Articles | Volume 16, issue 1
Research article
15 Jan 2016
Research article |  | 15 Jan 2016

Uncertainty in flood damage estimates and its potential effect on investment decisions

D. J. Wagenaar, K. M. de Bruijn, L. M. Bouwer, and H. de Moel

Abstract. This paper addresses the large differences that are found between damage estimates of different flood damage models. It explains how implicit assumptions in flood damage functions and maximum damages can have large effects on flood damage estimates. This explanation is then used to quantify the uncertainty in the damage estimates with a Monte Carlo analysis. The Monte Carlo analysis uses a damage function library with 272 functions from seven different flood damage models. The paper shows that the resulting uncertainties in estimated damages are in the order of magnitude of a factor of 2 to 5. The uncertainty is typically larger for flood events with small water depths and for smaller flood events. The implications of the uncertainty in damage estimates for flood risk management are illustrated by a case study in which the economic optimal investment strategy for a dike segment in the Netherlands is determined. The case study shows that the uncertainty in flood damage estimates can lead to significant over- or under-investments.

Short summary
This paper discusses the differences that are found between flood damage estimation models. Based on an explanation of these differences, a method to quantify the uncertainty in flood damage models is proposed. An uncertainty estimate is made for a case study and the potential implications of uncertainty in flood damage estimation for investment decisions is shown.
Final-revised paper