APPLIED METHODOLOGY FOR ECONOMIC EVALUATION OF FLOOD PROTECTION WORKS.

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COMMISSION INTERNATIONALE DES GRANDS BARRAGES -----------VINGT ET UNIÉME CONGRÈS DES GRANDS BARRAGES Montreal, 2002 ------------

APPLIED METHODOLOGY FOR ECONOMIC EVALUATION OF FLOOD PROTECTION WORKS. POYO CREEK IN VALENCIA (SPAIN) AS A CASE STUDY (*).

Enrique CIFRES Júcar River Water Authority. Member of SPANCOLD. enrique@cifres.com

Enrique ORTIZ Hydrologist. AMINSA. Consultant

Ramiro MARTÍNEZ Ph.D. Civil Eng. AMINSA. Consultant. rcosta@aminsa.com

José María BENLLIURE General Director of Urbanisme . Regional Governement of Valencia

SPAIN

INTRODUCTION The increasing pressure of urban and industrial development on metropolitan areas means, besides a growth of the value of the capital which is settled on a territory, an also increasing vulnerability before the natural risks, among which floods are those with the biggest economical incidence.

The request for investments on protection measures against floods whether with a structural character or not has to be based on a concept of sustainability, so that the creation of infrastructures do not generate an acceleration of the vulnerability of the territory.

*

Méthodologie appliquée pour l’évaluation économique des ouvrages front au risque des crues fluviales. Le cas du bassin du Poyo à Valence (Espagne).

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That balance has to be due to a global economical analyse where the generalized costs must be taken into account, including those of the investment itself as well as the environmental, indirect and opportunity costs, caused by the construction of the proposed infrastructures.

On the other hand, the also generalized benefits have to include the direct reduction of damages as well as the benefits derived from the suppression of indirect costs caused by the floods. Among the indirect effects, the following ones: 1) Production losses due to inactivity or productivity, 2) devaluation of land, 3) Dissuasion from investments and competitiveness loss. 4) Environmental damages A given scenario on a territory, can be characterized by the generalized economical cost which is derived from the floods. This cost has to internalize the real costs of the infrastructures as well as the social and environmental ones, and to compute the annual average damage, which the settled capital suffers because of the flood.

This second factor demands the establishment of a harmonic and agreed methodology for the decision taking and about structural and non-structural measures, combining theses, in an optimal way. to prevent a growth of vulnerability, which unbalances the process and invalidates the measures, which were adopted on a changing scenario it is indispensable, besides the investing policy concerning to defences, to develop a land-ordering legal frame that regulates the urbanite activity in the risk zones.

This is the labour carried out in the Valencian Community (1st in Spain), through the PATRICOVA (Territorial Action Plan against Flood Risks in the Valencian Community), and which, among other things, allows to approach the economical analyse of the defence works (dams, channelling, etc‌) in a regulated and objective way.

Alternatives must be compared by its annual generalized cost computed from: 1) Direct Costs by floods 2) Indirect and opportunity costs. 3) Amortization infrastructures & maintenance. 4) Internalisation of social & environmental costs.

Cost effective reduction will justify the adoption of a determined investment strategy. For that task two kinds of study must be carried out: 1) Hydrological risk and 2) Vulnerability.

The hydrological factor means a determined frequency of hydrological events done by: Discharge ,flooded surface, water velocity, Depth, Persistence,..

Very often, theses variables will be strongly relate to one another and even will obey the same probability function. Nevertheless, this is not always like this.

There may be events, which mean non-reciprocal relations of these variables with one another, which would cause a problem of multivariate probability. From the theoretical point of view, it is not difficult to establish this multivariate function. f(q,v.y,∆t) In most of the cases, however, a direct mutual relation of the mentioned variables, which are governed by a unique probability function, will be enough.

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f(q) v=v(q) ; y=y(q) ; ∆t=∆t(q)

DAMAGES AND VULNERABILITY OF THE TERRITORY Done a known damage function depending on the hydrological variables, we could deduce the expected average damage as:

D* = ∫

AREA

d (q, v, y, ∆t ). f (q, v, y, ∆t ).dq.dv.dy.d∆t

In the unvaried case it would be:

D* = ∫

AREA

d (q ). f (q).dq

combining the hydrological-hydraulic study of flood frequency with the evaluating studies of costs or flood impacts on the territory.

The evaluation of a cost-flow function is not trivial and it is object of a specific methodology, which is not always easily approachable. In our case, thanks to PATRICOVA, we have the suitable instrument for that.

The main parameter to determine vulnerability is the water depth, so that, for any land use, there would be a theoretical relationship damage-depth.

This vulnerability is derived from: 1) direct damages, 2) indirect damages (also monetary) 3) Intangible damages (no monetary) tied to the social and cultural aspects.

As in our case, it is usual to proceed to the calculation of the direct damages, estimating the indirect damages and the intangible ones by applying an enough contrasted coefficient on the calculated direct costs.

DIRECT DAMAGE CALCULATION. Direct damage calculation is usually been carried out with methodologies which take into account the typology and density of the land use in the area which has been affected by the flood, distinguishing according to more or less free-standing residential uses, productive uses, equipments and facilities, communication infrastructures and public services, etc.

For the productive uses, the basic damage criterion is recorded in monetary terms depending on the mathematical expectation of losses according to the concrete productive activity, whereas in the residential uses the damages caused on buildings, furniture and vehicles are the only ones, which generally admit a monetary expression.

In our case, for most of these uses (residential, industrial, tertiary and of equipment, and agricultural), we have chosen an estimation methodology of constant parameters for all the scope of work. Only for the dispersed commercial

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one, we have preferred to descend to a bigger detail level ¾municipal in this case¾, depending of its bigger difficulty to be levelled.

To this effect, we have worked with a coefficient use which seeks to collect the existing differences for the commercial activities to the flood, depending of commercial establishments, residential land surface fraction exposed to flood risk.

of dispersed commercial the sensibility degree of the quantity of existing and residential surface

By applying the exposed considerations and including in the calculation for each case- the market value applicable to the unitary cost of land assigned to each one of the uses, the result is a final relation, which exactly determines the value of the direct damage vulnerability ¾expressed in monetary unities¾ associated to each use. In order to make its comparison easier in more homogeneous terms, we have preferred to make that value dimensionless within a variation range from 0 to 100 (with the maximum value of 100 for 82.2€/m2 calculated for5 the case of a extremely dense residential use).

The indirect damage coefficient tries to represent the whole of indirect damages and intangible ones, which have been calculated without employing a specific methodology.

In our case, it has been estimated from the data about the total population of the municipality, percentage of affected surface, population density, quantity of populated areas, building park, located productive sector (through the total employment) and percentage of active population tied to farming. This relation could be more extensive, appealing to analyse factors related with the population percentage, composition by ages, social-economical characteristics, etc. However, the described one has been considered as the identified one with the most relevant factors.

Most of the experiences of damage analysis, which have been consulted, yield values of this kind of affection with maximum figures around 55% additional to the direct damage estimation. So, the numerical municipal coefficient of direct damages and intangible ones has been obtained, for each case, as the geometrical mean of the considered typified variables, with the limitation of final range (1-1.55).

In this way, the impact for each surface unity in each elemental polygon (constancy of municipality, land use and flood risk) will be evaluated with the expression:;

I

= F × (V1 + C × V2 ) × K 2

Where: I = Impact for each surface unity F = frequency factor in the risk area V1 = vulnerability (except for the dispersed commercial use) V2 = vulnerability for the dispersed commercial use C = dispersed commercial use coefficient (null for different uses from the dispersed commercial one K1 = Indirect damage coefficient

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The whole impact for an area, in damage term , is calculated from here adding all the elemental polygons in which it disintegrates.

For the estimation of the diminishing of this impact by effect of the modification of the frequencies associated to each polygon, as in this case, the previous expression would calculate the mentioned ∆I, entering with ∆F instead of F in the expression.

POYO CREEK CASE STUDY Poyo Creek (462 km2) is situated near Valencia city (fig 2), whose demographically and industrially very dynamic metropolitan area is affected by its torrential regime. The upper basin, at least at 50 km from the coast, is situated above 1000 m. Before reaching the coast plain, it goes across a semiendorreic area with a very mild slope, reaching the zone called Pla de Quart (Quart Plain) where the geomorphic and anthropical action makes the stream disappear, which cannot be recognised as such until it gets near Torrente city.

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3

1

4 Fig 2: Poyo Creek and Pozalet Creek basins / Bassins du Poyo et du Pozalet 1 Poyo creek basin / Bassin du Poyo. 2 Pozalet creek basin / Bassin du Pozalet 3 Valencia / Valence 4 Albufera lake / Lac de la Albufera From this point the stream runs towards it outlet into Albufera Lake crossing several urban areas. In parallel and in the same direction, the flow of the Pozalet Creek appears, disappearing in a semiendorreic area in the Quart de Poblet industrial pole. Downstream the flow reappears having a flow geomorphology up to Alaquàs and Aldaia urban areas, where it virtually totally disappears.

The land uses in the upper and middle basins are middle and thick

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woodland masses with row crop areas. In the lower basin the land use is mainly industrial and residential, the latter being the area the affected one by floods.

There are 4 areas, which can be flooded in the PATRICOVA. The first one is due to Pozalet Creek, affecting to Quart de Poblet industrial pole, which is situated in a semiendorreic area. The second one, also due to the same creek, affects to the urban areas of Aldaia and Alaquàs due to its disappearing. The third one is caused by the by the Poyo Creek runoffs in the semiendorreic area of Pla de Quart, affecting to the above mentioned industrial pole. Lastly, the fourth area, which collects the contributions of the whole Poyo Creek basin and floods the Massanassa and Catarroja urban areas.

PROPOSAL OF INFRASTRUCTURES FOR FLOOD CONTROL The Integral Project against Floods (fig 3) in this basin involves:

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a

3 1

4

5

7 9 6

8 10 10

b

Fig 3: Current scheme and proposal of Flood protection works. Present (a) and future (b) / Schéma actuel et avec des ouvrages proposés. Situation actuelle (a) et situation au futur (b).

1 Poyo Creek. / Ravin du Poyo. 2 Pozalet creek / Ravin du Pozalet 3 Industrial and urban floodable areas / Aires inondables industrielles et urbaines 4 Industrial and agricultural floodable areas / Aires inondables industrielles et agricoles. 5 Urban floodable area / Aires urbaines inondables. 6 Cheste dam for flood control / Barrage du Cheste pour contrôle des crues. 7 Routing pool (artificial lake) / Lagune de laminage. 8 Diversion channel / Canal de déviation.

9 Protected areas / Aires protégées. 10 Flooding reduced area / Réduction d’aire d’inondation

− Infrastructures for flood controlling: Cheste Dam, routing pool, channelling of Pozalet Creek and its diversion. − Non-structural actgions for use limitation, collected in the mentioned 6

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PATRICOVA. − Reforesting in the upper basin.

The flood control reservoirs proposed along with the complementary channelling works allow to modify the basin response by varying the frequency factor. This modification has been evaluated through the corresponding hydrologic studies The whole cost of the first establishment of the proposed works for flood controlling has been evaluated in 27.7 million €, from which a 63% fits the cost of the flood control dam (fig. 4) Fig.4 Cost of Flood Protection Works (millions of euros)./ Coûts des 6 ouvrages de défense (10 euros).

1 2 3

6.5 17.4

3.8

1 Dam / Barrage 2 Channelling / Canal 3 Routing pool / Lagune de laminage

HYDROLOGIC STUDY An efficient flood routing (fig 5.) with the consequent reduction of peak flows y therefore of the frequency of the events associated al different points of the basin is deduced from the hydrologic simulation of the basins with and without the mentioned infrastructures.

600

1 2

Q (m3/s)

400

200

0:00

18:00

12:00

6:00

0:00

18:00

12:00

6:00

0:00

0

Time (hr)

Fig.5: 500 year flood routing in the proposed reservoir / Crue 500 ans au barrage proposé This modification of the basin response results in the following chart of revaluated return periods

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Peak Flow (m3/s)

Return Period Natural regime (years)

New Return Period after works (years)

152

25

41

255

50

74

387

100

157

810

500

1770

1,00

1,00

0,99

0,99

0,98

F(Q )

F (Q )

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1 2

0,98 1 2

0,97

0,97

Q( m3/s)

Q (m3/sec)

0,96 0

200

400

600

800

0,96

1000

0

50

100

150

200

250

300

a b Fig.6 Modification of PDF due to the flood protection plan. / Modification du PDF à cause du plan de défense front aux inondations..

1. Natural regime./ Régime naturel. 2. Future regime / Régime futur 3. Poyo Creek / Ravin du Poyo. 4. Pozalet creek / Ravin du Pozalet The routing effect of the causes a modification of the non-exceedence frequencies associated to the streams and therefore to the floodable areas, so diminishing the frequency (fig 6) with which those areas are flooded. That implies an increase of the return period in the floodable areas, because the natural streams are modified bay a new frequency law, as it is observed in the graphics above (8a and 8b).

ECONOMIC EVALUATION In order to carry out the economic study we have used a GIS wherever it has been possible to relate the division into zones with a hydrologic risk (frequency factor) with the vulnerability depending of the land use. The application of this tool has allowed to identify 197 different polygons for the impact evaluation, exclusively considering the industrial and urban uses (fig.7) Fig. 7: Damage distribution / Distribution 1 des dommages 13% 2 3

1. Urban and residential / Urban et résidentiel 2. Industrial / Industriel 3. Farming / Agricole

56%

31%

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The economic analyse has been based on the determination of the income and the costs that can be quantified and that suppose monetary flows directly related to the project, quantifying, firstly the net flows and its later updating with regard to our times. To this purpose, the following standard indicator have been taken into account: Net Present Value (N.P.V.), Internal Rate of Return (I.R.R.), Cost-Benefit Ratio (C.B.R.).

As investment costs we have computed the estimated ones for the proposed actions, evaluated at 27.7 million euros. The exploitation and maintenance costs of the project at 1% of the whole investment.

The amortization costs have been considered linear, carrying out their calculation according to the difference between the initial value of the investment and the residual estimated value (15%), distributed as a constant instalment along the life span of the project (50 years).

For each year of the economic life of the project we have carried out a balance between the obtained income (only the residual value (RV) at the end of the life span) and generated costs (investment costs (IC)), exploitation costs (EC) and amortization costs (AC). This balance (cash flow) is updated to the reference year (year 2002) with a discounting rate of 5%.

With these premises, the following results have been achieved: Annual mean benefit of 5.6 million euros for avoided damages, Net Present Value (NPV) of 52.2 million euros, Iinternal Rate of Return (IRR) of 15.20% and Cost-Benefit (C-B) Ratio of 2.66.

CONCLUSION The result of the present study brings two interesting conclusions 1. A tool for country planning like the PATRICOVA developed in Valencia not only allows investments concerning the defence against floods, tan easy evaluation of the economic profitability of the investments concerning the defence against floods, but is an indispensable non-structural actuation in order to avoid the uncontrolled increasing of vulnerability.

2. Even without taking into account a lot of the implied indirect benefits, especially in the general economic activity, the very advantageous economic effect of the proposed defence works justifies these public inversions.

SUMMARY The paper deals with the application in Valencia (Spain) of a general methodology of economic analyse of cost-benefit of an integral project of defence works against the floods in a metropolitan area.

The existence of a Territorial Plan of Action of the Valencian Government, conceived as an instrument for the country planning supplies in addition an objective analyse tool of the economical impact of the planned defence infrastructures.

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Besides the mentioned non-structural measures, we propose the construction of a dam, a routing pool and channelling works and stream diversion in the basin, analysed as a whole. This analyse, considering the modification of the hydrologic response of the basin and the vulnerability of the territory defined in the mentioned Plan, casts very positive results in the cost-benefit analyse with a IRR above 15%.

RESUME

Cette communication présente l’application en Valence (Espagne) d’une méthodologie générale d’analyse économique pour le coût-bénéfice d’un project intégral d’ouvrages contre les crues sur une aire métropolitaine.

On montre, aussi, un très bon outil opérationnel d’arrangement du territoire comme le Plan d’Action front au risque des inondations mis au point pour le Gouvernement Autonome du Valence, qui fait possible l’analyse de la répercussion économique des infrastructures prévues.

Au cours de cette communication, on propose un ensemble de mesures pour la réduction du risque d’inondation au bassin du Poyo, une aire avec une très grande densité de population très prochaine à la cité du Valence. On propose, fait partie ces de tipe non-structurale, la construction d’une barrage, lagune de laminage, et des ouvrages de canalisation et déviation des débits, qui sont étudiées toutes ensemble. Cette analyse inclue la modification de la réponse hydrologique du bassin et de la vulnérabilité du territoire établie au sein du plan nommé en avant, et donne des résultats très positifs en termes du coût-bénéfie, avec une T.I.R. (Taxe interne du retour) supérieur au 15 %.

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