Flooding has emerged as one of the most impactful disasters of our time, affecting millions of lives worldwide.

The gravity of the situation becomes clear when we consider that nearly two billion people live in areas prone to high flood risk. Of these, a staggering 660 million individuals live in urban regions exposed to river flooding.

The consequences of flooding primarily occur as direct economic losses, mostly in the form of infrastructure damage and inventory loss. According to a survey conducted on risk management for businesses, flooding is ranked as one of the top three concerns regarding potential risks, highlighting the urgent need to strengthen our resilience and implement effective mitigation measures.

Harnessing the power of dams for flood protection

Multi-purpose reservoirs, exemplified by large-scale dams, showcase various functions beyond the generation of hydroelectricity. They provide domestic and industrial water supply, support irrigation systems, facilitate navigation, offer recreational opportunities and promote fishing and aquaculture.

In terms of number of sites, the top three uses of federally owned hydropower reser­voirs - accounting for approximately 50% of installed capacity - are recreation, flood control and irrigation. However, power generation does not always need to be the primary purpose of dams. For instance, most of the 87,000 existing dams in the United States do not include hydropower generation facilities.

Dams play a crucial role in flood prevention, as part of their comprehensive water management function. In many cases, hydropower generation is not necessarily the primary objective of these structures but different purposes can be complementary, rather than conflicting. For instance, maximising electricity generation and strategically lowering reservoir levels before the flood season can effectively prevent water spillover and minimise the magnitude of floods.

In this context, all reservoirs contribute to flood control efforts, regardless of their single or multiple purposes. These reservoirs regulate river flows by storing varying volumes of floodwaters and meticulously controlling the timing of water discharge. Reservoir operators adopt operational rules to strike a balance between drawdown levels before the flood season and the prevention or minimisation of spillage.

Measuring the economic value of dams in flood control

The anticipated impact of climate change, such as increased precipitation and extreme weather events, requires an understanding of dam contributions to averting flood losses.

While the non-power services of dams have long been acknowledged to yield significant returns, data on the economic benefits of dams in flood management remains somewhat generalised. Multi-purpose hydropower facilities are predicted to generate economic values surpassing those derived solely from electricity generation.

Adopting an evaluation approach

Our approach aims to evaluate the impact of dams on the gross domestic product (GDP) as a substitute for overall wealth related to flood damage.

This assessment involves dividing the evaluation into three key variables: a) economic values in relation to rivers, b) economic values at risk, and c) the effectiveness of dams in mitigating flood damages.

By examining the relationship between these variables, we can gauge how dams help reduce the global impact of flood losses. The full methodology is provided in the appendix section.

Summing up the benefits: dams reduce GDP losses from flooding

In summary, we present a comprehensive scheme to evaluate how dams reduce GDP losses resulting from flooding (Table 1). Our findings indicate a potential reduction range of 12-22% in GDP at risk, amounting to an approximate annual savings of USD 53-96 billion attributed to the flood control function of dams.

These figures indicate the advantages dams offer, accounting for the likelihood of increased flood losses due to the negative impacts of climate change. Various stakeholders, including hydropower project operators, investors and insurance companies, will benefit from these findings as they assess the impact of hydropower dams on our communities, economies and ecosystems.

APPENDIX

Variable a: Economic activities in relation to rivers

In academic discussions, GDP is considered a parameter closely correlated with flood vulnerability. A higher GDP per capita enables more significant investments in flood control measures, improved building quality, and effective communication of direct and long-term risks, thereby reducing vulnerability. Data suggests that 660 million people and 145,000 square kilometres are at risk of flooding within urban areas.

Variable b: Economic values at risk

Assessing flood damage is a complex task, involving considerations of both direct and indirect impacts. Direct damage encompasses physical harm to assets, loss of life, health effects and ecological degradation caused by flooding. Tangible damages typically include agricultural losses, damage to industrial or commercial facilities and infrastructure destruction. In contrast, indirect damage often manifests as costs related to emergency services and losses in industrial production. Moreover, intangible damages must be considered, such as the inconvenience of post-flood recovery and the increased vulnerability of survivors.

This variable represents the direct economic losses resulting from floods. In our study, flood damage or loss is defined as the product of the value of exposed elements within flood-prone areas, including residential and commercial buildings.

It is important to note that flood-related GDP losses vary significantly based on the magnitude of the flood, the number of people or value exposed and contextual factors such as social, demographic, cultural and institutional elements.

Different flood events yield varying levels of damage, with some causing minimal harm while others result in severe losses. According to the World Commission on Dams’ records, GDP losses from floods in 1997 ranged from 0.4% to 2.6% of GDP. Notably, developing countries often experience losses at the higher end of this range. For instance, recent floods in Pakistan incurred over $10 billion in damages, whereas, in Thailand, GDP losses were estimated at 5.48% of GDP.

Variable c: Dams' effects on reducing flood risks

To comprehend the effectiveness of dams in mitigating flood damages, we further break down this variable into three components: c1) the percentage of dammed rivers, c2) the presence of dams with flood control functions, and c3) the success rate of dams in reducing flood damages.

The effectiveness of dam operations for flood prevention hinges on the ability of hydropower plants to regulate flooding through reservoir storage.

During the flood season, dam management must balance competing operational purposes, such as energy production, environmental flows and sediment transport management. The effectiveness of dams varies significantly depending on river and flood characteristics.

Previous studies have considered factors such as flood characteristics, flood damage curves, exposure characteristics, and property values to explore the success of dams in reducing flood risks. Dams typically lessen both the frequency of floods and the extent of flooded areas within most catchments.

Two case studies provide insights into the success rate of dams in mitigating flood losses. In Myanmar, for instance, dams were found to contribute to a 50% reduction in flood damages to buildings and assets. Another study on a large Pyrenean reservoir in Spain highlights the impact of water storage levels and the time of year on the flood control function.

Some literature employs the concept of flood reduction rate (%) to assess the success of dams in reducing flood losses. This rate is defined as the ratio of water stored or supplied by the dam relative to the inflow amount. For instance, the Soyanggang Dam on the Han River in South Korea has recorded a success rate of 68% in reducing flood losses.

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