally speaking not costeffective. For a system that resembles the Netherlands, it has been shown that despite prevention, it is cost-effective to also invest a small amount in emergency management. This paper contributes in the above discussions by clarifying the economic implications of multi-layer safety from a rational perspective. In particular the objectives of the forthcoming analysis are 1) to clarify what is the most relevant information for decision makers regarding investments in multi-layer safety, and 2) to provide guidance on how to derive this information by means of cost-benefit analysis. The analysis is facilitated through a fictitious case study that refers to a coastal area, where the implementation of a multi-layer safety project is contemplated