Judith Köberl

On flood risk pooling in Europe

In this paper, we review and discuss some challenges in insuring flood risk in Europe on the national level, including high correlation of damages. Making use of recent advances in extreme value theory, we, furthermore, model flood risk with heavy-tailed distributions and their truncated counterparts and apply the discussed techniques to an inflation- and building-value-adjusted annual data set of flood losses in Europe. The analysis leads to Value-at-Risk estimates for individual countries and for Europe as a whole, allowing to quantify the diversification potential for flood risk in Europe. Finally, we identify optimal risk pooling possibilities in case a joint insurance strategy on the European level cannot be realized and quantify the resulting inefficiency in terms of additional necessary solvency capital. Thus, the results also contribute to the ongoing discussion on how public risk transfer mechanisms can supplement missing private insurance coverage.

A Summary of Sector and Region Specific Economic Impact and Vulnerability Assessments by Case Study in Bulgaria, Romania and Hungary

This paper summarises the main economic findings of an interdisciplinary EU project (FP6) which studied the impacts of climate change in Hungary, Bulgaria and Romania. Economic impact assessments were carried out at region and sector specific case study levels. Results suggest positive economic impacts related to climate change on agriculture in the Bulgarian case study region, whereas no clear message about impact direction could be derived for the Romanian region under investigation. The studied climate change impacts on tourism are tendentially negative in the regions considered within the single tourism case studies. The conducted energy case studies also suggest (small and sometimes insignificant) negative economic impacts of climate change within specific configurations assumed. Vulnerability of the public sector has been assessed by analysing the countries’ risk transfer mechanisms with respect to damages from extreme weather events.