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 Proc. IAHS, 369, 3-6, 2015 http://www.proc-iahs.net/369/3/2015/ doi:10.5194/piahs-369-3-2015 © Author(s) 2015. This work is distributedunder the Creative Commons Attribution 3.0 License.

11 Jun 2015
Modelling the interaction between flooding events and economic growth
J. Grames1, A. Prskawetz2, D. Grass3, and G. Blöschl4 1Centre for Water Resource Systems, Vienna University of Technology, Vienna, Austria
2Institute of Statistics and Mathematical Methods in Economics, Research Unit Economics, \hack{
} Vienna University of Technology, Vienna, Austria
3Institute of Statistics and Mathematical Methods in Economics, Research Unit Operations Research and Control Systems, Vienna University of Technology, Vienna, Austria
4Institute of Hydrologic Engineering and Water Resources Management, Vienna University of Technology, Vienna, Austria
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.

Citation: Grames, J., Prskawetz, A., Grass, D., and Blöschl, G.: Modelling the interaction between flooding events and economic growth, Proc. IAHS, 369, 3-6, doi:10.5194/piahs-369-3-2015, 2015.