Promoting flood prevention as a tool for economic growth, the European Commission yesterday made the case that investing in flood defenses makes financial sense and should be coupled with less taxes on labor and more taxes on air and water pollution.
"Investing in flood protection can bring overall benefits to the economy, especially through nature-based solutions which are highly cost-effective. And environmental fiscal reforms have the potential to almost double the revenues they currently bring to national treasuries, with benefits for our environment as well as scope for cutting taxes on employment or cutting the deficit," said E.U. Environment Commissioner Janez Potocnik in a statement. "That's a powerful argument for changing the status quo."
The announcement follows a report published Sunday in the journal Nature Climate Change showing that if flood defense strategies are not improved, Europe faces a 480 percent rise in average flood recovery costs by 2050. The study found that increases in the frequency of extreme floods and damage, along with a growing population, are likely to see average annual flood losses mount from €4.9 billion to €23.5 billion ($6.7 billion to $32.3 billion).
"Due to climate change and GDP growth, by 2050 a one-in-50-years flood might be one in 30 years, so the frequency of such losses increases dramatically -- almost doubling," Brenden Jongman of the IVM Institute for Environmental Studies at VU University Amsterdam, lead author of the Nature Climate Change study, told Reuters.
In one of two studies published yesterday, the European Commission found that between 2002 and 2013, each flood cost an average of €360 million. Those costs are not distributed evenly across member states. France and the United Kingdom tied for the countries with the highest number of flood events, 48, over the last 12 years. In France, the costs of those floods came to €8.7 billion. In the United Kingdom, however, the estimated costs came to €23 billion.
By comparison, Germany, which experienced 11 floods during this period, suffered an estimated €34 billion in damage, the highest amount and about 23 percent of the total flood costs in the European Union. Together, Germany, Poland and the United Kingdom account for 55 percent of E.U. flood costs.
The death toll from floods was highest in Romania, with 183 fatalities, followed closely by France, with 153, and Italy, with 127.
Dutch and German example
In the Netherlands, which has heavily invested in flood defenses, the last 12 years has resulted in only three flooding events for this lowland coastal country. The total costs for these floods came to €14 million, and they left no fatalities.
The European Commission estimated that 10,000 people along the European coasts experience flooding every year and that by 2080, that number may increase to as many as 425,000 people every year without even taking into account sea-level rise. By comparison, fluvial flooding along river basins currently affects 167,000 people in Europe every year and is expected to reach 359,000 people by 2080.
To reduce the risk, Jongman and his colleagues recommend enhancing the solidarity between countries, expanding risk transfer financing and investing in flood protection.
"Extreme discharges are strongly correlated across European river basins," reported Jongman and his colleagues. "Major river floods are typically driven by large-scale atmospheric circulations. As a result, single flood episodes can affect vast areas in a short period of time, irrespective of economic and political boundaries."
The European Commission concluded that "each €1 spent on flood protection could save €6 in damage costs."
Many E.U. member states are taking action and, besides the traditional defenses of embankments, dikes and seawalls, are now moving to incorporate more green infrastructure into their defense plans. Germany has invested €407 million to relocate up to 26,000 hectares (64,000 acres) of dikes along its stretch of the River Elbe, which flows from the Krkonoše Mountains of the Czech Republic to the North Sea.
In 2002, floods cost Germany €9 billion. The country spent €6.5 million in emergency funds and €185 million in E.U. funding to reconstruct homes, waterways and roads in the damaged communities. The government spent €38.5 million in flood protection measures implemented in 2003, including the removal of one of the middle-class housing developments in Röderau Süd, Saxony, where most of the damage occurred, and the resettlement of the population.
The country then earmarked €1.3 billion for future defenses. By 2013, 700 hectares of the 26,000-hectare dike relocation project had been completed. When devastating floods struck again in 2013, Germany evacuated 52,500 people from the banks of the Elbe and Danube rivers and the ministry of finance reported €8 million in damage.
The European Commission found that overall, "green infrastructure projects have a high proportion of capital costs which are incurred up-front, with benefits that are delivered into the future. As a result, the creation, restoration and maintenance of green infrastructure projects often require substantial investment." In Germany, the cumulative benefits of relocating the dikes along the Elbe are expected to reach €926 million over 90 years from the restoration of river ecosystems.
U.K. is battered by storms
In November, the United Kingdom completed the formation of 183 hectares of intertidal habitats and 80 hectares of new transitional grasslands along a 7-kilometer earth embankment in Medmerry, West Sussex. "We are very pleased with how the new flood defences coped during the storms. We've had some of the worst conditions we've seen on our south coast for 20 years with a sustained period of very high tides, strong winds and stormy seas," reported the U.K. Environment Agency. "Medmerry's new defences were completed just in time!"
Indeed, the January storms exposed four items of unexploded ordnance from World War II. The U.K. Environment Agency detonated the shells during a controlled explosion Jan. 8. Public access to and around the new beach will still be under development through the summer.
"Other key sites where tidal lagoons could protect against coastal erosion and flooding are along the north Wales coast," said Roger Falconer, director of the hydro-environmental research center at Cardiff University.
When it comes to severe storms and larger river floods, substantial flood defenses are required. "The Thames Barrier has worked very well and been very effective," he said. But as the London Telegraph reported last month, it costs the government €5,000 each time the barrier closes, and this year, the barrier has closed an unprecedented 40 times.
"River barriers are ideal but expensive. If one can get the same effect from marine renewable energy structures, then we should develop opportunities where we can acquire two for the price of one," said Falconer.
Higher taxes to support higher protection standards
One consequence of flooding that is often overlooked is the risk of environmental pollution from industrial sites. In Sweden, 376 hazardous chemical companies are working in zones where flooding is considered a once-in-every-100-years risk.
To put that in perspective, the Netherlands has a national flood defense level of a one-per-1,000-years standard. In situations where companies show a potential risk for pollution, the European Commission may consider tax obligations.
By moving taxes away from labor and increasing the tax on consumption, property and combating pollution, the European Union could see revenues of €35 billion in 2016 and €101 billion in 2025, concluded the European Commission in another study published yesterday. In addition, €24 billion could be saved if steps are taken to remove environmentally harmful subsidies.
"The potential revenues range from just over 1 percent of GDP per annum through to just over 2.5 percent of GDP per annum in 2025, depending on the member state concerned," concluded the report. To ensure good practices and equal treatment, the study suggests that whether the rates set in a member state are at or above the proposed minimum rates, a common rate of tax per unit of carbon dioxide emissions, for example €20 per metric ton of carbon dioxide emissions, should be applied.
For other air pollutants, the study recommends raising taxes, or implementing them in some member states, to €1,000 per metric ton of sulfur dioxide, €1,000 per metric ton of various forms of nitrogen oxides, and €2,000 per metric ton of particulate matter that is up to 10 micrometers in size and €3,000 per metric ton of the more dangerous particulate matter that is 2.5 micrometers or smaller.