4 Current expenses for the mitigation of and adaptation to Alpine hazards
This section outlines current expenses for structural and non-structural mitigation measures in Alpine countries and introduces climate change in mountain areas and its relevance for the costs of natural hazards.
Due to legal foundations, the protection of natural hazards in Austria is primarily a federal task, whereupon there is no legal obligation to protect each citizen. Yet it is sure-ly a high priority and an overriding public interest to guarantee public safety and organ-ise federal prevention measures. Primarily, these tasks are to define protection levels, planning of prevention measures and organising crisis management (Rudolf-Miklau 2009). Moreover, natural hazard management is a complex challenge, since many insti-tutions are involved. Prevention (mitigation) of alpine hazards is carried out by different means (spatial planning, technical mitigation, risk awareness building, and risk assess-ments) for which different public agencies are responsible.
These numbers must also be interpreted under the premise that very different pub-lic structures and risk transfer mechanisms regarding natural hazard management are implemented in Austria and Switzerland. For example, in Switzerland, risk transfer in the case of natural hazards is mainly done by a compulsory, state-controlled system, whereas in Austria public funding by a disaster fund and a residual private insurance-system absorb economic damages to private assets (Prettenthaler & Vetters 2005). The Swiss insurance premiums are included in the study of Wegmann et al. (2007), while they are not (completely) considered in the figures for Austria.
Figure 4.1: Costs of mitigation measures 1997 - 2011 of the Austrian Federal Ministry of Agriculture, Forestry, Environment and Water Manage-ment; Source: Pfurtscheller & Thieken (2010 p. 395).
Wegmann, M., Merz, H. & K. Meierhans Steiner (2007): Jährliche Aufwendungen für den Schutz vor Naturgefah-ren in der Schweiz - Strategie NaturgefahNaturgefah-ren Schweiz, Umsetzung des Aktionsplans PLANAT 2005 - 2008. Bern.
Explanation: This study was part of a national strategy dealing with natural hazards in Switzerland by the PLAN-AT-platform. The annual costs of natural hazards are the main basis for a cost-efficient assessment of natural hazards. The analysis assesses the expenses of the public sector at all administrational levels (state, cantons, and municipalities). Moreover, also the annual costs of risk transfer (insurance premiums) are analysed. The study contains the costs of floods, avalanches, geologic mass movements, earthquakes, storm, hail and extreme temperatures. In general, about SFr 400 per capita is spent each year for natural hazard mitigation in Switzerland.
The study comprehends both, fixed and variable costs.
• Cost types addressed: All costs in the public and private sector (insurances) were assessed, which were trig-gered by natural hazards in Switzerland on a yearly basis. This also comprises costs of risk transfer.
• Objective of the approach: to get an overview about the total economic costs of natural hazards
• Impacted sectors: analysis of the public and the private sector
• Scale: from local to national
• Expected precision (validity): relatively high, due to the comprehensiveness of the study
• Results and result precision: public and private costs of natural hazards in Switzerland
• Is the method able to deal with the dynamics of risk? No, this cost assessment is connected with extensive re-search and data collection due to the involvement of diverse public and private institutions. So, such an analysis only could be done once, if there is no systemically approach to collect he data needed.
• Skills required: statistics, advanced knowledge in public natural hazard management
• Types of data needed: alls costs triggered by natural hazards in Switzerland
• Data sources: all public and private institutions which deal with natural hazard management
• How is the data collected: survey of data at all public bodies dealing with natural hazard management at the state, cantonal, and municipal level - average values of the period 2000 to 2005
• Is data derived ex-ante or ex-post: ex-post
• Data quality: relatively high
Comparison of risk transfer systems
The flood in 2005 offered the chance to systematically analyse the effectiveness of different risk transfer systems in Austria, Germany and Switzerland. Raschky et al.
(2009) and Schwarze et al. (2011) compared: i) Bavaria (Germany) with a pure market-based insurance system and public relief in case of very severe events, ii) Grisons (Switzerland) with a compulsory insurance against natural hazards and alpine risks pro-vided by a public (monopoly) cantonal property insurer (KGV) and iii) Tyrol (Austria) with a tax-based disaster fund that is supplemented by market insurance. In Austria and Germany insurance against losses due to natural hazards can be contracted as addition to building fire insurance. Accordingly, insurance density varies significantly: While in Grisons/Switzerland 100% of the homes are insured against natural hazards, this holds for less than 15% in Tyrol/Austria and for only 10% in Bavaria/Germany.
In addition, the costs for insurance, i.e. the premiums, differ in the three systems.
People in Tyrol would pay an annual net premium of approximately 420 Euros for a fixed sum insurance assuming a house worth 335,000 Euros, i.e. approximately 1‰. Consid-ering information of two German insurers a relative premium of more than 1‰ was cal-culated for Bavaria. Assuming a house with a value of 300,000 Euros and an excess of 1% of the sum insured, the yearly net premium for an insurance against damage due to fire and natural hazards would amount to 313 Euros at the first insurer (Bruderhilfe). The premium of the second insurer (Gerling) is based on an excess of 10% of damage and results in an annual net premium of 376 Euros. In contrast, the monopoly insurer in Gri-sons can provide insurance coverage for a house worth 500,000 CHF (about 335,000 Euros), for a yearly premium of 150 CHF (about 100 Euros). This corresponds to a rela-tive premium of 0.3‰, i.e. less than one third of premiums in Austria or Germany.
The lower costs of public monopoly insurance was already realized within Swit-zerland, where in seven of 26 cantons (the so called GUSTAVO cantons), insurance is offered by private companies, which charge significantly higher premiums. Ungern-Sternberg (2002) and Fischer (2008) identified different reasons for the higher efficiency of public monopoly insurers: low advertising and other competition costs, larger reserves of the monopoly insurers and their right to participate in the processes of the Building Codes and Land Use Planning as well as the financing of the Fire Service and Cantonal Civil Defence Services. In fact, Swiss monopoly insurers invest about 15% of the premi-um incomes in prevention.
For comparison: In Spain, where a comprehensive legal compulsory insurance against damage caused by geo-atmospheric hazards and other ‘extraordinary events’
(terrorist attacks, political unrest) was put in place, the annual contribution amounts to 0.092‰ of the insurance sum for buildings.
4.2 Climate Change and its relevance for the costs of alpine hazards