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Carbon Brief Staff

Carbon Brief Staff

19.08.2013 | 4:50pm
ScienceUK flood fund underestimates number of homes at risk
SCIENCE | August 19. 2013. 16:50
UK flood fund underestimates number of homes at risk

Building homes and businesses in flood prone areas might be more costly in the future than government expects, according to a new report.

A policy paper published today by the London School of Economics says the government’s new insurance scheme has seriously underestimated the cost of future floods in the UK. The scheme’s failing, according to the research, is that it doesn’t factor in the rising number of homes at risk of flooding as a result of climate change.

Fortunately though, a separate new research paper does just that – estimating how the cost of flooding might scale with climate change.

The UK picture

Flooding is one of the biggest natural threats in the UK, and it’s set to become even more of a problem in the future. Climate change is predicted to raise the risk of flooding through heavier rainfall and sea level rise, while the ongoing development of floodplains means that when it does flood there’s more to lose.

To help homeowners in the most flood prone areas of the country, the government has proposed a new insurance scheme called Flood Re. Through a £10.50 levy on all insurance policies nationwide, the government hopes to raise £180 million per year, which it will then use to compensate flood losses in homes which normal markets consider too risky to insure.

The modelling behind the scheme assumes £180 million will be enough to cover the losses from 500,000 homes at high risk of coastal, river and surface flooding. But today’s new report from the London School of Economics (LSE) says the government hasn’t “adequately, if at all,” considered the increasing risk of flooding due to climate change.

The report states:

“For this reason, [the scheme] is likely to be put under increasing pressure and may prove to be unsustainable because the number of properties in future that will be at moderate and high probability of flooding has been significantly underestimated.”

The government’s own Climate Change Risk Assessment, published in January 2012, suggested that the number of properties at risk of flooding could increase from 370,000 in 2008 to between 500,000 and 1.5 million by the 2050s.

Failing to include these figures means the government scheme has underestimated the cost of flooding, says the report. But other studies which factor in the effects of climate change show clearly that the rising risk of floods will force up annual losses.

Global flood bill

Research published just yesterday in the journal Nature Climate Change suggests that the global bill for flooding in coastal cities is set to rocket from current levels of around $6 billion per year to more than $60 billion by 2050. The study looks at how economic change, population growth, sea level rise and subsidence could all combine to raise the cost of coastal flooding in the next few decades.

From the 2008 baseline of $6 billion, population growth and economic development in 136 cities worldwide will raise flood losses to $52 billion each year by 2050, it says. Add to that the effect of subsidence (the sinking of land as a result of changes during the last ice age) and sea level rise due to climate change, and the bill rises further to a possible $1 trillion per year by 2050.

The authors of the study say the $1 trillion figure isn’t actually a projection, since it assumes no action is taken to adapt to sea level rise between now and 2050. And that’s pretty unlikely. But the modelling illustrates just how powerful climate change is in influencing the costs of flooding, and how important it is to consider its effects.

The modelling is important too, because it shows considerable financial savings can be achieved if adaptation measures are put in place – something the UK government scheme is also criticised for failing to consider. The study shows that if additional measures like sea walls and dykes are built to keep the risk of future flooding in coastal cities worldwide at current day levels, the bill would fall from $1 trillion to $63 billion each year by 2050.

Risks & costs rising

Whether in the UK or elsewhere, it’s clear that housing people and businesses in flood prone areas is a risky business. While the expense might be worth the risk for now, it may not be such an attractive prospect in the future as sea levels rise and rainfall patterns change.

But clearly this is something the UK government should consider and prepare for. Looking back at the 2012 Climate Change Risk Assessment, scientists and politicians have clearly identified flooding as a major threat to the UK. But as the LSE report notes, government has so far failed to integrate this knowledge in its flood insurance plans. Until it does, individuals and families living in uninsurable homes face an uncertain future.


Hallegate, S. et al. (2013) Future flood losses in major coastal cities. Nature Climate Change. DOI: 10.1038/nclimate1979


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