Hydrological Ensemble forecasting – financial investment vs return

by Hannah Cloke, Fredrik Wetterhall and Florian Pappenberger

Within the HEPEX community we all understand very well that hydrological (ensemble) forecasting is hard work. Massive effort goes into developing the systems, huge resources go into running them and there is much sweat over making decisions. Entire PhDs, or indeed careers, are spent on getting a system to work or to be used effectively. In most cases there are still mountains to climb before we reach our current goals.

To motivate spending resources in the public and private sector it is beneficial to provide evidence of the benefits of our forecasts in terms of ‘hard cash’. Usually we are asked to do this in terms of financial, economic or monetary return on investments in a system. This could lead us down the tricky ethical path of specifying the value of human lives or to account for psychological impacts after a flood event. However another option is to remain on more solid ground and just account for the direct monetary benefit. Such studies include assumptions on how many people react to a flood event as a percentage of the population and what actions they are taking. These percentages and actions are usually taken from post-flood event surveys. These assumptions cover for example rational response to warnings, such as always moving your (very heavy) TV upstairs when a flood alert is received, although the effect of false alarms and the pull of the prospect of insurance claims can mean that response to warnings doesn’t follow these assumptions.

Despite these caveats it is possible to calculate the potential monetary value of a forecast system by combining forecasting system performance with the percentage of response to warnings, given the investments and running costs of the system. For early warning of floods the results are surprising. Within the setting of such a theoretical study, the benefits are of the order of 400 Euro for every 1 Euro invested. Indeed, it is near impossible not to have a positive return from an early flood warning system – so keep developing, forecasting, operating or whatever else you do in hydrological ensemble forecasting – it is worth it!!!!

This blog post is based on a recent publication on “The monetary benefit of early flood warnings in Europe” (see http://www.sciencedirect.com/science/article/pii/S1462901115000891)