The economics of flood insurance
The economics of flood insurance

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The economics of flood insurance

4.1 How might building on flood plains be reduced?

In Video 2 you will hear Matt Georges from the Environment Agency talking about ways to tackle this problem of building on flood plains.

He first makes clear that 95 per cent of local authorities follow Environment Agency advice not to build on flood plains, so this problem is small, relative to the total of new building that is undertaken. However, this still means that some 25,000 homes a year (around 11 per cent of new residential properties in England) were built in areas with a high flood risk in 2016-17 (Ministry of Housing, Communities & Local Government, 2018; Ministry of Housing, Communities & Local Government, 2019).

Activity 7 A range of options

Timing: Allow 15 minutes for this activity

Watch Video 2. What options does Matt Georges suggests for reducing the amount of building on flood plains.

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Skip transcript: Video 2 Matt Georges from the Environment Agency

Transcript: Video 2 Matt Georges from the Environment Agency

So the first place you’d start is the planning process. We are statutory consultees in the planning process for certain-size developments. And we will, if it’s in a floodplain, we’ll say, don’t build it there. The local authority can ignore that advice. But we keep a record of how many do and don’t. And I haven’t seen the latest figures, but it’s always around 95%, 96, 97% of local authorities go with our advice.
So that’s positive in that it stops the problem in the first place. That said, there is a huge legacy of buildings that have been built in the floodplain, either way back in historical time or more recently. In those cases, we look to adapt them as much as possible. So, we would give advice on whether to build them up higher, whether to have certain adaptations within the buildings. So, for example, having your plug sockets at kind of chest height instead of floor height means that if you are flooded, say to 30, 40, 50 centimetres, your electrics don’t go. So that really helps.
There are lots of other adaptations that you can put into buildings, especially when they’re being built that can help to reduce that. The next stage is obviously, OK, you built it, we’ve got this issue, what do we do? And there are various flood risk interventions that you can take.
So we always talk about flood risk not flood defence, because you can’t stop flooding. You can only reduce the risk of it happening. So that might be something as simple as a brick wall. It might be something that’s more sympathetic to maybe a historic environment. So concrete, but faced with local stone, sandstone or something like that.
It might be a natural flood measure. So you might go kind of further up the river and speak to farmers and landowners, and see what they can do about their land management to make sure that you don’t have water rushing down and kind of hitting a village or town further downstream.
And then the final aspect of it is kind of warning. So if all else fails and the flood does happen, how to reduce the impact on people? Do you, you know, are people signed up to our warnings? Do they know what to do if a warning occurs? So do they have a flood plan, and how are they helped to kind of get back into their homes afterwards? So the average length of time that somebody is out of the home after a flood is nine months, something like that. It can go on for years. And so an element of what we will call resilience is just being able to get back into your home and get on with your life as soon as you can afterwards.
So there’s a whole range of policy interventions right along that spectrum where government can help. So, a final one would be insurance.
End transcript: Video 2 Matt Georges from the Environment Agency
Video 2 Matt Georges from the Environment Agency
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Matt Georges talks about a spectrum of interventions. The first is to use the planning system: using this to refuse permission to build on flood plains (though note that in England such developments are not banned outright but at the discretion of local authorities).

If developments do go ahead then they can be made more flood resilient through adaptations (such as waist-height electrical sockets) and flood risk reduction measures (such as brick walls and up-river land management changes). While Georges does not say who would pay for these, one option would be to make developers bear such costs thus internalising the externalities you looked at a moment ago.

Georges then suggests initiatives to help people cope if flooding does occur, such as warnings and encouraging people to have flood plans. And the final option he mentions is flood insurance.


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