Economics of flood control

The modern theoretical underpinning of economics is given by Lionel Robbins and Paul Samuelson, defining it as a social science concerning how people and society make choices to allocate scarce resources—which have alternative uses—to produce, distribute, and consume goods and services over time to satisfy unlimited human wants and needs. Fundamental to this definition are the scarcity and choice notions, highlighting human behavior as it has a direct liaison between the limited means, having alternative uses, available to satisfy unlimited desires.

Economics of flood control involves how people and society make choices to allocate resources pertaining to the flood control to satisfy human sustainable or environment-friendly wants and needs. It takes account of the cost-benefit analysis of investments of flood defense. Moreover, it provides high returns by overlooking important economic and infrastructure losses, declining costs of insurance, and encouraging indigenous economic growth through the creation of jobs. Non-structural measures are also significant factors such as land-use rules, insurance, and predictions to control flood risk and safeguard sensitive areas.

Sustainable and effective flood control economics is beyond what is seen and observed. It integrates socio-environmental-economic factors, sustainability considerations, and integrated management mechanisms to ensure green growth, circular economy, and sustainable results for communities and economies in generic form and green spaces in the precise form.

A crucial tool in the sustainable flood control economics is the sustainable cost-benefit analysis, which compares the projected costs of flood control projects with the anticipated benefits. It involves a cost-benefit analysis of green investments in flood protection measures against the projected flood damage costs, aiming to measure the projects economic viability. This examination takes into account direct damages, indirect costs, and secondary advantages such as, new economic opportunities and environmental benefits or sustainability improvements.

Modern ways such as eco-design or bio-mimicry also condider nature-based solutions to solve human and economic problems of choice and scarcity in a sustainable manner. They mimic natural systems for efficiency, resourcefullness, and resilience. Furthermore, they offer important co-benefits like improved air quality ( indoor in particular) and biodiversity coupled with flood risk reduction. Economic losses from floods comprise direct damage to infrastructure, economic sector, property, and agriculture, alongside indirect costs like business losses, supply chain disruption, declining GDP, and inflation. These losses have their roots in the declining productivity levels (total factor productivity in particular), damaged capital, and lop-sided financial intermediation, impacting all sectors of the economy, particularly households, businesses, and public services.

As far as the economic losses from floods are concerned, they include direct property and infrastructural damage, relief and recovery effort costs, and indirect costs in terms of productivity losses and economic activity disruptions.In order to avoid flood like situation, it is very important to understand the fundamentals of the economics of flood control as a cost-benefit breakdown balancing structural factors such as high leading costs for physical stumbling blocks against the non-structural factors, potentially more flexible in nature such as flood insurance.The most productive and sustainable approach to economics of flood control often integrates both types of methods, supplemented by green skill development, green growth, green infrastructure, green financing, early warning mechanisms, community empowerment, to promote sustainable development and mitigate both current and future flood risks.

Dr. Binish Qadri, Assistant professor, Cluster University Srinagar.