Toward index-based insurance design and implementation to hedge hydrological risks for water utilities in a changing world

Código

I-EBHE0170

Autores

Greicelene Jesus Da Silva, PEDRO GUSTAVO CAMARA DA SILVA, Eduardo Mário Mendiondo

Tema

WG 1.03: Urban Water - Urbanization phenomenon & adequate water management

Resumo

Water supply systems are vulnerable to water related multi-hazards, often altered by climate change. Within this perspective, climatic and socioeconomic drivers of change bring an uncertain future scenario to water utility business. Adaptation approaches are essential to minimize potential impacts and secure the reliability of water supply regarding evolving threats. Risk transfer models by index insurance are recently being investigated to manage financial damages to water utilities business due to water-related disasters. However, this disaster risk reduction tool still needs to incorporate multiple hazards and uncertainties to risk management. This work brings, therefore, some scientific directions that, if effectively addressed, could pave the way for the implementation of multi-hazard index insurance schemes, considering uncertainty drivers, for the public water supply sector. Many gaps and limitations in this matter remain, including specific studies on indices, loss modeling and policies price determination to flood and water quality degradation; vulnerability behavior of the water utilities business under non-stationary scenarios; basis risk characterization and control studies in risk transfer contracts for the water supply sector, besides of willingness to pay determination for insurance, as well as the administrative, financial, operational, and climate-change risk perception factors that can influence index-insurance demand.