Game theoretic approach for flood risk management considering a financial model

Abstract

In process of flood risk management, there is usually conflict between the governments, insurance companies and people as players in sharing financial responsibilities, because of how calculate insurance premium, compensation and governmental assistances. In order to this conflict resolution, in this paper a new methodology is proposed based on game theoretic approach by using Nash equilibrium method, that for the first time, the payoff functions of insurance companies and government have been associated to each other. In this method, according to maximization of player's payoffs, the best response has been found and for the first time, comprehensive financial model has been developed for sharing players' financial responsibilities in flood risk management plans. In order to increase the accuracy of flood insurance calculations, the parameters of deductible and franchise have been applied. The key findings indicate, success of flood risk management plans depend on purchasing flood insurance with full coverage and government financial assistances simultaneously. The developed flood insurance plan has most sensitivity to parameters of deductible and insurance rate. This model could be utilized as practical and academic model in flood risk management. The applicability and efficiency of the methodology are examined in Northeast of Tehran as capital of Iran.

Assessment of economic impacts in flood events in Lages/SC, Brazil

“…Moreover, among the studies identified that used HEC-FDA for flood damage analysis, it is noted that none of them developed a study based on past land use, which can be compared with the results of this study (Cunha and Taveira-Pinto, 2011;Qi and Altinacar, 2011;Mohammadi et al, 2014;Lee et al, 2015;Mas, 2015;Difrancesco et al, 2020;Moosakhaani et al, 2020;Moosakhaani, et al, 2022). However, Van Dau et al (2017)…”

“…Some studies that used HEC-FDA, for evaluating flood damage proposed plans with mitigation measures, such as dams, flood insurance, and different channel types. In these studies, benefits were found with the application of protective measures, such as a reduction in expected annual damage (Lee et al, 2015;Mas, 2015;Moosakhaani et al, 2020). In a study carried out in the Bago region of Myanmar, it was observed that there were elevated houses, with average heights between 1.4 and 1.9 m, indicating that this type of house was mostly located in highly flood-prone areas, aiming to adapt to flooding.…”

“…The HEC-FDA model has been applied in watersheds in Europe, Asia, and North America. These studies used the model to estimate flood damage considering scenarios without projecting, i.e., without application of flood control methods, and scenarios with projecting, i.e., with mitigation measures, such as dams and flood insurance programs (Cunha and Taveira-Pinto, 2011;Qi and Altinacar, 2011;Mohammadi et al, 2014;Lee et al, 2015;Mas, 2015;Van Dau et al, 2017;Difrancesco et al, 2020;Moosakhaani et al, 2020;Moosakhaani et al, 2022).…”