Publication: Flood Protection and Land Value Creation: Not All Resilience Investments Are Created Equal
Loading...
Published
2024-03-11
ISSN
Date
2024-03-14
Author(s)
Editor(s)
Abstract
This paper investigates the land value creation potential from flood mitigation investments in a theoretical and applied setting, using the urban area of Buenos Aires as a case study. It contributes to the literature on the wider economic benefits of government interventions and the dividends of resilience investments. Using a simple urban economics framework that represents land and housing markets, it finds that not all flood mitigation interventions display the same potential for land value creation: where land is more valuable (city centers for example), the benefits of resilience are higher. The paper also provides ranges for land value creation potential from the flood mitigation works in Buenos Aires under various model specifications. Although the estimates vary largely depending on model parameters and specifications, in many cases the land value creation would be sufficient to justify the investments. This result is robust even in the closed city configuration with conservative flood damage estimates, providing that the parameters remain reasonably close to the values obtained from the calibration. Finally, acknowledging that fully calibrating and running an urban simulation model is data greedy and time intensive—even a simple model as proposed here—this research also proposes reduced form expressions that can provide approximations for land value creation from flood mitigation investments and can be used in operational contexts.
Link to Data Set
Citation
“Avner, Paolo; Viguié, Vincent; Jafino, Bramka Arga; Hallegatte, Stephane. 2024. Flood Protection and Land Value Creation: Not All Resilience Investments Are Created Equal. Policy Research Working Paper; 9744. © World Bank. http://hdl.handle.net/10986/41196 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Flood Protection and Land Value Creation(World Bank, Washington, DC, 2021-07)This paper investigates the land value creation potential from flood mitigation investments in a theoretical and applied setting, using the urban area of Buenos Aires as a case study. It contributes to the literature on the wider economic benefits of government interventions and the dividends of resilience investments. Using a simple urban economics framework that represents land and housing markets, it finds that not all flood mitigation interventions display the same potential for land value creation: where land is more valuable (city centers for example), the benefits of resilience are higher. The paper also provides ranges for land value creation potential from the flood mitigation works in Buenos Aires under various model specifications. Although the estimates vary largely depending on model parameters and specifications, in many cases the land value creation would be sufficient to justify the investments. This result is robust even in the closed city configuration with conservative flood damage estimates, providing that the parameters remain reasonably close to the values obtained from the calibration. Finally, acknowledging that fully calibrating and running an urban simulation model is data greedy and time intensive—even a simple model as proposed here—this research also proposes reduced form expressions that can provide approximations for land value creation from flood mitigation investments and can be used in operational contexts.Publication Climate Policy and Inequality in Urban Areas(World Bank, Washington, DC, 2022-09)Opposition to climate policies seems to arise, at least partly, from their effects on inequality. However, so far, the impact of climate policies on inequality has mainly been studied through the lens of income inequality, and their spatial dimension is poorly understood. This paper, using Cape Town, South Africa, as a case study, investigates the impact of a fuel tax on both spatial and income inequalities. It uses a model derived from the standard urban economics land use model, accounting for four income classes and four housing types. This modeling framework allows decomposing the impacts of the tax by income class, housing type, and housing location. The analysis also decomposes the impacts of the tax over different timeframes, assuming that households and developers progressively adapt to the tax. The findings reveal strong evidence that in the short term, there are both income and spatial inequalities, with households being more negatively impacted by the fuel tax if they earn low incomes or live far from employment centers. In the medium and long term, these inequalities persist: the poorest households, living in informal settlements or subsidized housing, have few or no ways to adapt to changes in fuel prices by changing housing type, adjusting their dwelling sizes or locations, or shifting transportation modes. Low-income households living in formal housing also remain impacted by the tax over the long term due to complex effects driven by the competition with richer households on the housing market. Complementary policies promoting a functioning labor market that allows people to change jobs easily, affordable public transportation, or subsidies helping low-income households to rent houses closer to employment centers will be key to enable the social acceptability of climate policies.Publication Global Socio-economic Resilience to Natural Disasters(Washington, DC: World Bank, 2025-05-22)Most disaster risk assessments use damages to physical assets as their central metric, often neglecting distributional impacts and the coping and recovery capacity of affected people. To address this shortcoming, the concepts of well-being losses and socio-economic resilience—the ability to experience asset losses without a decline in well-being—have been proposed. This paper uses microsimulations to produce a global estimate of well-being losses from, and socio-economic resilience to, natural disasters, covering 132 countries. On average, each $1 in disaster-related asset losses results in well-being losses equivalent to a $2 uniform national drop in consumption, with significant variation within and across countries. The poorest income quintile within each country incurs only 9% of national asset losses but accounts for 33% of well-being losses. Compared to high-income countries, low-income countries experience 67% greater well-being losses per dollar of asset losses and require 56% more time to recover. Socio-economic resilience is uncorrelated with exposure or vulnerability to natural hazards. However, a 10 percent increase in GDP per capita is associated with a 0.9 percentage point gain in resilience, but this benefit arises indirectly—such as through higher rate of formal employment, better financial inclusion, and broader social protection coverage—rather than from higher income itself. This paper assess ten policy options and finds that socio-economic and financial interventions (such as insurance and social protection) can effectively complement asset-focused measures (e.g., construction standards) and that interventions targeting low-income populations usually have higher returns in terms of avoided well-being losses per dollar invested.Publication An Exploration of Systemwide Flood Protection Standards for Coastal Polders in Bangladesh(Washington, DC: World Bank, 2025-11-05)Bangladesh has demonstrated how investment in coastal flood protection saves lives, reduces economic losses, and protects development gains. Yet, its cost effectiveness depends on the design standards, which are currently selected on a project-by-project basis. This is because at present, there is no law, policy, or agency guidance to guide or inform decisions on design standards for coastal polders in the country. To inform the discussion on appropriate flood protection standards for Bangladesh’s coastal polders, this paper investigates what these standards would look like if they were based on cost-benefit analyses. The analysis finds that implementing differentiated flood protection standards across the coastal polders can be a cost-effective strategy for further suppressing flood risks, reducing up to 27.5 percent of the total cost and flood risks (from US$23.4 billion investment cost + US$11 billion flood risk to US$18.6 billion investment cost + US$6.7 billion flood risk). This includes the substantial investment in bank protection needed (~US$5 billion), irrespective of the flood protection standards, to maintain the alignment of the present embankments around the coastal polders. Although the absolute values of the economically optimal protection levels are subject to considerable uncertainty, a sensitivity analysis confirms the robustness of the finding that there is considerable value in flood protection level differentiation. Flood protection standards are rarely based on economic considerations alone. They could also be informed by the desire to reduce life safety risk or combat poverty. It is recommended that the implications of applying different perspectives on the tolerability of risks to determine differentiated flood protection standards be carefully explored in consultation with stakeholders.Publication Early Warnings Coverage, Determinants of Reception, and Benefits: What Surveys Can Tell Us(Washington, DC: World Bank, 2025-09-03)Early warning systems are a cornerstone of disaster risk reduction, enabling timely alerts and protective actions that save lives and reduce damages. Yet, despite their documented cost-effectiveness and potential to bolster resilience, early warning system coverage remains uneven across countries and within communities. Furthermore, there remains a gap in the literature around people-centered approaches to understand what drives early warning system coverage, the reception of warnings, and their realized benefits at the household level. This paper addresses that gap by leveraging four surveys conducted at different scales (international, national, and subnational) and focusing on different geographic areas (urban versus rural) to examine early warning systems from a household perspective. Using the World Risk Poll, the paper first examines the determinants of early warning system coverage at the national level, highlighting the role of gross domestic product, disaster predictability, and the likelihood that a country is affected by a disaster. At the household level, the findings show that warning reception is influenced by socioeconomic status, dwelling location, and access to digital devices. Finally, the paper shows that receiving an early warning is strongly associated with higher perceived resilience, increased adoption of preventive measures, and significantly lower casualty rates in disaster-affected areas. These findings underscore the urgent need to improve both the accessibility and effectiveness of early warning systems, particularly for vulnerable populations in low-income and high-risk regions.
Users also downloaded
Showing related downloaded files
Publication G5 Sahel Region Country Climate and Development Report(Washington, DC: World Bank, 2022-07-01)The five countries of Burkina Faso, Chad, Mali, Mauritania, and Niger (the G5) in the Sahel region of Africa are among the least developed countries in the world. The now regular and growing climate shocks are causing large losses in outputs, reducing human capital accumulation, and leading to potentially devastating ecological and economic tipping points in the region. This World Bank country climate development report (CCDR) has examined the most critical actions and policy changes needed to accelerate the region's economic recovery, sustainable and inclusive development, and adaptation to the impacts of climate change. This report has three main messages. First, the opportunities for a resilient and lower-carbon development of the G5 countries are significant. They can reverse environmental degradation and maximize the benefits of climate action for the poor. Second, rapid, resilient, and inclusive growth is both the best form of adaptation to climate change and the best strategy for meeting development goals in an effective, sustainable, and productive manner. Third, the costs of inaction are far greater than the costs of action. Early and targeted action on policies and programs presented in this report can move the G5 Sahel countries towards a greener, more resilient, prosperous, and inclusive future.Publication Western Balkans 6 Country Climate and Development Report(Washington, DC: World Bank Group, 2024-07-16)This Regional Western Balkans Countries Climate and Development Report (CCDR) stands out in several ways. In a region that often lacks cohesive regional alliances, this report emphasizes how the challenges faced across countries are often common and interconnected, and, importantly, that climate action requires coordination on multiple fronts. Simultaneously, it illustrates the differences across countries, places, and people that require targeted strategies and interventions. This report demonstrates how shocks and stressors re intensifying and how investments in adaptation could bring significant benefits in the form of avoided losses, accelerated economic potential, and amplified social and economic spillovers. Given the region’s high emission and energy intensity and the limitations of its current fossil fuel-based development model, the report articulates a path to greener and more resilient growth, a path that is more consistent with the aspiration of accession to the EU. The report finds that the net zero transition can be undertaken without compromising the economic potential of the Western Balkans and that it could lead to higher growth than under the Reference Scenario (RS) with appropriate structural reforms.Publication Kyrgyz Republic Country Climate and Development Report(Washington, DC: World Bank, 2025-11-03)This Country Climate and Development Report (CCDR) on the Kyrgyz Republic aims to support the country’s development goals amid a changing climate. The CCDR considers two policy scenarios up to 2050: the business-as-usual (BAU) and high-growth scenarios. As it quantifies the likely impacts of climate change on the Kyrgyz economy between now and 2050, the report highlights key government actions to best prepare for and adapt to climate impacts (referred to as “with adaptation” measures), with a particular focus on the time horizon up to 2030. The CCDR also outlines a path to net zero emissions by 2050 (referred to as “with mitigation” measures, “decarbonization,” or, simply, “net zero 2050”), highlighting associated development co-benefits.Publication Côte d’Ivoire Country Climate and Development Report(Washington, DC: World Bank, 2023-11-02)Le présent CCDR comporte trois messages principaux: (i) En premier lieu, le maintien du statu quo ne permettra plus de soutenir la croissance économique de la Côte d'Ivoire et ses ambitions de devenir un pays à revenu intermédiaire de la tranche supérieure à l’horizon 2030, tout en réduisant considérablement la pauvreté. Toutes choses étant égales par ailleurs, et dans le cadre d’un scénario de climat sec/plus chaud, le changement climatique devrait réduire le produit intérieur brut (PIB) réel de 13 pour cent d’ici à 2050, ce qui empêcherait 1,63 million de personnes de s’affranchir de la pauvreté. Quoique dispendieuses, les mesures d’adaptation peuvent potentiellement compenser une grande partie de l’impact négatif du climat, notamment sur les populations démunies; (ii) Deuxièmement, des secteurs économiques clés, dont le cacao et l’énergie, courent le risque de connaître des contre-performances si aucune mesure n’est prise maintenant même pour faire face aux impacts climatiques et tirer parti des mutations technologiques ou des changements réglementaires. En outre, les centres urbains, qui sont des pôles économiques, sont exposés aux dommages climatiques subis par les infrastructures et aux pertes considérables de moyens de subsistance subies par les populations démunies vivant dans des communautés à faibles revenus. Des menaces planent également sur les routes, les réseaux numériques et les autres infrastructures qui assurent l’interconnectivité au plan national, garantissant l’efficacité des déplacements et l’accès aux marchés et aux services; (iii) Troisièmement, la Côte d'Ivoire n’est pas actuellement prête à faire face aux conséquences du changement climatique. Sa capacité d’adaptation en est encore à ses balbutiements, ses institutions et sa coordination de l’action en faveur du climat sont fragmentaires, et ses politiques et programmes ne sont pas à la hauteur du défi climatique auquel sont confrontées les populations vulnérables. Entre-temps, la mise en œuvre des stratégies et plans existants reste limitée. Les composantes réglementaires, institutionnelles et climatiques nécessaires à la gestion des impacts climatiques doivent être revues ou mises en place. Certes, la croissance du secteur privé a connu une tendance positive, mais elle n’atteint pas encore son potentiel en termes de portée et d’échelle, si bien qu’elle doit encore se développer pour jouer son rôle essentiel à l’adaptation aux effets du changement climatique et à leur atténuation.Publication China Country Climate and Development Report(World Bank Group, Washington DC, 2022-10)The China Country Climate and Development Report (CCDR) provides analysis and recommendations on integrating the country’s efforts to achieve high-quality development with the pursuit of emission reduction and climate resilience. Without adequate mitigation and adaptation efforts, climate risks will become a growing constraint to China’s long-term growth and prosperity, threatening to reverse development gains. Conversely, if efforts to tackle climate risks lead to a significant decline in growth and rising inequality, they would deprive millions of people of development and likely erode support for the reforms necessary to achieve a lasting economic transformation. Hence, China will need to grow and green its economy at the same time. This report offers policy options to achieve these dual objectives by easing inevitable trade-offs and maximizing potential synergies between China’s development and climate objectives.