Flood damage-related economic losses totaled $51.6 billion in 2023, but research shows protective measures can substantially reduce losses, according to Swiss Re Institute.

As losses are expected to increase due to more intense weather events and continued urban sprawl, it is necessary to examine ways to reduce risk potential.

Swiss Re Institute’s study, “Resilience or rebuild? The costs and benefits of climate adaptation measures for flood,” compared economic benefits and cost ratios of selected flood adaptation measures.

Protective measures such as dykes, dams and flood gates are pricey, but their financial benefits can exceed costs for rebuilding after a disaster by up to 10 times, the study showed.

“Investments in climate adaptation, such as flood preparedness, not only promote economic stability and create jobs but also help keep people safe. Yet there is chronic underfunding. It is therefore crucial to create the conditions for private capital to flow into climate adaptation projects and at the same time optimise the use of public funds. Quantifying the benefits of adaptation measures is a key step towards facilitating public-private investment and ultimately closing the huge financing gap,” said Veronica Scotti, chairperson Public Sector Solutions at Swiss Re.

Benefit-to-cost ratio can vary significantly depending on the region.

The research indicated that gray infrastructures, such as dykes and levees, are highly effective in reducing coastal flood damage.

Their benefits can outweigh costs by two to seven times globally, and up to 10 times in flood-prone areas, the study noted.

Built to optimal standards, these structures can reduce flood damage by 60-90 percent, especially in densely populated regions, the research showed.

In less-populated areas, nature-based solutions such as barrier island restoration or foreshore vegetation are equally effective.

Policy interventions, such as land use restrictions, can enhance the value of flood prevention, particularly in emerging economies.

Flood defenses and zoning restrictions are found to be almost twice as effective and feasible than accommodative measures, such as dry proofing for both coastal and river floods, the study found.

All flood interventions, especially when upgraded and maintained, can benefit both insurers and policyholders, Swiss Re said.

Public and private sectors can work together in facilitating and accelerating risk adaptation, the Institute added.

“By focusing on preventing and reducing future flood losses, the public sector can shift the remaining risks to the re/insurance industry and support economic stability after disasters,” the study authors noted.” By being involved in the early stages of planning protection measures, the re/insurance industry can help mitigate risks and provide financial protection.”