Are You Flooded By Eight-Fold Returns

Extreme weather events place climate change foremost in minds all around the world.

I see this week that (at least) one region of England has witnessed once-in-a-century floods three times this century already. Storms named Ciara and Dennis dumped record levels of rain only a week apart during Feb 2020 wreaking severe flood havoc.

Calls for more funds for more barrier defences and more landscape preventative measures deafen across airwaves.

Yet I learn of a key stipulation.

The Treasury has long used a calculation to decide where to allocate money for defences:

For every £1 spent, there must be an economic benefit of at least £8.

An eight-fold return. That’s a tough justification in any setting.

Yet an 8x bar apparently leads to drawbacks;

“It’s a system that favours areas that are densely populated. The big cities generally do well, villages and suburbs tend to lose out. And small communities often see themselves as victims, on the receiving end of flood water channeled from somewhere better defended upstream. There’s also an uncomfortable reality that’s usually dodged; that there can be no total guarantee of safety from flooding. And the possible solutions may themselves be unappealing. As one flood defence official once [remarked], ‘who wants to live beside a river only to lose the view behind a ten foot wall?’ So the country faces some awkward choices. And all against a backdrop of a changing climate in which storms are likely to become even more intense.”

That brings us plenty of artillery in our RoI discussions.

Firstly, the topline point is that a huge return requirement can clearly be restrictive. Why should those at the ‘periphery’ be left out? Even worse, be put in direct jeopardy by the actions for those at the ‘centre’? And the added injurious insult, be expected to make do with a solution that ruins their lot?

There’s many a solution sell analogy in here.

What is the typical return projects of your nature are required to ensure?

What flexibility exists depending upon for whom such returns manifest?

What sections of the business have been scraping by without any such help?

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