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J. Grames, A. Fürnkranz-Prskawetz, D. Grass, A. Viglione, G. Blöschl:
"Modelling the interaction between flooding events and economic growth";
Keynote Lecture: EGU 2016, Vienna (invited); 2016-04-18 - 2016-04-22.

Recently socio-hydrology models have been proposed to analyze the interplay of community risk-coping culture,
flooding damage and economic growth.
These models descriptively explain the feedbacks between socio-economic development and natural disasters
such as floods. Complementary to these descriptive models, we develop a dynamic optimization model, where the
inter-temporal decision of an economic agent interacts with the hydrological system.
This interdisciplinary approach matches with the goals of Panta Rhei i.e. to understand feedbacks between
hydrology and society. It enables new perspectives but also shows limitations of each discipline. Young scientists
need mentors from various scientific backgrounds to learn their different research approaches and how to best
combine them such that interdisciplinary scientific work is also accepted by different science communities.
In our socio-hydrology model we apply a macro-economic decision framework to a long-term flood-scenario.
We assume a standard macro-economic growth model where agents derive utility from consumption and output
depends on physical capital that can be accumulated through investment. To this framework we add the occurrence
of flooding events which will destroy part of the capital.
We identify two specific periodic long term solutions and denote them rich and poor economies. Whereas rich
economies can afford to invest in flood defense and therefore avoid flood damage and develop high living
standards, poor economies prefer consumption instead of investing in flood defense capital and end up facing
flood damages every time the water level rises. Nevertheless, they manage to sustain at least a low level of physical
capital. We identify optimal investment strategies and compare simulations with more frequent and more intense
high water level events.