Flood Risk Management in Flood Risk Management in Hungary's Upper Tisza BasinHungary's Upper Tisza Basin

A model-based, stakeholder approachA model-based, stakeholder approach

IIASAIIASAwithwith

Hungarian Academy of ScienceHungarian Academy of ScienceStockholm UniversityStockholm University

Funded by Swedish FORMASFunded by Swedish FORMAS

BackgroundBackground

Escalating flood losses in Hungary Tisza region is especially at risk and vulnerable Government has invested huge sums on levees

throughout Hungary Government rebuilds homes and compensates

victims Status quo unacceptable to some stakeholders

Hungary and the Tisza RiverHungary and the Tisza River

Government assistanceGovernment assistance

Government financed housing reconstructionGovernment financed housing reconstruction after the 2001 floods in Hungaryafter the 2001 floods in Hungary

Source: IIASA, Linnerooth-Bayer and Vari, 2003

The Public Policy Context

• The Hungarian government says it can no longer afford its escalating expenses for:

- Reducing flood risks (Loss reduction)- Compensating victims (Loss sharing)

ButBut

• Insurers appear unwilling to increase their exposure in high-risk areas

• Many appear concerned about the environmental effects of flood-loss measures

• Many in the public may feel it is unfair to impose more responsibility on poor areas

Upper Tisza Study Objective

Can we identify a flood risk management strategy that is acceptable to the stakeholders?

PILOT study with emphasis on developing a flood insurance system for Hungary.

The Upper Tisza StudyThe Upper Tisza Study______________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Hydro-Model• One-dimension• Unsteady Flow

Flood Model• GIS-Based• Flood Depth

Loss Model• Agriculture• Infrastructure

Public Survey

Policy Model• Cost-Benefit• Stochastic Opt.

Stakeholder Interviews

Stakeholder Interviews informed by the model

Stakeholder Workshop

Interviews with 24 active Interviews with 24 active stakeholdersstakeholders

National government– Finance ministry– Ministries of water

management, agriculture, environment

Local governments Water authorities

Public– Upper Tisza– Downstream– Non-risk areas

Insurance Companies NGOs Experts

Stakeholder Views

Egalitarian/Holistic•Naturalization•Sustainable development•Mutual insurance

Individualistic•Self responsibility•Relocation w. compensation•Private insurance•Incentives

Hierarchical•Structual mitigation to protect lives•Government compensation to victims

Survey of the PublicSurvey of the Public

Upper Tisza regionDownstream cityNon-risk urban areaNon-risk city

Chosen by(%)

Poor maintenance of levees 73

Clearance of forests 63

Levees not sufficient 57

Upstream countries 46

Global climate change 42

Building permitted in high-risk areas 34

Weakened water management authorities 21

River regulation (naturalisaton) 20

Poor warning systems 12

People choose to build in flood-risk areas 10

Insufficient private mitigation measures 8

What are the main causes of increasing flood losses?

What are the most important What are the most important mitigation measures?mitigation measures?

Heightening and strengthening leveesLittle support for

– Individual measures, e.g., changing agriculture

– Relocation– Renaturalization

What is the most important argument for government compensation?

The government has always compensated

flood victims26%

The government is responsible for flood

losses51%

Social solidarity on the part of Hungarian

taxpayers19%

do not know4%

70

64

2730 29

37

44

53

3234 35

45

2

8

5

10

0

10

20

30

40

50

60

70

Social solidarity requiresthat government

compensate flood victims

Everybody should takemore responsibility

(including insurance)

Locals should pulltogether and create a

fund

It does not matter whatyou do

Do you agree with the following statements?

Upper Tisza Downstream No Risk Rural No Risk Urban

Flood-Loss-Policy ModelFlood-Loss-Policy Model

HydrologicalModel

One -dimensionalUnsteady Flow

InundationModel

GIS-BasedFlood DepthFlood Duration

ConsequenceModel

AgriculturalUrbanInfrastructuralHistorical Buildings

Policy Model

Test policy options

Monte Carlo simulated losses

Three Policy Paths for Round 3: Three Policy Paths for National Flood Insurance ProgramNational Flood Insurance Program

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Option 1 Option 2 Option 3

Voluntaryprivate

insurance(cross subsidies)

Voluntaryprivate

insurance(risk based)

Voluntary private insurance

(cross subsidies,government pays

premiums for poor)

Government reinsurance

(with tax payer support)

Government compensates

victims(percentage

of losses)

Government compensates

victims(fixed amount)

Voluntaryprivate

insurance(cross subsidies)

Private InsuranceVoluntaryFlat rate

Subsidies for poor households

Government CompensationOnly for households

with insurance

Round 4

Stakeholder workshop on a national insurance scheme

Private reinsurance

SummarySummary

Context: Strong stakeholder differences and conflicts on flood risk management, especially for vulnerable regions

Process: Iterative process that respected views of stakeholders. Interviews, questionnaire, stakeholder workshop

Outcome: Consensus on mitigation strategy and a national insurance program that is influencing parliamentary process