The macroeconomic impacts of future river flooding in Europe

Abstract

Abstract The economic impacts of disasters can reach far beyond the affected regions through interconnected transboundary trade flows. As quantification of these indirect impacts is complex, most disaster risk models focus on the direct impacts on assets and people in the impacted region. This study explicitly includes the indirect effects via regional economic interdependencies to model economic disaster losses on a continental scale, exemplified by river flooding in Europe. The results demonstrate that economic implications go beyond the direct damages typically considered. Moreover, we find that indirect losses can be offset by up to 60% by economic actors through finding alternative suppliers and markets within their existing trade relations. Towards the future, increases in economic flood losses (up to 350%) can be expected for all global warming scenarios. Indirect losses rise by 65% more compared to direct asset damages due to the increasing size of future flood events, making it more difficult to offset losses through alternative suppliers and markets. On a sectoral level, future increases in losses are highest for commercial services (∼980%) and public utilities (∼580%). As the latter are predominately affected through cascading effects, this highlights how interdependencies between economic actors could amplify future disaster losses.