Lorenzo Carrera

Assessing direct and indirect economic impacts of a flood event through the integration of spatial and computable general equilibrium modelling

In this paper we developed and tested an integrated methodology for assessing direct and indirect economic impacts of flooding. The methodology combines a spatial analysis of the damage to the physical stock with a general economic equilibrium approach using a regionally-calibrated (to Italy) version of a Computable General Equilibrium (CGE) global model. We applied the model to the 2000 Po river flood in Northern Italy. To account for the uncertainty in the induced effects on regional economies, we explored three disruption and two recovery scenarios. The results highlight that: i) the flood event produces indirect losses in the national economic system, which are a significant share of the direct losses, and ii) the methodology is able to capture both positive and negative economic effects of the disaster in different areas of the same country. The assessment of indirect impacts, in particular, is essential for a full understanding of the economic outcomes of natural disasters. Rarely the accounting of flood losses includes indirect economic impacts.The proposed method integrates spatial and computable general equilibrium modelling for the estimation of indirect impacts.We analyse a flood event in Northern Italy, reporting indirect economic impacts as around 20 percent of direct impacts.Economic benefits arise in non-flooded sub-regions of Italy.

Improving Flood Damage Assessment Models in Italy

Flood damage assessments are often based on stage-damage curve (SDC) models that estimate economic damage as a function of flood characteristics (typically flood depths) and land use. SDCs are developed through a site-specific analysis, but are rarely adjusted to economic circumstances in areas to which they are applied. In Italy, assessments confide in SDC models developed elsewhere, even if empirical damage reports are collected after every major flood event. In this paper, we have tested, adapted and extended an up-to-date SDC model using flood records from Northern Italy. The model calibration is underpinned by empirical data from compensation records. Our analysis takes into account both damage to physical assets and losses due to foregone production, the latter being measured amidst the spatially distributed gross added value.

Policy-Relevant Assessment Method of Socio-Economic Impacts of Floods: An Italian Case Study

This paper estimates the direct and indirect socio-economic impacts of the 2000 flood that took place in the Po river basin (Italy) using a combination of Computable General Equilibrium (CGE) model and Spatial and Multi-Criteria Analysis. A risk map for the whole basin is generated as a function of hazard, exposure and vulnerability. The indirect economic losses are assessed using the CGE model, whereas the direct social and economic impacts are estimated with spatial analysis tools combined with Multi-Criteria Analysis. The social impact is expressed as a function of physical characteristics of the extreme event, social vulnerability and adaptive capacity. The results indicate that the highest risk areas are located in the mountainous and in the most populated portions of the basin, which are consistent with the high values of hazard and vulnerability. Considerably economic damages occurred to the critical infrastructure of all the sectors with the industry/commercial sector having the biggest impact. A negative variation in the country and industry Gross Domestic Product (GDP) was also reported. Our study is of great interest to those who are interested in estimating the economic impact of flood events. It can also assist decision makers in pinpointing factors that threaten the sustainability and stability of a risk-prone area and more specifically, to help them understand how to reduce social vulnerability to flood events.

Tradable certificates for renewable energy: The Italian experience with hydropower

The paper reviews the economic incentives for the development of renewable energy sources in Italy, in particular in relation to hydroelectricity. The review addresses the impacts of the hydropower development incentivised by the Green Energy Certificates. The Green Energy Certificates were introduced in Italy in 1999 and modified several times. In 2011 the Italian Government decided to phase out the compliance market for certificates and to replace it with a system of auctions. The paper attempts to draw conclusions from the application of the compliance market in Italy, further discusses the performance in the light of the similar economic instruments put in place elsewhere in Europe and finally, offers a baseline for the comparison for the new policies to be implemented in the future.

Climate Variability and Energy Security in Italy

Energy and water security are arguably among the most important present-day societal and environmental challenges. Amidst the early signs of human induced climate change, both energy and water management systems are undergoing sizeable transformations. In addition, water is a critically important resource for hydro- and thermoelectricity generation; fossil fuel extraction/processing, and for the production of biofuels. This paper analyses inter-dependences of energy and water in the Po River Basin District (PRBD) situated in the Northern Italy, the most industrialised part of the country and home to 17 million people. Specifically, we explore the role of climate variability as a part of the structural vulnerability of thermo- and hydroelectricity generation.