1. Vienna | Austria | 7-12 April 2019
A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Diego Guzman 1, Guilherme S Mohor2 & Eduardo M Mendiondo 3
1 Faculty of Civil Engineering, Pontificia Bolivariana University, Bucaramanga, Colombia
2 Institute of Environmental Science and Geography, University of Potsdam, Potsdam, Germany
3 São Carlos School of Engineering, University of São Paulo, São Carlos - SP, Brazil

2. A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil
This study in short:
This work presents a hydrological multi-hazard assessment applied to insurance planning schemes under a global change perspective.
We addressed multiple hydrological natural hazards (i.e. floods and water scarcity) that affect the same area in a defined timeframe (i.e. within a multi-year insurance contracts).
Major research efforts were focused on the "actuarially fair premium" identification, by means of quantitative multi-scenario approaches (climate change and anthropogenic change).
Keywords: Hydrological Hazards, Multi Risk Analysis, Insurance, Climate Change

3. A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil
Multi-scenario approach:
- Climate models data inputs;
- Identify changes in to time step (land use, population grow, urban expansion planning, change in water consumption habits.
- Define the analysis temporal window (Multi-year contracts);
- Identify appropriate hydrological variables (Index);
- Assess impacts of hazards;
- Provide climate change scenarios with an associated probability and uncertainty
in preparation to Ecological Economics

4. Model Output Information
A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil
Model Output Information
Synthetic time series (for one given scenario)
in preparation to Water

5. 3. Applications 1. Why 2. The Model 4. Results
A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
1 Faculty of Civil Engineering, Pontificia Bolivariana University, Bucaramanga, Colombia 2 Institute of Environmental Science and Geography, University of Potsdam, Potsdam, Germany
3 São Carlos School of Engineering, University of São Paulo, Department of Hydraulic and Sanitary Engineering, São Carlos - SP, Brazil
1. Why
3. Applications
2. The Model
4. Results
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6. A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
1. Why
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil
, São Paulo, SP
after 60 mm rainfall in the afternoon
Photo: Sergio Neves/Estadão Conteúdo
, Cantareira System
at 7,2% capacity during wet season
Photo: Nacho Doce/Reuters

7. A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
1. Why
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil
Hydrological Modeling
Flood Index
Flood and Droughts Hazards in the Basin
Threshold
Upper Chart: WEAP Hydrological Modeling outputs (ETA INPE Ensemble)
Left Upper chart: Sao Carlos city, SP, urban floods, showing storm event in 22 Nov., 2015.
Left Lower chart: Drought Cantareira System 2013/15 (~9 million affected, adapted from SABESP 2016)
Drought Index

8. A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
2. The Model
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil
Multi-scenario approach:
- Climate models data inputs;
- Identify changes in to time step (land use, population grow, urban expansion planning, change in water consumption habits.
- Define the analysis temporal window (Multi-year contracts);
- Identify appropriate hydrological variables (Index);
- Assess impacts of hazards;
- Provide climate change scenarios with an associated probability and uncertainty
in preparation to Ecological Economics

9. 𝑆 𝑡 = 𝑆 𝑡−1 1+ 𝑡𝑥 2 + 𝐼 𝑡−1 − 𝐿 𝑡−1 𝑡𝑥 1 + 𝑃𝑟 𝑡−1
A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
2. The Model
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil
Integrated in an annual step, we calculated the insurance fund balance (S) from (Pr)emiums, claims (L), and (I)nterests.
𝑆 𝑡 = 𝑆 𝑡− 𝑡𝑥 2 + 𝐼 𝑡−1 − 𝐿 𝑡−1 𝑡𝑥 1 + 𝑃𝑟 𝑡−1
Repeated after x synthetic series, we calculate the scenario’s (Op)timized premium
𝑂 𝑝 =𝑚𝑖𝑛 𝑡=1 𝑁 $𝑙𝑠 𝑥, 𝑡 − 𝑆 𝑡
in preparation to Ecological Economics

10. A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
2. The Model
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil +
Economic Impacts
RISK
Based on consumption priority and asset values, we estimate sector-wise financial impact.
The curves are related to a more general return period, facilitating transferability and readability. +
𝑭𝒑 𝒙 = 𝑨𝒗𝒈 𝑫 𝒙(𝑭,𝑫 ∗ 𝟏− 𝟏 𝑻 𝑹(𝑭,𝑫 𝒏

11. A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
3. Applications
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil
Feature
Drought application
Flood application
Time step of the analysis
Year-based (annual extreme)
Time period scenario
30 synthetic series by scenario: climate change, land use change, water infrastructure change and no changes with period extension ( ).
30 synthetic series by flood scenarios with Tr 10, 25, 50 and 100 year and urban density actual/future conditions.
Input data
Q7,min annual time series
Q annual max. time series
Purchase requirement
Compulsory
Spatial coverage
Watershed scale
Watershed scale, with risk functions at flood-prone area
Targeted policyholders
Population only supplied by surface water
Buildings within flood-prone areas
Premium setting
Actuarially fair premium
Damage cost evaluation*
Business interruption cost
Direct cost
Details
Adapted from Graciosa, 2010
Adapted from Laurentis, 2012
INSURANCE SCHEME
apud Guzman et al., in preparation to Water

12. A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
4. Results
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil
3. Applications
2. The Model
4. Results
Droughts
Source: Laurentis, 2012 apud Guzman et al. prepared to Water
Floods
Source: Graciosa, 2010 apud Guzman et al. prepared to Water

13. maximum loss per risk area (m²) maximum loss per risk area (m²)
A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
4. Results
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil
Flood application
in São Carlos, SP, Brazil
under current and projected urbanization scenario for different coverages.
Source: Graciosa, 2010
Current condition
Coverage (return period)
Risk area (m²)
maximum loss
maximum loss per risk area (m²)
10 anos
218,908
R$ 11,744,764.00
R$ 53.65
25 anos
224,460
R$ 14,029,124.00
R$ 62.50
50 anos
239,600
R$ 18,436,854.00
R$ 76.95
100 anos
246,596
R$ 20,430,260.00
R$ 82.85
Future condition
Coverage (return period)
Risk area (m²)
maximum loss
maximum loss per risk area (m²)
10 anos
243,932
R$ 20,103,234.00
R$ 82.41
25 anos
254,196
R$ 20,625,232.00
R$ 81.14
50 anos
263,640
R$ 26,183,044.00
R$ 99.31
100 anos
268,068
R$ 28,017,029.00 R$

14. A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
4. Results
1 Pontificia Bolivariana University, Bucaramanga, Colombia University of Potsdam, Potsdam, Germany
3 University of São Paulo, Brazil
After the runs, we calculate indicators to compare scenarios or insurance settings and assess its sustainability
𝑆C= 𝑂𝑝𝑡𝑖𝑚𝑖𝑧𝑒𝑑 𝑃𝑟𝑒𝑚𝑖𝑢𝑚−𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐿𝑜𝑠𝑠𝑒𝑠 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐿𝑜𝑠𝑠𝑒𝑠
𝐿𝑜𝑠𝑠 𝑅𝑎𝑡𝑖𝑜 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐿𝑜𝑠𝑠𝑒𝑠 𝑂𝑝𝑡𝑖𝑚𝑖𝑧𝑒𝑑 𝑃𝑟𝑒𝑚𝑖𝑢𝑚 𝑥 100
Fig. Solvency Coefficient in sub-basins of Piracicaba.
Smud: no change
Cli: climate change
ClUso: Climate + Landuse change
(Laurentis, 2012)

15. A Hydrological Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context Guzman, D.1, Mohor, G.2 & Mendiondo, E.M.3
1 Faculty of Civil Engineering, Pontificia Bolivariana University, Bucaramanga, Colombia 2 Institute of Environmental Science and Geography, University of Potsdam, Potsdam, Germany
3 São Carlos School of Engineering, University of São Paulo, Department of Hydraulic and Sanitary Engineering, São Carlos - SP, Brazil
Current and Future developments
Drought application: insurance against business interruption of a Water Utility.
Implementation of SDF curves to better describe risk.
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Manuscripts in preparation:
Water. Flood Risk Transfer Assessment under Changing Conditions in Brazilian Watersheds Context.
Ecological Economics. A Hydrological drought multi scenario approach to planning the financial resilience of the Water utility through a risk transfer strategy