In this report, CICERO and IVL assess the sustainability of measures for protecting homes in Nordic urban areas from extreme precipitation. Extreme rain and flooding drive a growing share of insurance payouts, making these measures increasingly relevant. Sustainable measures are defined here as those that, over their lifetime, do not increase greenhouse gas emissions relative to unmitigated damage and are proven economically beneficial based on cost-benefit analysis (CBA).
Sustainability assessments of four preventive measures against backflow and water intrusion
Four preventive measures were selected through expert workshops and interviews: (1) installing a backflow valve to prevent sewage backflow, (2) early replacement of the drainage system, (3) redirecting downspouts to a rain garden via a swale, and (4) redirecting downspouts to underground stormwater cassettes via underground pipes. To assess environmental and economic sustainability, we conducted life cycle assessments (LCA) and CBAs for each measure, comparing their emissions and costs with those avoided by preventing extreme precipitation damage. We evaluated each measure’s sustainability using a break-even analysis to determine the frequency of damage prevention needed for each measure to remain sustainable. Scenarios for avoided emissions and costs are based on claims data from the insurance company If, reflecting extreme precipitation events in Norway. We identified four cases of high- and low-cost backflow and water intrusion damage to calculate restoration emissions and costs.
Results from life-cycle assessments and cost-benefit analyses sensitive to damage frequency
Table S1 of the report summarizes the results. The top panel summarizes the results from the LCA analyses of each preventive measure under different assumptions about damage frequency. Dark green cells indicate that the measure achieves at least 30 percent lower emissions compared to a scenario with unmitigated damage. Orange cells indicate that impact on emissions is uncertain, with emissions close to those of prevented damage (+/- 30 percent). Gray cells show that the preventive measure results in emissions that are more than 30 percent higher than the avoided damage emissions. The lower panel of the table summarizes the results from the CBA. The dark green cells indicate a net present value (NPV) of investing in the preventive measure that exceeds 10 000 2023-NOK , the orange cells indicate uncertain profitability (a NPV of +/- 10 000 NOK), and the gray cells indicate that the measure is unlikely to be profitable, with a NPV lower than -10 000 NOK. The LCA-results (upper panel) show that the backflow valve does not lead to increased emissions under any assumed damage frequency shown. For instance, even with only one low-cost backflow damage occurring after 40 years, installing a backflow valve results in less emissions than the emissions from repairing the damage. The CBA results (lower panel) show that the backflow valve must prevent at least one high-cost backflow damage every 30 years, or at least one low-cost backflow damage every 20 years to be profitable. A nature-based solution using a swale and rain garden to manage stormwater on-site is also sustainable under moderate assumptions about damage frequency for high-cost water intrusion. Emissions from this investment are lower than those from unmitigated damage, provided it prevents at least one high-cost water intrusion every 30 years. With conservative estimates on carbon sequestration, the necessary damage prevention frequency drops to less than one event over the 60-year analysis period. For low-cost water intrusion, however, emissions from damage are minimal, and constructing the rain garden would likely produce higher emissions than the avoided emissions from low-cost damage. Economically, the swale and rain garden measure is profitable if it prevents a high-cost intrusion damage at least once every 20 years and marginally profitable if it prevents low-cost damage every 10 years.Due to the significant material investments required for a new drainage system, early re-investment is likely to result in higher emissions than those avoided, and investment costs are high compared to avoided damage costs. Replacing the drainage system of the house to prevent water intrusion damage is thus only likely to be sustainable if it prevents very frequent and/or severe water intrusion damage. The same holds for investing in stormwater cassettes, which is a more expensive and emission-intensive solution for handling stormwater than the nature-based solution. The stormwater cassette solution is sustainable if it prevents at least one high-cost damage every 10 years.
Backflow valve and swale & rain garden are most likely to be sustainable measures
Based on the assumptions underlying the analyses, we find that the backflow valve is the measure that is most likely to both reduce emissions and be cost-effective – though only at certain damage frequencies. The swale and rain garden emerges as the most relevant solution for avoiding high-cost damage from water intrusion through the ground. It reduces emissions and is profitable if such events occur at least once every 20 years.
What an avoided low-cost and high-cost damage event might mean
Due to the limited scope of this project, we have taken a simplified approach to accounting for the probability of a measure preventing or reducing damage from a given extreme precipitation event, and rather attempted to show under what assumptions each measure can be considered sustainable (a break-even approach). The variation in costs and emissions for our damage cases may also be interpreted as examples of damages that are only partially prevented (low-cost cases) and damage that is fully prevented (high-cost cases), or as higher (lower) frequency, lower (higher) severity events. The low-cost case of water intrusion damage can also be interpreted as a case where measures to reduce the impact of water intrusion have already been undertaken (steel legs for furniture, tile floors), and shows that this is likely to significantly reduce emissions from repairs. There is little existing empirical evidence on the effectiveness of these measures in preventing damage, and this is an important topic for further research. The sensitivity of our results to emissions and costs from damage emphasize that the choice of making preventing measures or not should be carefully based on the risks each property or homeowner faces.
Differences between households and society’s perspective on costs and benefits
Most of the measures we consider can potentially impact neighboring properties, or the wider neighborhood in some way. These impacts are not included in our analyses, since our focus is on the household level. Both local stormwater management measures may potentially reduce problems from surface water runoff to neighboring properties and reduce pressure on combined stormwater and sewage systems. In addition, the swale and rain garden may contribute to environmental benefits such as reduced water pollution and improved biodiversity, in addition to esthetic values. We therefore consider the assessed benefits of the swale and rain garden in particular, to be a conservative estimate. In contrast, the analyses of the backflow valve do not take into account that this measure could inadvertently increase backflow risks for neighboring properties unless other measures are in place to reduce the pressure on combined stormwater and sewage systems during extreme precipitation.This illustrates that the efforts to prevent damage from extreme precipitation and managing stormwater must consider impacts beyond the individual property. The misalignments between individual benefits and societal benefits from for instance nature-based stormwater management means that there will be too little investment in these measures without additional incentives. None of the measures are profitable for the household when we take into account that households normally only cover a share of the damage cost, that may be independent of the size of the damage, or unrelated to risk of damage. However, our results hopefully provide useful information to both households and to insurance companies that are considering how to incentivize investment in preventive measures for households. Our study highlights the critical role of frequency and severity of damages needed for each measure to be sustainable. This provides new knowledge in sustainable property management, guiding homeowners and insurance companies in assessing whether preventive investments are justified for their particular circumstances. To our knowledge, there are no existing studies that combine cost-benefit analysis (CBA) and LCA analysis of building-level adaptation measures. Further research is though warranted to explore effective ways to encourage investments in sustainable preventive measures, and to ensure that municipal and household measures to handle backflow and stormwater are effective and compatible.