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True flood costs underestimated

GOVERNMENT RULES for justifying spending on flood prevention schemes seriously underestimate the cost of floods, insurers claimed this week.

The revelation will increase pressure to raise funding for flood defence and alleviation projects. Many have been put on hold to pay for better warning and forecasting systems (NCE 21 January).

Speaking during an ICE conference on the Easter 1998 floods, Association of British Insurers property and household manager Chris Mounsey claimed the true cost of inundation could be three to four times that allowed for in Ministry of Agriculture Fisheries & Food guidelines.

He said the methods used to assess the cost of flooding under Treasury rules were 'understated' and failed to account for the impact on the UK's balance sheet as a whole.

'The costs of the police and rescue services and the impact on business all have to be met in addition to the cost of damage to property,' he explained.

Mounsey's remarks follow research by the ABI into the macro-economic impact of fires. Preliminary results show the cost of damage and disruption to be much higher than previously thought.

Mounsey claimed similar principles could also be applied to flooding. The ABI is now calling for detailed research into the economic case for flood protection to be carried out with the help of the Environment Agency, MAFF, local authorities and the rescue services.

The Environment Agency and regional flood defence committees welcomed the initiative.

EA Anglia Region water manager Peter Kite said more accurate damage estimates could lead to higher spending on flood prevention schemes.

'Everything we do has to be justified by a cost-benefit analysis. Clearly if the true cost of damage is higher than was previously thought we can justify a great deal more spending on defences,' he said.

South West RFDC chairman Deborah Clark said the growing risk and cost of flooding should not be ignored.

'The ABI must be in the best position to assess the cost of damage because it is assessing claims all the time,' she claimed.

A MAFF spokesman denied that its methods of assessing flood damage costs were outdated. But he added: 'This adds to the body of knowledge on the subject and come the next spending round we may take it into account if necessary.'

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