Appraising, prioritising and financing flood protection projects in Austria: Introduction of new Guidelines and Tools for Cost Benefit Analysis (CBA)
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1 Appraising, prioritising and financing flood protection projects in Austria: Introduction of new Guidelines and Tools for Cost Benefit Analysis (CBA) Heinz Stiefelmeyer 1, Peter Hanisch 2, Michael Kremser 2 1 ) Federal Minstry of Agriculture, Unit of Flood Protection; Vienna, Austria 2 ) DonauConsult Consulting Engineers; Vienna, Austria Introduction After a general introduction to the practice of managing and financing flood protection measures in Austria, this article will give a deeper insight into economic aspects of flood protection measures, as seen by the Unit of Flood Protection within the Federal Minstry of Agriculture. The huge floods of 2002 and subsequent years, especially 2005, have triggered close investigations of economic efficiency in flood protection. These eventually lead to a new guideline for cost-benefit-analysis for flood protection projects. The theoretical background is enlighted as well as the practical use of the tool provided. The experience of more than two years and 100 CBA s conducted round up the Austrian view to economics and flood protection. Legal framework, Proceedings Administration and financing of flood protection measures in Austria are governed by federal laws and accompanying guidelines. Whereas the WFD is already incorporated into the Water Law Act, similar steps are currently undertaken to incorporate the FD in the same way. Special consideration will be given the interaction and synergies between these two approaches to river management. Basin wide studies down to flood risk mapping for single municipalities are currently financed 100% by the Federal Government. These types of investigations are guided by the regional offices of the Flood Protection Unit and conducted by external consultants. Strictly spoken there is currently no legal claim to flood protection as long as there are no official documents available which show the actual flood risk. The situation becomes less clear when a lot of land or the building permit have been acquired under the (pre-) condition that the place is not under flood risk. The local municipality or a regional cooperation of multiple cities or villages (legally defined by the Water Law) is entitled to funding by the Federal and / or the Provincial Government for flood protection measures. Several preconditions have to be fulfilled, among others the proof of economic efficiency as described in the respective CBA guidelines. A valid permit under Water Law is defined as mandatory for funding.
2 The Water Subsidies Law sets the protection goal at the 100 years return flood. This dimensioning parameter is not altered by the results of a CBA. Development of the new CBA Guideline After working more than 20 years following a provisional guideline, in 2005 the Federal Flood Protection Unit has taken action to develop an all-new guideline together with a mandatory calculation tool. These steps were triggered by the huge impacts of the 2002 and 2005 floods in Austria and the resulting questions of subsidy allocation as well as by the prospective contents of the FD under construction. A working group was set up which consisted of members of the Federal Flood Protection Unit, Professor R.A. Schmidtke from Germany, well renowned for more than 30 years of experience in floods and economics and DonauConsult as external head consultant. After an extensive literature and best practice research in other European MS, in Switzerland, the US and a few other overseas nations, the framework for the new guideline was put together. In order to do this, a few general assumptions had to be laid down. Consensus was found that a dual approach would be the method of choice: the (strictly) economic part was to be complimented by a non-monetary balance. The aggregation of these two parts should be done on a verbal, qualitative basis to support political decision making. CBA s have to be conducted for flood protection projects with investment costs from 1 million and more. There are simplified procedures provided for projects between ,- and 1 M. Funding for preservation of flood protections works and their adjustment to the State of the Art does not ask for a CBA. A discussion process of more than one year yielded a draft document, which was subsequently discussed among members of the Federal and Provincial Flood Protection Units, together with representatives of the Federal Ministry of Finance. The guideline and its prospective results had to be passed by the technical staff as well as by the funding institution. Within this process also the ways of assessing secondary effects of flooding, e.g. loss of net regional product, interruption of traffic lines and diversion costs, long term effects on tourism, industrial areas and regional development have been discussed indepth to achieve a transparent guideline and an consistent algorithm for calculating the potential economic losses. Planning efficiency was also taken into account by integrating tables of standard values for economic parameters, partly regionally differentiated. This will yield comparable results for the whole country without omitting variation of such parameters among provinces and land use types. Assessing potential damage to residential housing is done by a damage function taking into account water depth as a single parameter. Other hydrologic or hydraulic parameters have not been integrated explicitly. The effects of flooding time, water
3 velocity, sediment load, etc. should be integrated using different values of the base damage cost which is then processed within the damage function. Consideration was also given the collection of damage data through the calculation tool. Using a standard interface these values can be extracted to contribute to a country-wide damage database. Contents of a CBA The CBA is based on detailed flood mapping as available through flood hazard maps ( Gefahrenzonenpläne ) defined in the guidelines of the Federal Flood Protection Unit. These maps show the inundated areas for the 30, 100 and 300 years return period. The technical background data and results from hydraulic simulations usually also yield water depths and velocities. Additional hydrologic and hydraulic data necessary to start assessing potential damage include the flow (return period) of dam overtopping and at least one more flooding scenario, if linear interpolation between the available data does not deliver satisfying accuracy. Balance #1: Monetised damages To incorporate the basic housing data an interface is provided to the addressoriented Object and Apartment Register, a country-wide GIS-linked database which is currently being built up by Statistics Austria. To assure correct spatial assignment the mapping is done based on the digitally available cadastral maps. As the damage potential in residential housing is calculated using a damage function, base parameters are assessed through field studies. Clustering of objects helps increase efficiency in data collection. Especially the existence and usage of basement rooms, which are very common in Austrian architecture, is given special attention. Huge parts of damage potential are located downstairs, e.g. heating unit including oil tank, washing machine, deep freezer, workshop, sauna and fitness appliances. Assessing damage potential in non-residential areas and single commercial buildings has to be done by site visits and interviews. This enables the expert conducting the CBA to investigate in detail start and course of potential damage with rising water level. Where real damage data exist from recent flood events, these are linked to the respective hydraulic parameters to achieve calibration of damage functions and values, which will be entered into the calculation tool. Damage potential in infrastructure is mostly taken from empirically established figures, and is adjusted in cooperation with the municipal authorities and the infrastructure companies. The listing below gives an overview of the main damage groups: Residential Housing Non-Residential Objects (commercial buildings, administration, schools, hospitals, )
4 Infrastrucure (Roads, railway lines, energy and water supply, sewer system water and waste processing plant, disposal sites, telecommunication lines, ) Flood Protection Works (river training works, dikes, weirs,...) Agriculture and Forestry areas Other land use types Tourism (Accommodation, technical infrastructure, e.g. cable cars) These categories make up the monetised total assessed damage. They are aggregated in balance #1. Balance #2: Non monetised and non monetisable damages All other types of potential damage and benefit, no matter if they could be expressed in monetary terms or not, are summed up within balance #2. These include Danger to human life Efficiency benefits o Avoided damages to regional prosperity o Investment incentives o Land use restrictions, temporal problems with supply and sewer lines o Flood retention measures Extra-economical effects o Socio-cultural aspects o Ecological aspects The identification and expression of these non-monetary criteria is done strictly on a verbal basis. The expert is asked to value each criterion separately on a dual scale: slightly, medium or strongly - advantageous or non-advantageous. Aggregation After completing the two separate balance sheets a summary table is printed containing the main figures (project costs and accumulated avoided damages, benefitcost ratio and the valuation of the criteria groups from balance #2). The CBA is closed by a final statement by the expert, valuing the summary balance and allocating to the project an overall advantageous or non-advantageous economic effect. Resume of experiences with new CBA guideline: From 2008 on, about 100 CBA s have been conducted by external consultants as well as by internal experts from the Provincial Flood Protection Units. A grand total of flood protection investments of about 300 million was allocated this way. This represents about two thirds of flood protection investments in Austria. One third is allocated by the ministry of infrastructure for FP measures along the Danube river (an inland waterway). As these projects often also cover improvement of inland navigation, the current procedures do not ask for a CBA focused on flood protection. The natural hazard related investments by the torrent and avalanche control unit reach about the same dimensions as in flood protection.
5 One of the first evident results of the CBA evaluation was the fact that especially small projects serving a limited number of residential houses with no or little commercial activities involved reach an economic B-C ratio greater than 1. Compared to algorithms used in other MS, this is due to the fact that all soft facts and a series of other non-monetised damage or benefit categories are not included in the economic balance. This effect was in deed intended and leads to a greater transparency in the (political) decision making process. When describing the criteria taken into account in balance #2, the special regional or local situation is evaluated implicitly. The current evaluation of CBA s from all over Austria shows a wide variation in assessed damages, even in the base parameters used in the damage function for single houses. Experience with damage assessment and data about its accuracy are still limited. The data collection will eventually lead to a country-wide damage database in order to simplify field data collection. Another interesting part is the distribution of damage categories within one CBA. A closer look at these figures helps the expert allocating his efforts to the main contributors to the damage potential. The results demonstrate that often only one category makes up the major part of the overall damage potential. The control instances within the Federal Flood Protection Unit and the Ministry of Finance can easily focus on these main parts to check for consistency and accuracy of the CBA. The collection of data from the evaluated CBA s provides benchmark figures for the following CBA s, constantly increasing the The Federal Flood Protection Unit expects the quality of data to improve with intensifying the exchange and publication of results of CBA s and the data from evaluation of different CBA s. A checklist has been created for a quick review of CBA s, giving the examiner an exploratory view of the parameters used, also in relation to the so far collected data. The collected damage data are currently analysed for regional and other influences (e.g. predominant housing type and land use, date and intensity of last flood, ) on average and extreme values and their variance. It is expected that within one or two years the collected data can provide enough information to shorten required field data collection significantly and to improve overall quality of CBA s. This should subsequently help allocating the funding for flood protection measures more efficiently thus reducing the overall economic losses through natural hazards like floods. Addresses of the authors: Heinz Stiefelmeyer: ( Heinz.Stiefelmeyer@Lebensministerium.at ) Federal Unit of Flood Protection ( Bundewasserbauverwaltung ) at the Federal Ministry for Agriculture, Forestry, Environment and Water Resources Management Marxergasse 2, 1010 Vienna, Austria Peter Hanisch ( Peter.Hanisch@DonauConsult.at ), Michael Kremser ( Michael.Kremser@DonauConsult.at ) DonauConsult Ingenieurbüro GmbH (formerly DonauConsult Zottl & Erber ZT-GmbH) Klopstockgasse 34, 1170 Vienna, Austria
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