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Worldwide, increased flood risk from climate change prompts adaptive behavior of households in situ or through migration. Both can be sensible adaptation responses involving tradeoffs, and understanding their drivers is important for effective climate policy. However, in-situ adaptation and migration are rarely studied in combination and research on how extreme events trigger adaptive behavior in originally low-risk areas is lacking. We analyze survey data from residents affected by the extreme summer floods of 2021 in the Netherlands to contribute to fill this research gap. Our results indicate that current low levels of flood-related migration are likely to increase under higher flood risk. Undertaken in-situ adaptation may act as a barrier for further in-situ adaptation or migration behavior. Where in-situ adaptation is mostly related to cognitive factors including risk perceptions, response efficacy and self-efficacy, migration seems to be driven by flood-related emotions. Personal flood experience, mediated by worry, is strongly associated with both types of adaptive behavior. We discuss how policymakers can use these insights to guide and anticipate household adaptation behavior.

Registered protocol for a systematic literature review focused on studies, methods and metrics available for assessing the the risk reduction potential and co-benefits associated with nature-based solutions.

This article reviews the literature on the financial sector impacts of natural disasters and physical climate change risks, covering banking, insurance, stock markets, bond markets, and international financial flows. Most studies have applied statistical approaches to historical data from developed countries to identify these impacts, while some have also used theoretical and computational modeling to assess future risks under climate change scenarios. The findings show that natural disasters and climate change risks generally lower insurer profitability and risk-sharing capacity, bank stability and credit supply, returns and stability of stock and bond markets, foreign direct investment inflows, and international lending. Factors such as income levels, rigorous financial regulations, capital abundance, market diversification, and adaptation strategies mitigate the negative effects. Natural disasters increase remittance inflows and financial assistance to low- and middle-income countries. We recommend future research on forward-looking computational modeling to assess the future financial sector impacts of climate change, while accounting for adaptation actions and their drivers. Future research should also consider hazard correlations and the interactions between financial industries and regions to more comprehensively assess the economic effects of natural disasters in general and for vulnerable countries in particular.

By implementing nature-based solutions (NBS), cities generate value for their residents, such as health and wellbeing. We estimate the aggregate social value to urban residents of 85 NBS projects implemented across Europe and find that the majority yield attractive social returns on investment. We offer a new metric to support investments for NBS by public and private actors for whom social value creation to residents is a core objective.

Improving assessments of droughts risk for smallholder farmers requires a better understanding of the interaction between individual adaptation decisions and drought risk. Agent-based modeling is increasingly used to capture the interaction between individual decision-making and the environment. In this paper, we provide a review of drought risk agent-based models with a focus on behavioral rules. This review leads to the conclusion that human decision rules in existing drought risk agent-based models are often based onad hocassumptions without a solid theoretical and empirical foundation. Subsequently, we review behavioral economic and psychological theories to provide a clear overview of theories that can improve the theoretical foundation of smallholder farmer behavior and we review empirical parameterization, calibration, and validation methods of those theories. Based on these reviews, we provide a conceptual framework that can give guidance for the integration of behavioral theories in agent-based models. We conclude with an agenda to guide future research in this field.

Flood risk management in the USA is largely embedded in the National Flood Insurance Program (NFIP). Climate change and increasing exposure in flood plains pose a challenge to flood risk managers and make it vital to reduce risk in the future. The proposed reforms are steering the NFIP to risk-based premiums, but it is uncertain if the reforms will result in unaffordability and incentivize risk-reduction investments or how the NFIP is affected by large-scale adaptation efforts. Using an agent-based model approach for current and future scenarios, we demonstrate that risk-based premiums will yield a positive societal benefit (US$10 billion) because they will incentivize household risk-reduction investments. Moreover, our results show that proactive investment in large-scale adaptation measures complements a transition to risk-based premiums to yield a higher overall societal benefit (US$26 billion). We suggest that transitioning the NFIP to risk-based premiums can only be secured by additional investments in large-scale flood protection infrastructure.

Reforms are required to maintain a healthy and robust flood insurance market under future climate conditions for the United States. Therefore, policymakers should implement premiums that reflect flood risk and incentivize household-level risk reduction, complemented with regional flood adaptation investments.

In the United States (U.S.), there is no one base policy for property insurance that can cover all disaster perils such as floods and windstorms. Hurricane-based insurance is intrinsically complex because the disaster peril may be excluded from a regular insurance policy and thus homeowners need to purchase a separate policy for that risk. Besides, the coverage for disaster perils often comes with separate deductibles and coverage limits. As a result, homeowners need to acquire a significant amount of information and knowledge to understand the insurance policies and make informed decisions about their coverage choices. This study utilizes decision trees to provide a comprehensive overview of flood and wind insurance purchase outcomes in the state of Florida. We also examine the behavioral, personal, and socio-demographic factors that influence the decision to obtain natural disaster insurance coverage for the various identified types of insurance purchases. Our empirical analyses are based on homeowner survey data collected from coastal residents in Florida. We find that different types of flood and wind insurance purchases are related to unique factors, which highlights the importance of distinguishing insurance purchase outcomes. We also provide policy implications that focus on specific targets to improve insurance uptake.

Het Nederlandse klimaatbeleid is een lappendeken van duurzame maatregelen die elkaar vaak in de weg zitten of helaas verkeerd uitpakken. Wat nodig is, is een eenduidig beleid.

Financial institutions, including pension funds and insurance companies, are key investors in financial markets and important providers of funding to companies. Their investment decisions can steer the transition towards a more sustainable economy and can ensure that sufficient capital is made available for the investments needed to achieve the goals of the Paris Agreement. The development of robust carbon disclosure metrics is key to measuring the sustainability of these institutions’ investment portfolios. However, common carbon disclosure metrics are unreliable, since they are prone to macroeconomic effects, such as inflation and exchange rate fluctuations. This becomes relevant when one wants to consider the change in these metrics over time. In this study, we show that when the metrics are adjusted for inflation and exchange rate fluctuations, one can observe the real sustainability improvement over time. We find that sustainability improvements based on existing metrics are notably one-quarter to one-third smaller when adjusted for these effects. Hence, more than one-quarter of the observed ‘greening’ is ‘non-real’; rather it is a consequence of macroeconomic fluctuations. We propose an adjusted metric that is robust to such fluctuations and illustrate its use in evaluating pension and insurance sector investments. Various international organizations, such as the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) and the Task Force for Climate-Related Financial Disclosures (TCFD), are working together to create harmonized climate-related disclosure frameworks. This study aims to contribute to the ongoing work on carbon disclosure by identifying and solving methodological issues that are currently hampering the potential of carbon disclosure metrics, such as Weighted Average Carbon Intensity (WACI). Key policy insights Although carbon disclosure metrics are currently recommended in international reporting standards, presently there is no commonly agreed set of metrics in place. Adjusting relative carbon disclosure metrics for inflation and exchange rate fluctuations makes a significant difference to the level and dynamics of these metrics over time. Adjusting carbon disclosure metrics for inflation and exchange rate effects contributes to establishing a harmonized global framework, which can help steer the transition towards a more sustainable economy and can ensure that sufficient capital is made available for the investments needed to achieve the goals of the Paris Agreement.