Cost benefit analysis and flood damage mitigation in the Netherlands

Abstract

Aim of this paper is to investigate the application of cost benefit analysis methods in the decisionmaking on a desired flood protection strategy in the Netherlands. After a discussion of historical developments in flood protection in the Netherlands the method of cost benefit analysis is presented as a useful instrument in decision-making. In the second part of the paper the economic analysis of flood protection strategies is firstly approached from a theoretical point of view. Subsequently the economic analyses carried out in practice are described for two more practical cases, the study on “emergency retention areas” and the dike reinforcement program in the river system. It is concluded with some notions about a recent project, which aims at mapping the risk of flooding for the Netherlands. The paper shows that an economic analysis, when correctly applied, can provide important rational information in the decision-making process.