Risk assessment as a basis for sustainable flood management

With the increase in both flood risk and flood protection investments in many areas in the world, it is generally recognised that improved methods for sustainable flood risk management are needed that should take into account both the potential damage and the probability of flooding. Only this way it is possible to carry out a full cost-benefit analysis that can tell authorities what investments in flood management or flood damage mitigation measures generate the highest economic returns. An AAD (Average Annual Damage) assessment is an essential part of such an analysis, as it translates both the potential damage and the probability of flooding into a single figure for annual cost due to flooding. The current paper demonstrates the methodology of an AAD-assessment for the Hai River Basin in north-eastern China - a flood-prone densely populated lowland area in which large cities (including Beijing and Tianjin), important industries and intensive agriculture are situated. The assessment consists of the following elements: 1) delineation of 'uniform' flood management areas, 2) determination of potential damage in these areas (total investments plus production), 3) determination of the probability of flooding (return time) in each area, 4) determination of the loss rate expected for different flood depths, 5) calculation of AAD as: AAD = loss rate * potential damage / return time. It is shown how the results can be used to calculate the benefit of certain flood management measures. It is also stressed that the accuracy of economic and hydrological data is critical to the successful application of this method.