MITIGATING CATASTROPHIC FLOOD RISK AND COST-BENEFIT ANALYSIS

Abstract

The paper presents an extended framework of the cost-benefit analysis for flood control projects. The recent development of financial technologies has expanded the channels of risk spreading, resulting in discounting premium rates and increasing the capacity corresponding to the large claims. The insurance premiums paid by the respective households reflect the individual willingness-to-pay for alleviating psychological burden stemmed from flood risks. In this paper, the affordable insurance premium for the people living in a model catchment area was calculated using the economic valuation methods of mitigating catastrophic risk. The benefits of flood control project can be defined by the reduction in insurance premium payment.