Key Messages 
  • Flood protection standards for the whole country are written in law and central government and its services play a key role in overall flood risk management.
  • The Netherlands is factoring in the effects of future climate change into flood risk management strategies (‘Dynamic Adaptive Policy Pathways’).
  • From the 1950s onwards, cost-benefit analysis (CBA) has played an important role. In recent years the application area of CBA has been extended, from assisting in the update of national safety standards to the evaluation of alternative risk-reduction strategies and individual investment projects.
  • CBA - together with other tools – is used at the highest level of decision-making on flood protection standards, while much more participatory and multi-criteria approaches are employed for local-level decisions on the actual design of flood control infrastructures.

Context

The Netherlands has learned to cope with flood risks for over a thousand years. Still, the Netherlands is by its geographical disposition notoriously exposed to extreme flooding. More than half of its land area faces flood risks, putting two-thirds of its population and 70 % of its GDP at risk. The policy employs a so-called ’multilayer safety approach’, encompassing prevention, spatial solutions (including adaptations to buildings and infrastructure), and crisis management, whereby prevention of flooding receives prominent attention. On the request of the Delta Committee, which was commissioned 1958 after a huge flood, the mathematician Van Dantzig designed an algorithm to determine optimal dike heights based on the equilibrium between marginal investment costs and marginal expected avoided flood damage. The first Delta Act of 1958 included flood protection standards for coastal areas, which were partly based on the work of Van Dantzig. As of the 1970s, safety norms were assigned to rivers and since 1996 all water safety norms have been written in law. The Water Act determines flood protection standards for all dike-ring areas (polders) in the Netherlands. However, the standards of the 1950s did not take account of the possible impacts of climate change and sea level rise. On the advice of the second Delta Committee, Delta Programme was launched in 2010 to foster protection against high water and keep the freshwater supply up to standard. This Programme is called ‘adaptive’ in the sense of remaining flexible to take account of future possibilities, insights and circumstances. It is called ‘integral’ in the sense that water safety solutions should try to serve multiple interests and to realign with different spatial developments.

The second Delta Committee was installed as a response to the near-flooding of 2003 and 2005. It recommended an update of these flood protection standards in light of the growth of exposed population and assets, and projected sea level rise. The Committee adopted the first Delta Committee’s risk-based approach and advised that the new standards should be based on three factors: 1) the probability of individual fatality due to flooding, 2) the probability of large numbers of simultaneous casualties, and 3) economic and other damage (to landscape, to natural and cultural heritage values, to the country’s reputation and to society). To achieve this aim the committee tentatively advised that protection levels for all dike rings should be increased by a factor of ten (e.g., if the current protection level was 1/1,000 it should be increased to 1/10,000). In parallel, the CPB Netherlands Bureau for Economic Policy Analysis initiated an alternative risk-based approach to update flood protection standards in 2005, which was strongly economic in weighing (marginal) protection costs and avoided damages. Damage included direct and indirect economic damage, and loss of life expressed in monetary value through the value of statistical life concept. With this approach optimal protection levels were determined for all dike rings in the Netherlands. It is interesting to note that the investment costs of the economically efficient flood protection standards were estimated to be € 7.8 billion: almost 70% cheaper than the investment costs of the plan of the second Delta Committee (Eijgenraam et al. 2014).
 

Policy and methodological developments 

Regarding decision-making in flood risk-related investments, from the 1950s onwards, CBA has played an important role. In recent years its application area has been extended, from assisting in the update of national safety standards to the evaluation of alternative risk-reduction strategies and individual investment projects. In analysing decision-making and the use of CBA in the Netherlands, a distinction can be made between the national level where decisions on flood protection standards are taken and where measures are designed, and the regional/local level where individual flood protection measures are implemented. For decision-making at the national level, we briefly examine decision-making on flood protection standards 50 years apart: in the first Delta Committee of 1958, and in the second Delta Committee and the Delta Programme of 2008 that led to the new set of flood protection standards adopted in 2014. Up to the 1980s, the rational planning model was dominant in the Netherlands. To support this planning model, use was made of traditional decision-support tools such as CBA and multi-criteria analysis (MCA). For example, CBA was used in decision-making in the major Dutch flood protection plan from the 1950s, the Delta Plan. From the 1970s onwards, the rational planning model and its decision-support tools came under increasing criticism. It was argued that most (if not all) public policy problems were too complex and ill-defined to be adequately addressed by this model. By the 1990s, a consensus emerged amongst academics and practitioners in The Netherlands that policy makers should no longer use traditional planning and decision support tools such as CBA and MCA, and attention shifted to participatory and process-based methods. However, while the interactive planning perspective is very attractive at first sight, in Dutch practice it facilitated (or did not obstruct) the construction of some extremely expensive transport infrastructure projects. Nowadays, in response to these perceived failures of interactive planning, CBA has become compulsory for large infrastructure projects (both transport and spatial), and the CBA also needs to be reviewed (’second opinion’) by the CPB.

The new flood protection standards are taken from risk-based approaches. In the first place, these standards should offer a common minimum level of protection for each citizen who is protected by dikes or dunes by the year 2050. The higher standards in the case of high economic damage are based on the CBA that assessed economically-optimal protection levels for each dike ring, based on the equalisation of marginal protection costs and avoided damage (Kind 2014). In fact, in this study each dike ring was divided into dike ring trajectories that face different flood risks.


(How) is future climate change taken into account?

The Delta Programme that sets flood protection standards up to year 2050 takes the potential effects of climate change on sea level rise and river discharge into account. A number of climate and socioeconomic scenarios have been explored for use in the Delta Programme. The underlying climate scenarios were developed by the Dutch Meteorological Institute KNMI. In the scenario with most climate change, regional sea level rise in 2050 is 35 cm, increasing to 85 cm in 2100. For future river discharge, flood protection policies in upstream countries are relevant. The maximum river discharge of the Rhine in the Netherlands is presently ’capped’ at 16,500 m3/s, because higher discharge is made impossible by flooding that would occur upstream in Germany. Due to increases in the likelihood of extreme precipitation events, the maximum discharge is assumed to increase to 17,000 m3/s in 2050 and 18,000 m3/s in 2100. Similar calculations have been made for the river Meuse. The Delta Programme advocates adaptive management (’adaptive delta management’) to address future uncertainties, including the impacts of climate change, in a ‘transparent’ manner. Different approaches towards this ‘new way of planning’ are being actively researched (Haasnoot et al. 2013). Four points of departure are:
1.    Linking short-term decisions with long-term tasking.
2.    Incorporating flexibility in possible solutions
3.    Working with multiple strategies that can be applied alternately depending on developments.
4.    Linking different investment agendas with other local authorities or private parties for the purpose of sharing costs, reducing impediments, or creating added value.

A recent communication on adaptive Delta management posited that the approach is still under development and that there are many knowledge gaps to be filled. To this end, the approach is currently being tested in a number of regional projects (e.g., the Delta Programme Rijnmond/Drechtsteden, and the water boards Delfland and Aa en Maas). The CPB Bureau for Economic Policy Analysis is currently examining various approaches to assess the costs and benefits of flexibility.  

Main implications and recommendations 

The Netherlands case study shows the complexity of decision-making of flood risk protection at national, regional and local levels. In The Netherlands, flood protection standards for the whole country are written in law and central government and its services play a key role in overall flood risk management. The other countries analysed show different characteristics: (1) Austria: central government, in coordination with the regional governments (Länder), is responsible for the designation of flood hazard areas, (2) in the UK the Environment Agency has responsibility for managing risk from flooding from main rivers and the sea, including the approval and funding of flood risk management projects undertaken by local authorities and water drainage boards and (3) Czech Republic: the central government has an important coordinating role in the development of the multiannual programme of flood prevention. In all the case study countries, regional and local authorities play distinctive but varying roles in various elements of flood risk management (flood control, flood damage mitigation, preparedness, emergency planning and recovery).

The Netherlands provide an interesting example where CBA - together with other tools – is used at the highest level of decision-making on flood protection standards, and where much more participatory and multi-criteria approaches are employed for local-level decisions on the actual design of flood control infrastructures. The use of CBA and participatory decision-making is supported by the EU Floods Directive. In practice, CBA tends to focus primarily on tangible costs and benefits such as avoided direct damage to buildings and infrastructure. In order to include intangible damages in the equation (human casualties, health, environmental damages, etc.), decision-makers often take recourse to some sort of MCA. In the Netherlands, simple MCA approaches are used for setting protection standards. Also compared to the other three countries analysed, as yet, there is no single superior decision-making tool to fit all circumstances. We found that there is growing recognition across Europe, also promoted by the EU Floods Directive, that participatory approaches to decision-making should be employed, whenever this is feasible.

The Netherlands is actively factoring in the effects of future climate change into flood risk management strategies. The sophistication of the approaches used ranges from simple updates of protection design standards based on one ‘most-likely’ scenario of future (climate) changes, to complex applications of ‘Real Options Analysis’. The evidence suggests that the approaches have by no way settled yet: governments, government agencies and academic researchers are experimenting with approaches and are actively evaluating and developing the options. In this context, the European Commission has rightly argued that in investment projects, climate change-related risk management should be integrated into existing project lifecycle appraisal approaches to manage the additional risk from climate change. These existing approaches can vary between countries and sectors. From a practical perspective it is important that risk management approaches complement existing project appraisal processes but not replace them.  

Bibliography 

Eijgenraam, C., Kind, J., Bak, C., Brekelmans, R., den Hertog, D., Duits, M., Roos, K., Vermeer, P. and Kuijken, W. (2014), Economically efficient standards to protect the Netherlands against flooding. Interfaces 44 (1): 7-21. http://dx.doi.org/10.1287/inte.2013.0721.

Haasnoot, M., Kwakkel, J.H., Walker, W.E., and ter Maat, J. (2013), Dynamic adaptive policy pathways: A method for crafting robust decisions for a deeply uncertain world. Global Environmental Change 23 (2), 485-498. http://dx.doi.org/10.1016/j.gloenvcha.2012.12.006.

Kind, J.M. (2014), Economically efficient flood protection standards for the Netherlands. Journal of Flood Risk Management 7 (2): 103-117. http://dx.doi.org/10.1111/jfr3.12026.