1. Flood Risk Management in Hungary's Upper Tisza Basin A model-based, stakeholder approach IIASA with Hungarian Academy of Science Stockholm University Funded by Swedish FORMAS

2. Background Escalating flood losses in Hungary Tisza region is especially at risk and vulnerable Government has invested huge sums on levees throughout Hungary Government rebuilds homes and compensates victims Status quo unacceptable to some stakeholders

3. Hungary and the Tisza River

4. Government assistance Government financed housing reconstruction after the 2001 floods in Hungary after the 2001 floods in Hungary Source: IIASA, Linnerooth-Bayer and Vari, 2003

5. The Public Policy Context The Hungarian government says it can no longer afford its escalating expenses for: - Reducing flood risks (Loss reduction) - Compensating victims (Loss sharing)

6. But Insurers appear unwilling to increase their exposure in high-risk areas Many appear concerned about the environmental effects of flood-loss measures Many in the public may feel it is unfair to impose more responsibility on poor areas

7. Upper Tisza Study Objective Can we identify a flood risk management strategy that is acceptable to the stakeholders? PILOT study with emphasis on developing a flood insurance system for Hungary.

8. The Upper Tisza Study ___________________________________________________________________________________________________________________ Hydro-Model One-dimension Unsteady Flow Flood Model GIS-Based Flood Depth Loss Model Agriculture Infrastructure Public Survey Policy Model Cost-Benefit Stochastic Opt. Stakeholder Interviews informed by the model Stakeholder Workshop

9. Interviews with 24 active stakeholders National government – Finance ministry – Ministries of water management, agriculture, environment Local governments Water authorities Public – Upper Tisza – Downstream – Non-risk areas Insurance Companies NGOs Experts

10. Stakeholder Views Egalitarian/Holistic Naturalization Sustainable development Mutual insurance Individualistic Self responsibility Relocation w. compensation Private insurance Incentives Hierarchical Structual mitigation to protect lives Government compensation to victims

11. Survey of the Public Upper Tisza region Downstream city Non-risk urban area Non-risk city

12. What are the main causes of increasing flood losses?

13. What are the most important mitigation measures? Heightening and strengthening levees Little support for –Individual measures, e.g., changing agriculture –Relocation –Renaturalization

16. Flood-Loss-Policy Model Hydrological Model  One -dimensional  Unsteady Flow Inundation Model  GIS-Based  Flood Depth  Flood Duration Consequence Model  Agricultural  Urban  Infrastructural  Historical Buildings Policy Model  Test policy options

17. Monte Carlo simulated losses

18. Three Policy Paths for Round 3: Three Policy Paths for National Flood Insurance Program ________________________________________________________________ ___________________________________________________ Option 1Option 2Option 3 Voluntary private insurance ( cross subsidies) Voluntary private insurance (risk based) Voluntary private insurance (cross subsidies, government pays premiums for poor) Government reinsurance (with tax payer support) Government compensates victims (percentage of losses) Government compensates victims (fixed amount) Voluntary private insurance ( cross subsidies)

20. Private Insurance Voluntary Flat rate Subsidies for poor households Government Compensation Only for households with insurance Round 4 Stakeholder workshop on a national insurance scheme Private reinsurance

21. Summary Context: Strong stakeholder differences and conflicts on flood risk management, especially for vulnerable regions Process: Iterative process that respected views of stakeholders. Interviews, questionnaire, stakeholder workshop Outcome: Consensus on mitigation strategy and a national insurance program that is influencing parliamentary process