Economic Implications for Accommodate, Retreat, Protect and More in Case of Sea Level Rise for the Dutch Delta

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

1. In the "Abstract", the text finished abruptly without determining any broader application for the potential readers.
2. The main limitation of the manuscript in its present form is that no discussion has been provided comparing the results of present study with the existing literature. It is recommended to add a section and the results of present study should be compared with the existing studies.
3. Start from Formula 1 to Formula 5, with no equation numbers provided. For Formula 6, an equation number is given. The formatting should be consistent throughout.
4. If possible, use a higher-resolution image for all figures. The details and the legend for Figure 1 are not readable.
5. Below Figure 3, there are some reference errors in the paragraphs. Please make sure to carefully review the manuscript before submitting it again.
6. The "Conclusions" section of the manuscript must provide the scientific contribution of the paper, and/or the applicability of the obtained findings/results. Please revise the "Conclusion" section by providing more details, particularly that of scientific contributions, limitations, and the practical applications of your findings/results and the possible future research directions.

Author Response

Dear reviewer

Thanks for your comments and feedback. Below we described point by point how the paper is improved. All changes are also highlighted with track changes in the document.

1. In the "Abstract", the text finished abruptly without determining any broader application for the potential readers.
   
   We extended the abstract with the added value of the developed method (this is also added to the conclusions)
   
   
2. The main limitation of the manuscript in its present form is that no discussion has been provided comparing the results of present study with the existing literature. It is recommended to add a section and the results of present study should be compared with the existing studies.
   
   We added a short description of literature in the discussion section as an introduction. In this section we describe the current discussion.
   
   
3. Start from Formula 1 to Formula 5, with no equation numbers provided. For Formula 6, an equation number is given. The formatting should be consistent throughout.
   
   Numbers are added
   
   
4. If possible, use a higher-resolution image for all figures. The details and the legend for Figure 1 are not readable.
   
   We tried, figure 1 is earlier published in water so a high resolution picture.
   
   
5. Below Figure 3, there are some reference errors in the paragraphs. Please make sure to carefully review the manuscript before submitting it again.
   
   We could have checked that before, the references are updated
   
   
6. The "Conclusions" section of the manuscript must provide the scientific contribution of the paper, and/or the applicability of the obtained findings/results. Please revise the "Conclusion" section by providing more details, particularly that of scientific contributions, limitations, and the practical applications of your findings/results and the possible future research directions.
   
   We improved the conclusion part by adding the contributon and guidance for next steps

Reviewer 2 Report

Comments and Suggestions for Authors

(1) It would be better to provide the impact and significance of the proposed plan on the other relevant regions of the world.

(2) The significance of this study should be addressed.

Author Response

Thank for the review. We improved the manuscripts based on the review. The same comments were also made by reviewer 1. All changes are highlighted with track changes in a separate version of the document. 

(1) It would be better to provide the impact and significance of the proposed plan on the other relevant regions of the world.

We added a paragraph in the discussion part which relates to the current scientific debate, we also described the added value fo the research in terms of a method for a first assessment of different strategies. 

(2) The significance of this study should be addressed.

See the answer before, we improved the discussion section as well as the conclusion. 

Reviewer 3 Report

Comments and Suggestions for Authors

Dear author thank you for submitting your paper, which is of potential interest to the audience of the Journal. It is nicely written and well-structured.

I do have some pressing issues to be considered.

• The author state that " In case of a retreat strategy the housing market in the project area may collapse in the area, as demand plummets and residents are no longer free to choose where they live. Government intervention may be needed either by guaranteeing compensation for home-owners (as the state will eventually purchase these homes), or by purchasing and renting out all properties immediately. Whether this can be financed is a major question". This is indeed the question. So one could argue whether this strategy is realistic. I can imagine that it requires government regain control in spatial planning and housing. 
• It is stated that "managed retreat is hardly possible because the costs cannot be spread over many years". So what are possible financial arrangements for the Dutch Government to fix? What is needed to prepare ourselves and what can be done now to save reduce the riks/costs in the long run?
• It is stated that "Managed Retreat is applicable only when prevention becomes technically or financially infeasible or unwanted. The results also indicate that preventive measures must be maintained throughout the retreat transition period. Failing to do so would initiate a high-risk transition phase". Technical or financial infeasibility can be quantified relatively easy compared to social feasibility e.g., social acceptance of managed retreat.
• Overall, the limitation of the analysis is that it ignores the aspect of social feasibility or acceptance, which is of course uncertain. However, this will influence the technical or financial (in)feasibility. Please elaborate how to account for this issue?
• Overall, the author presents a cost/benefit analysis of long-term strategies. Each strategy is presented as a single option, but I would be interested to see how the overall costs would change if you combine different strategies at the same time or when strategies are subsequently applied depending on their tipping points (expire date). I think the overall analysis can be improved when considering the tipping points of each strategy from an economic and social perspective. In my opinion, this marks a limitation of your study.
• The author state that "If protective infrastructure is not properly maintained, the consequences for the financial sector could be severe, due to increased capital requirements and elevated exposure to risk. This could lead to a withdrawal of financial actors as banks and insurance 
  companies and render insurance coverage for investments virtually unattainable".  Withdrawal of the private sector would be catastrophic indeed. This means that the Dutch government has to step in, but costs are extremely high. So in this regard, comparable to the US, should a government-based national flood insurance also be considered as a strategy?
• As stated by the author, "greater insight is needed into how financial arrangements can support current risk management efforts, through improved coordination between government, the financial sector, citizens, and businesses". Please elaborate on this, e.g. I could think of local flood communities in which local government,  financial sector, citizens, and businesses govern the flood risks.

Other issues are related to future research:

• In case of all scenarios, it would be interesting to address the impact of nature-based measures on the discount rate.
• Related to my previous point, social desirability needs to be taken into account to adopt an integrated view.
• The author state that "it is recommended to conduct further research into the interaction between realistic long-term climate adaptation strategies based on prevention in combination with local accommodation, insurability, and investment conditions". It would be interesting to propose policy recommendations.

 

 

Author Response

Dear reviewer, tanks for your review on our manuscripts. We improved the manuscripts and describe below how we did point by point. All changes are also added to a version of the manuscripts with track changes. Also all the questions are answered below. A choice is made to keep the manuscript focussed on the economic costs, addressing the need for more research after the social impact. 

• The author state that " In case of a retreat strategy the housing market in the project area may collapse in the area, as demand plummets and residents are no longer free to choose where they live. Government intervention may be needed either by guaranteeing compensation for home-owners (as the state will eventually purchase these homes), or by purchasing and renting out all properties immediately. Whether this can be financed is a major question". This is indeed the question. So one could argue whether this strategy is realistic. I can imagine that it requires government regain control in spatial planning and housing. 
  
  Dear reviewer. I fully agree with the doubts that such a strategy is realistic, especially when so many homes are involved as in the Netherlands. The costs are extreme, and all kind of other problems will arise. Other strategies, like land use planning for new developments can be more effective (or less destructive). Nevertheless there is a debate about these strategies, with also people who strongly advocate retreat. The added value of this research is to show the consequences in a quantitative assessment.
  
  
• It is stated that "managed retreat is hardly possible because the costs cannot be spread over many years". So what are possible financial arrangements for the Dutch Government to fix? What is needed to prepare ourselves and what can be done now to save reduce the riks/costs in the long run?
  
  In the paper it is assumed that the measures and costs are spread over time in a period of 100 year. So in 100 year all houses are bought, 1% of all houses per year. In the statement you refer to the period is not 100 year but 1 year, so the costs cannot be spread. The Dutch government will have to go to the financial market to get loans. because of budget rules in the EU all kind of restrictions apply (if these are followed). I added some clarifications in the paper. 
  
  
• It is stated that "Managed Retreat is applicable only when prevention becomes technically or financially infeasible or unwanted. The results also indicate that preventive measures must be maintained throughout the retreat transition period. Failing to do so would initiate a high-risk transition phase". Technical or financial infeasibility can be quantified relatively easy compared to social feasibility e.g., social acceptance of managed retreat.
  
  Yes this is correct. Note that the Dutch Delta already has very extreme protection levels, high levees and many people are protected. Strategies which build forward on prevention do not influence social feasability (only when the society decided they do not trust the approach any more). We rephrased the conclusion by adding that also the society can loose trust in prevention 
  
  
• Overall, the limitation of the analysis is that it ignores the aspect of social feasibility or acceptance, which is of course uncertain. However, this will influence the technical or financial (in)feasibility. Please elaborate how to account for this issue?
  
  We choose to describe the societal impact in a qualitative way, and to exclude feedback loops. We fully agree that the response of the society to a retreat strategy influences the mostly financial (in)feasability. In the paper we describe in the discussion paper the potential impact inside the transition zone as well as between 'haves and haves not'. The mitigate these impacts additional costs have to be made, so the total costs will increase. Given the already high costs of retreat these additional costs will not give extra insights.  
  
  Future analyse on the societal impact of beyond our expertise and for societal researchers. 
  
  
• Overall, the author presents a cost/benefit analysis of long-term strategies. Each strategy is presented as a single option, but I would be interested to see how the overall costs would change if you combine different strategies at the same time or when strategies are subsequently applied depending on their tipping points (expire date). I think the overall analysis can be improved when considering the tipping points of each strategy from an economic and social perspective. In my opinion, this marks a limitation of your study.
  
  None of the measures in this research have a tipping point from technical or financial perspective given the used sea level rise scenarios (see also the basic of the plans we refer to). Costs of some measures however will go up, which is reflected in het cost assessment. 
  In prevention is not possible any more that would have been a tipping point, but this is not the case. 
  
  
• The author state that "If protective infrastructure is not properly maintained, the consequences for the financial sector could be severe, due to increased capital requirements and elevated exposure to risk. This could lead to a withdrawal of financial actors as banks and insurance 
  companies and render insurance coverage for investments virtually unattainable".  Withdrawal of the private sector would be catastrophic indeed. This means that the Dutch government has to step in, but costs are extremely high. So in this regard, comparable to the US, should a government-based national flood insurance also be considered as a strategy?
  
  Good question. Flood Insurance in the Netherlands is not available for the public, only for private businesses. Flood insurance is very costly because of the capital costs required following Solvency requirements of the government. For the Netherlands a pubic disaster fund is available. 
  To avoid retreat of international companies most important measure is to maintain the current risk level, in the current strategy by mainly prevention. Alle prevention strategies in the paper will maintain the risk level is as. So the retreat of international companies could be a consequence of less investment in levees (which requires a change in law so is not very likely). 
  
  
• As stated by the author, "greater insight is needed into how financial arrangements can support current risk management efforts, through improved coordination between government, the financial sector, citizens, and businesses". Please elaborate on this, e.g. I could think of local flood communities in which local government,  financial sector, citizens, and businesses govern the flood risks.
  
  This is a topic which definitely requires more research, I added some suggestions for additional research. 

Other issues are related to future research:

• In case of all scenarios, it would be interesting to address the impact of nature-based measures on the discount rate.
  A new research in NL has adressed this, the results can be compared with a prevention strategy. The added value is also benefits for nature, levees are still needed.  
• Related to my previous point, social desirability needs to be taken into account to adopt an integrated view.
  Agree, this is a next step. We added a few lined in the conclusion section for potential next steps. 
• The author state that "it is recommended to conduct further research into the interaction between realistic long-term climate adaptation strategies based on prevention in combination with local accommodation, insurability, and investment conditions". It would be interesting to propose policy recommendations.
  Agree, in the paper we already analysed different strategies and the impact. But first more knowledge is needed to make these recommendations. Also the politicians are needed, because these can make the trade offs. It is always a debate about the level of details and uncertainty which is needed for decision makers. 

Reviewer 4 Report

Comments and Suggestions for Authors

Hello

The paper focuses more on the economic comparison of the well-known "Protect" and "Managed Retreat" scenarios, without providing any significant innovation in modeling, analysis methodology, or new economic indicators. However, it could be re-evaluated after a major revision.

 

- The formulas presented (1-6) are very simplified and no details of the numerical model or computational tools (software, simulations, or precise spatial data) are provided. This makes it difficult or impossible for other researchers to replicate the results.

- Despite the emphasis on climate uncertainty, the papr does not provide any sensitivity analysis of the parameters (such as discount rate, economic growth rate, or damage function).

- I conclude that the paper's approach is biased in favor of Protect policies and that environmental, social, or ecological perspectives are neglected in defending the Accommodate/Retreat strategy.

- The presented case study is very general and relies on hypothetical data and estimated parameters. No real data from the North of the Netherlands (e.g. water level, population, infrastructure or land prices) are provided.

- The policy recommendations section is general and descriptive and in my opinion operational suggestions, e.g. on reforming insurance policy, taxation or the use of nture-based solutions, are not specifically stated.

- The economic analysis is based only on simple cost-benefit (cost vs. total risk) and macro-financial aspects (e.g. inflation, capital gains, private investment or dynamic insurance models) are not taken into account. These need to be discussed in detail in the limitations section.

- The assumption of “linearity of the area’s evacuation in 100 years” is not realistic. Population dynamics, social resilience and economic chnges are ignored.

- Social costs (e.g., community collapse, redction of public services, economic discrimination) are raised qualitatively but not included in quantitative calculations.

- The “retreat management” strategy is analyzed only from an economic perspective, while social acceptance, legal requirements, and government enforcement capacity play a key role in its success or failure.

Author Response

Thanks for the review. We improved the manuscripts on the comments, and describe below point by point how we did. 

The reviewer state that no innovation is presented in modelling and the strategies are well known. We do not agree on this. Discussion was only based on qualitative opinions, and not on quantitative data. So the costs were simply not known. This research gives a simple method to asses these costs. To illustrate the current state of the debate we added literature and addressed the literature in the start of the discussion.

We are aware of the limitations of our research, and we think these are mentioned in the manuscripts as well (as the need to explore other benefits as well). We used a very simplified description of a part of the Netherlands to make a first assessment of the impact. Given the results we believe that is with hindsight also a good choice. 

• The formulas presented (1-6) are very simplified and no details of the numerical model or computational tools (software, simulations, or precise spatial data) are provided. This makes it difficult or impossible for other researchers to replicate the results.

Table 4 presents all the data which has been used in the formulas. This data is public available in the Netherlands and based on all kind of (flood risk) studies and data to which is referred. So now numerical models have been used. All choices are made explicit. The formulas are indeed very simplified, which we believe is sufficient for the purpose of the study. In de conclusion we added some information about future directions for more detailed analyses. 

- Despite the emphasis on climate uncertainty, the paper does not provide any sensitivity analysis of the parameters (such as discount rate, economic growth rate, or damage function).

Sea level rise and the discount rate are used an uncertain parameter in this study (see section 4.1). The impact of these two factors is far beyond the economic growth or damage function (the impact of uncertainty in the flood probability is far higher than the impact of uncertainty in economic growth or damage function). The feedback loop of the uncertainty in the economic development with regard different strategies is mentioned as a parameter for future research because the economic growth will be less in case of retreat. This will result in even higher costs. 

- I conclude that the paper's approach is biased in favor of Protect policies and that environmental, social, or ecological perspectives are neglected in defending the Accommodate/Retreat strategy.

We are very clear that we only analysed the costs of the investments and the costs of flood risk. We also discuss the social impact and advocate that additional costs will rise to reduce unwanted consequences. The ecological benefits are not in scope of this research, but certainly worth to analyse.
We are not in favor of one solution, but describe the quantitative impact of the solutions. Of course decision makers have a wider view and can take other objectives into account. In the conclusion we already mentioned 'Additionally, it is recommended to explore, from a risk-based perspective, where spatial measures can effectively contribute to risk reduction, and how the associated land use can be aligned with other societal objectives and for example nature development. ' We added the bold text to advocate to analyse NBS solutions as well.

- The presented case study is very general and relies on hypothetical data and estimated parameters. No real data from the North of the Netherlands (e.g. water level, population, infrastructure or land prices) are provided.

All data is a proxy of actual data. 

- The policy recommendations section is general and descriptive and in my opinion operational suggestions, e.g. on reforming insurance policy, taxation or the use of nture-based solutions, are not specifically stated.

We added some directions in this section, also based on reviewer 3. However also these optyions have to be analysed further.

• The economic analysis is based only on simple cost-benefit (cost vs. total risk) and macro-financial aspects (e.g. inflation, capital gains, private investment or dynamic insurance models) are not taken into account. These need to be discussed in detail in the limitations section.

In the Netherlands flood insurance is not available for households because of the high costs. We used a discount rate to cover all price effects. The impact of the private investment is important, but we advocate compared to the reference strategy there is no reason why it will change in a 'prevention strategy', In the retreat strategy however the investments will be impact negatively resulting in higher costs (see the discussion).

- The assumption of “linearity of the area’s evacuation in 100 years” is not realistic. Population dynamics, social resilience and economic chnges are ignored.

This choice is made to simplify the analyses. Every year the same number of people retreat. The limitations that maybe some (rich) people move earlier are mentioned also with regard the social impact in the discussion part. 

- Social costs (e.g., community collapse, redction of public services, economic discrimination) are raised qualitatively but not included in quantitative calculations.

Correct, these are not quantified. These costs will increase the total costs of retreat.

- The “retreat management” strategy is analyzed only from an economic perspective, while social acceptance, legal requirements, and government enforcement capacity play a key role in its success or failure.

Correct, therefore we also recommend to do additional explorations. 

Round 2

Reviewer 2 Report

Comments and Suggestions for Authors

The modifications meet the requirements

Reviewer 4 Report

Comments and Suggestions for Authors

Hello 

Concerns addressed.

Accepted