Flood Risk Management in the Upper Tisza Region A Model-Based Stakeholder Approach

As of January 2006 the RMS program has changed to the Risk and Vulnerability program.

Because of escalating flood losses, the Hungarian government is concerned about its tradition of taking almost full responsibility for flood risk management, including flood prevention, response, relief and reconstruction. Government authorities would welcome more private responsibility, which economists view as important for providing market incentives that discourage development in high-risk areas. However, Hungarians almost unanimously regard the transfer of full liability for flood losses to citizens, especially those living in very poor areas, as unfair. The attribution of responsibility thus invokes fundamental questions of efficiency, equity and social solidarity in responding to extreme circumstances, especially in poor and vulnerable regions.

How much should people living in non-risk areas contribute to preventing losses and compensating victims in vulnerable communities, and to what extent should those living or locating in high-risk areas bear the burden? One of the more controversial issues in Hungary, and throughout disaster-prone countries of Europe, Asia and North America, is thus the respective roles of the government and the private market in preventing and pooling disaster losses. Many countries have formally and differentially allocated liability for the financial consequences of extreme events by legislating public-private systems for reducing disaster risks and pooling losses.

A pilot study carried out by IIASA with the Hungarian Academy of Sciences and Stockholm University developed and tested a model-based, citizen-participatory procedure for designing a public-private flood insurance system for Hungary with a focus on the economically depressed Upper Tisza river basin. A challenge for this three-year process was to identify the contending perspectives and preferred policy directions for flood risk management held by the stakeholders, and more concretely to identify a consensual policy path for a nation-wide, public-private insurance system. The project combined interviews with active stakeholders, a public questionnaire and a stakeholder workshop. The stakeholders included government ministries, water authorities, insurance companies, environmental groups, local mayors and residents. A unique feature of this process was a spatially explicit computer model that simulated the economic consequences of different insurance-policy strategies to the government, insurance companies and residents in a pilot area.

The Hungarian stakeholders agreed to a radical change in current practices: Only insured flood victims would be eligible for additional financial assistance in the aftermath of a disaster. They agreed that a public-private flood insurance system should provide support for vulnerable regions, including subsidized premiums for low-income households and nation-wide cross-subsidized premiums. This pilot study illustrates a new form of policy analysis that makes use of information technology in a participatory, stakeholder setting. As such, this study is relevant beyond Hungary and beyond the flood risk pooling issue. It will be of interest to all countries seeking social consensus for disaster risk management policies.

Swedish FORMAS provided funding for this study.

For more information, contact Joanne Linnerooth-Bayer

Responsible for this page: Karolina Werner
Last updated: 02 Jan 2006