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New storm surge scheme to promote climate change adaptation actions

New storm surge scheme to promote climate change adaptation actions

31-03-2010
Prevent damage to your property - or pay more excess insurance. This is the principle in a proposed new Danish storm surge scheme. The scheme will promote climate change adaptation actions.

In autumn 2009, a committee set up by the Danish Storm Council published a report on the revision of the existing Danish storm surge scheme (‘Rapport om Revision af Stormflodsordning’), suggested a series of changes to the scheme. This has led to a bill, which is currently before the Danish Parliament. 

The changes in the bill provide incentives for climate change adaptation actions. Some of the changes include a new compensation model, a so-called stepwise model, where the excess payable on insurance claims is increased if repeated damage occurs at the same address. This is to promote prevention of damage caused by climate change events such as flooding and storm surges. The explanatory notes to the bill say about the objective:

- Moreover, the objective of the bill is to introduce a new compensation model which is to ensure incentives for cost-effective climate change adaptation in the form of preventive actions and appropriate localisation, partly in connection with new development and partly through the construction of protective works.

Another important change is the expansion of the compensation model to cover damage caused by the flooding of watercourses and lakes.

Recommendations from the storm surge committee’s report
In its report, the storm surge committee recommends that the storm surge scheme be continued, but with a series of financial and organisational amendments. A new compensation model where the excess is raised if repeated damage occurs at the same address will provide an incentive for residents to prevent future damage. Compensation will still only cover events that occur less than once every 20 years. Storm surge events that occur less than once every 50 years will qualify for the lowest excess.

Cost-effective climate change adaptation is one of four considerations which the new model will take into account. The others are flexibility, financing and backing for the scheme. Climate change adaptation actions are cost-effective when the financial benefit (the damage avoided) more than cancels out the costs. Adaptation actions can take place when deciding the location of new developments and when constructing new protective works.

The significance of climate change
According to the report, in the longer term, the future likely impacts of climate change could be decisive for the number and the scope of storm surge events along the Danish coastline, and thus could be crucial for the storm surge scheme. With a time horizon of 20-30 years, the impacts of climate change however will “not be extensive”, according to the committee.

It appears that the total water level increase along Danish coasts within the next 20 years, with some probability, will be between 3cm-13cm, with the mean value 8cm. The total effect of a generally higher sea level and a higher maximum water level in connection with storm surges in a 20-year term is +13cm-14cm, with an uncertainty interval of at least +/- 5cm.

The Danish Storm Council

 

The Danish Storm Council, established by the Minister for Economic and Business Affairs, decides compensation claims pursuant to the Danish Act on storm surges and storm damage.

The Danish Storm Council consists of representatives from Danish municipalities, ministries, insurance companies and the Danish Consumer Council. The Council is appointed for a four-year term.