Articles | Volume 369
https://doi.org/10.5194/piahs-369-3-2015
https://doi.org/10.5194/piahs-369-3-2015
11 Jun 2015
 | 11 Jun 2015

Modelling the interaction between flooding events and economic growth

J. Grames, A. Prskawetz, D. Grass, and G. Blöschl

Abstract. Socio-hydrology describes the interaction between the socio-economy and water. Recent models analyze the interplay of community risk-coping culture, flooding damage and economic growth (Di Baldassarre et al., 2013; Viglione et al., 2014). These models descriptively explain the feedbacks between socio-economic development and natural disasters like floods. Contrary to these descriptive models, our approach develops an optimization model, where the intertemporal decision of an economic agent interacts with the hydrological system. In order to build this first economic growth model describing the interaction between the consumption and investment decisions of an economic agent and the occurrence of flooding events, we transform an existing descriptive stochastic model into an optimal deterministic model. The intermediate step is to formulate and simulate a descriptive deterministic model. We develop a periodic water function to approximate the former discrete stochastic time series of rainfall events.

Due to the non-autonomous exogenous periodic rainfall function the long-term path of consumption and investment will be periodic.

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Short summary
Communities live close to rivers and therefore are confronted with the risk of flooding. It is important to understand the drivers and mechanisms of the consumption and investment behavior of these societies in order to identify an optimal investment strategy into flood defense capital. To solve such an economic optimization model we develop a periodic water function to approximate the former discrete stochastic time series of rainfall events and apply it to an existing socio-hydrology model.