Risk measures and the distribution of damage curves for 600 European coastal cities

Abstract

A good understanding of climate change damages is vital to design effective adaptation policies and measures. Using a dataset of probabilistic sea-level rise and other of flood damages and protection cost curves for the 600 largest European coastal cities we generate stochastic damage curves and their distributions with and without adaptation. We apply the Generalized Extreme Value distribution to characterize the distributions and calculate two risk measures: the Value at Risk and the Expected Shortfall, which contribute to understanding the magnitude and probability of high-end sea-level rise represented by the upper tail of the distribution. This allows the costs of sea-level rise to be estimated (that is, in addition to other costs related to coastal extreme events) and supports decision-makers in integrating the high uncertainty related to future projections. This knowledge is necessary for an adequate risk management that does not underestimate risk. Furthermore, it allows city planners to tailor their risk tolerance. A great number of cities in Europe are currently undertaking adaptation plans or have already done so. Making these findings available should therefore be of great priority value to inform these processes.