1. ^aHydraulic Engineering, Delft University of Technology, Stevinweg 1, 2628CN Delft, P.O.Box 5048, 2600GA The Netherlands. E-mail: R.B.Jongejan@tudelft.nl
2. ^bDepartment of Statistics, London School of Economics, Houghton Street, London, WC2A 2AE United Kingdom. E-mail: p.m.barrieu@lse.ac.uk

Abstract

Without its primary flood defenses, a large part of the Netherlands would be swallowed by rivers and the sea. Floods caused by the failure of primary flood defenses are high-impact, low-probability events that are notoriously difficult to insure. Private insurance was long considered unfeasible but the Dutch government is currently studying ways to introduce a public–private insurance program. This paper offers a discussion of variables that should be taken into account in the choice for an arrangement for the financing of large-scale floods in the Netherlands. Because flood risk is highly concentrated and potential losses could be severe, a strong government role seems inevitable. But this would not necessarily be inappropriate as this could reduce the risk of underinvestment in flood protection.