Societal cost-benefit analyses based on quantified drought risks to assess Dutch Delta Program investments

Adaptive policy-making on drought risk management requires integrated assessment of uncertain future developments, policy actions and combinations of those. Preferably, such an assessment is based on quantified drought risks, defined as the integral of drought probability and economic consequences for all relevant sectors impacted by drought. The investment costs of proposed policy measures and strategies (various measures combined) can then be compared with the expected risk reduction.

We developed a method and assessment instrument to explore drought risk in the Netherlands, now and in the future, as well as in response to policy actions. By quantifying the amount of risk reduction in euro’s/year, we were able to assess costs and benefits of the investments proposed by various stakeholders.  The method has been applied in support of the Netherlands drought risk management strategy as part of the National Delta Program which has to prepare the Netherlands for climate change. Drought risks were quantified by carrying out simulations with the National Water Model and coupled impact modules for five water users: agriculture, shipping, drinking water, industry water, and nature areas. A qualitative approach was taken for the drought effects on nature areas.

With the approach taken, we were able to assess costs and benefits of the investment strategy proposed by various stakeholders. The risk reduction of a measure differs per scenario, per year and per combination of measures, while the annual costs are the same. Results showed that the strategy was cost-effective under a scenario with ongoing climate change, in which the combined probability of precipitation deficits and low river flows increases. The method also provided insight into the most opportune time to implement the measures, considering uncertainty about future climate change. This provided relevant input for adaptive policy planning on the national scale.