Wouter Botzen, environmental economist at VU Amsterdam, has received a Consolidator Grant from the European Research Council (ERC) of two million euro. The grant allows him to investigate how public-private insurance partnerships can enable households and businesses to adapt to multi-hazard climate change risks.
In total three scientists from VU Amsterdam have been awarded a Consolidator Grant.
Natural disasters cause hundreds of billion-dollar losses annually around the world and generate extensive societal consequences. The risk of natural disasters is expected to increase further as climate change increases extreme weather conditions – for instance, sea level rise intensifies coastal floods. “We aim to design insurance arrangements in EU countries that combine financial coverage for policyholders with comprehensive strategies for stimulating risk reduction”, says Botzen, Professor of Economics of Climate Change and Natural Disasters and director of the Institute for Environmental Studies (IVM) at VU Amsterdam.
Botzen will investigate in the project called “INSUREADAPT” how various extreme weather events can cause property losses for households and businesses. “We will develop agent-based models that assesses these correlated natural disaster risks under scenarios of climate change, while accounting for risk reduction actions. Examples are decisions by households and businesses to make buildings resistant against the impacts of extreme weather and government investments in flood protection.”
The developed models will also evaluate how various existing natural disaster insurance systems can cope with future multi-hazard climate risks. The models assess the effectiveness of reforms of insurance markets to improve both financial protection for customers and incentives for risk reduction actions. For instance, insurers can give information on risk that their policyholders face and effective protection measures, and stimulate their adoption through financial incentives, such as premium discounts. The effectiveness of these strategies are empirically evaluated using behavioural economic experiments.
Consolidator Grant
The ERC uses the Consolidator Grant to support excellent Principal Investigators at the career stage at which they may still be consolidating their own independent research team or program for a duration of five years. In total 321 researchers won ERC Consolidator Grants. For more information please look at the ERC press release.