Are Floods in Part a Form of Land Use Externality?
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Nat. Hazards Earth Syst. Sci., 8, 523–532, 2008 www.nat-hazards-earth-syst-sci.net/8/523/2008/ Natural Hazards © Author(s) 2008. This work is licensed and Earth under a Creative Commons License. System Sciences Are floods in part a form of land use externality? W. Dorner1, M. Porter2, and R. Metzka1 1Water and Environment, University of Applied Sciences Deggendorf, Germany 2Australian Centre for the Sustainable Catchments, University of Southern Queensland, Australia Received: 1 October 2007 – Revised: 11 January 2008 – Accepted: 12 January 2008 – Published: 27 May 2008 Abstract. Peak and volume of river flows are functions of made, but it can be stated, that depending on the local situ- the catchment surface characteristics. This means that any ation in the catchment all these effects cause an increase of impacts to the run-off regime (for example surface sealing flood peaks and the shape of a flood wave. On a plot and and river training) could affect people and land users in the micro scale these dependencies have been proven, on a meso lower system. The costs of flood defence or compensation scale they can be quantified and on a macro scale they can be of damages are usually not included in the economic calcu- estimated. lation of the upstream land owner or land user. In economic These effects of land use on flood development and the terms these effects are referred to as unidirectional externali- resulting damages or mitigation costs can be called an exter- ties. This paper presents a methodology to identify externali- nality of land use. If we take a rivulet or river as a system ties related to land use and run-off and describes the relevant with a unidirectional transmission of effects from the head cause-effect relations and how they can be modelled. The to the tail water, land users can fully export their costs of Herzogbach is a small tributary of the Danube River in Lower production in the form of run-off to the people downstream. Bavaria. It is located in a rural area, dominated by intensive From an economic point of view the extent of flood related farming practices. A combination of hydrological and hy- costs such as flood damages or flood defence are of inter- draulic modelling provided the core of the project methodol- est and how natural effects can be distinguished from human ogy to allow the interpretation of economic data. Compar- impacts, which represent the external cost. This is of impor- isons of damage estimates resulting from different hydrolog- tance to evaluate whether and how legal and market oriented ical scenarios based on different land uses, and flood miti- counter measures, called internalization, can be used. gation costs were used to show the economic significance of human impacts. 2 Theory of externalities In a market based economy goods are allocated via markets. 1 Introduction Prices are indicators for the demand for a good and for its scarcity. In a perfect market the market price causes an op- On a river basin scale the upper catchment is linked to the timal allocation of resources and an optimal welfare of all lower system via hydrological processes and the river sys- market participants. The theoretical assumption of a perfect tem. Land use such as agriculture, settlement, but also river market includes the idea that all market actions only affect training, detention and other flood protection are examples participants of this market. of human impacts that influence the run-off regime in this system. In the linked environment of a river basin, upstream In reality often other people are affected by market ac- actions can influence downstream stakeholders. Effects of tions. In economic theory costs and benefits, that are not land sealing, draining, river development and diked flood- included in the production costs and are exported to third plains have been evaluated during the last years. Specific parties, for example pollution and its social costs, are called statements about the level of increase of floods can not be externalities. They exist because people can use a resource without compensation for its use. “An externality arises Correspondence to: W. Dorner when a person engages in an activity that influences the well- ([email protected]) being of a bystander and yet neither pays nor receives any Published by Copernicus Publications on behalf of the European Geosciences Union. 524 W. Dorner et al.: Are floods in part a form of land use externality? compensation for that effect” (Mankiw, 2003, p. 204). Two situations resulting from different options to act. Cost- types of externalities are possible, depending on whether the Benefit-Analysis (CBA) can be used to compare economic effect on the bystander is positive or negative. Externalities outcomes of different scenarios as well as environmental sit- represent market failures or imperfections, because equilib- uations. CBA is a standard instrument in natural hazard rium in market forces is not possible. “The equilibrium fails management and suggested as a basis for flood mitigation to maximize the total benefit to society as a whole” (Mankiw, projects (Gamper et al., 2006; Schmidtke, 1981). ”The essen- 2003, p. 204). “Externalities cause markets to allocate re- tial theoretical foundations of CBA are: benefits are defined sources inefficiently” (Mankiw, 2003, p. 205). Externalities as increases in human wellbeing (utility) and costs are de- also exist in the form of spatial externalities and inter tempo- fined as reductions in human wellbeing. For a project or pol- ral externalities. Most actions take place in one area or time, icy to qualify on cost-benefit grounds, its social benefits must but the effects are transferred to another area or generation. exceed its social costs.” (Pearce et al., 2006, 16). But it is Public and private solutions exist to avoid market failures also bound to several restrictions. The calculated or assumed from externalities or to reduce their effects. These solutions costs and benefits depend on different limitations and restric- involve a process called internalisation, which means that po- tions like the definition of the geographical boundries of the litical, social or economic instruments are used to include the evaluation, inter-temporal effects or preferences of individ- external costs in the economic model. Private solutions can uals and groups of individuals. Umweltbundesamt (2007) be based on moral or social codes like charities, contracts, names the evaluation of irreversible damages, the choice be- bargaining or negotiation (Mankiw, 2003; Cansier, 1996; En- tween different types of cost categories and the quantification dres, 2000). Command and control strategies are used to reg- of potential risks as examples of problems to evaluate and es- ulate markets, establish emission levels or ban practices, as timate costs and benefits. Therefore, CBA can only give an alternatives to market oriented solutions such as certificates. impression of the total extent of externalities. Water use or the use of water bodies can be subdivided into two main types: direct and indirect use. Direct use in- cludes all types of use, where water becomes directly part 3 Processes on a catchment scale of the product or is consumed in the process of production. Indirect use includes all type of uses, where water is influ- “The hydrologic cycle describes the movement of water in enced as a side effect of the production, where the water all its states of aggregation from precipitation, over evapo- “use” has no direct impact on the success or failure of the transpiration, infiltration, surface run-off. Human actions production process and the resulting product. Direct uses in- like agriculture, settlement and infrastructure influence this clude for example hydro power, irrigation or washing water cycle and increase, especially in small catchments, the flood for vegetables. A typical form of indirect use is erosion on peaks. The development of floods is highly dependant on agricultural sites. Excessive rainfall does not play a role for surface structures, soil type and land cover. In densely set- the success of agriculture. Instead during such events most tled areas the percentage of sealed surface is the important rain water is lost, because of low infiltration and fast surface factor. In rural regions the type of fruits and plant cover in- run-off. Through the erosive processes and the transport of fluences mainly the run-off.” (Dorner et al., 2005, p. 27) sediments, nutrients and pesticides, water bodies and down- Different human actions happen in the catchment and stream riparians are influenced, because they have to bear along the river reaches. They affect hydrological sub pro- the costs for sediment removal or damages due to sediments cesses such as evaporation, infiltration and surface run-off, during flooding. as well as the hydraulic conditions for discharge in water Because of the upstream downstream situation in a river courses. basin, an upstream user will only marginally be affected by Scheidleder et al. (1996) aimed to detect the effects of its own action, while downstream users have to deal with the human interventions on the hydrologic cycle depending on full effect of upstream activities. As well as local or regional the Biogeographic Regions (Boreal, Atlantic, Continental, dimension, externalities can also play a crucial role in inter- Alpine, Mediterranean, Macronesian) in Europe. Selected national river basins. While national regulations and actions member states of the European Union including Denmark, have a national economic consequence, they can strongly af- France and Austria participated in this survey. State admin- fect the political situation between two states. istrations were asked to answer questions about the level of Each person upstream influences or can influence the interventions, measured impacts on the hydrological cycle quantitative, qualitative availability and the temporal and and the reasons for these interventions.