Fluvial flooding in the UK isworth 40% of UK Expected Annual Damages, a total of £560m, whereas coastalflooding is worth 24%, a total of £320m (Sayers et al.
, 2015). As flood risk to residential properties increases from860,000 in 2015 to 1.2 million at risk by the 2080s, this signals a need forbetter government intervention (Sayer etal., 2015). The UK government recognises thatcurrent flood risk management strategies (FRMS) and flood defences, identifiedlargely as a local public good due to their non-rivalrous and non-excludablenature, are currently “ineffective, inefficient, and fragmented” (UKParliament, 2017). Current policy doesn’t encourage the widespread use ofcatchment scale approaches (UK Parliament, 2017). Geaves and Penning-Rowsell (2016)recognised that flood warning systems (FWS) were categorically a non-privategood, deciding that FWS are a public good due to being non-excludable andnon-rivalrous. Government intervention is warranted due to correct previousgovernment errors and a need to distribute initial rights and install betterpolicies for land management between land owners in upland ecosystems who canbetter manage land for downstream members and homeowners.
Lack of effective FRMS createsnegative externalities, such as impacts on third parties or downstreamhomeowners by damage to homes and businesses. Positive externalities exist througheffective land management, e.g.
afforestation increasing biodiversity, nutrientdeposition on floodplains farmland. As flooding can be subsidised through floodinsurance, appropriate level of government intervention would be at a locallevel, e.g.
Powys County Council, to determine appropriate actions (Geaves andPenning-Rowsell, 2016). While command-and-control (CAC) offlooding through introducing a system of guidelines and building permits or thebanning of certain land management practices or inefficient building equipmentmay work, it would use a “one size fits all” approach (Harrington andMorgenstern, 2007). A key disadvantage of CAC approaches are that it doesn’taccount for individual differences in landowners or land management making iteconomically inefficient. As a result this reduces the individual incentive toaddress flooding as an issue, either through investigating methods of floodreduction or private flood defence measures individuals can purchase as aprivate good. These measures often exclude the poorest of society, as the costof property level protection is on average £4922 per property (Geaves andPenning-Rowsell, 2016).
Instead other economicinstruments such as incentives should be utilised. Incentives are often seen asflexible lower cost alternatives to CAC practices that require less input fromthe regulator (ELC, 2017). Economic instruments are often more efficient than CACand provide a continual incentive to address the cause of flooding, e.g.
purchasing land and leasing back to farmers subject they comply with FRMS(Harrington and Morgenstern, 2007; Beedell etal., 2012). As free-riders cannot be avoided,for new policy to be adopted the government is subjected to a period oflobbying flood risk towns or previous victims through rent seeking media appealsto help gain votes. The fine workings of the policy would only appeal toengineering companies and environmentalists who may ‘win’ contracts from thegovernment, whereas the general public will vote to elect politicians lobbying withthe most ‘desirable’ flood risk management strategy. A problem of politics isthe willingness of the public to pay for FRMS, meaning that any charge throughtaxes that the government introduces would be too much and lose the politicalparty votes (Geaves and Penning-Rowsell, 2016). While government intervention inUK flooding is warranted to address the collective action problem of politics,there needs to be utilisation of both CAC for regulations on developments onfloodplains and incentives to encourage landowners to use catchment consciousland management strategies.