To stop risky developments in the floodplains, we must tackle the profit motive

In the aftermath of destructive floods, we often look for someone to blame. Common targets are the ‘negligent local council’, the ‘greedy developer’, the ‘shortcut builder’ and the ‘foolish landlord’. Unfortunately, it’s not that simple, as the huge floods in Sydney clearly show.

In flood risk management, there is a well-known idea called the “levee effect”. Floodplain expert Gilbert White popularized it in 1945 by demonstrating how the construction of flood control measures in the Mississippi watershed contributed to increased flood damage. People felt safer knowing there was a levee nearby and developers were building deeper into the floodplains. When levees broke or were overrun, much more development was exposed and the damage was magnified. “Managing floods in all their capricious and violent aspects is a problem in part to adjust human occupation,” White wrote.

The levee effect shows why it is so difficult to reduce flood risk, even in areas hardest hit by this year’s record floods. The town of Lismore in New South Wales had a 10m dike, experience in dealing with numerous floods and a flood risk management plan. He was devastated anyway.

To address flood risk, we must respond to the social, political, economic and environmental factors that drive the development and occupation of floodplains.

Lismore properties underwater in February 2022.
Bradley Richardson/AAP

Social factors: we like to live near water

All over the world, people like to live near water, even though it can be flooded. Waterfront properties and those with a view of the river have significantly higher prices. Additionally, Australians view home ownership as a rite of passage, a key marker of adulthood as well as an economic investment. People will prioritize home ownership over concerns about living in a floodplain – especially when the home is part of a government-approved development.

Political Economy Factors: Money Can Drive Decision Making

The development of floodplains generates profits, not only in monetary terms, but also through social and political capital. When developments are proposed, flood risk is assessed using the 1% annual exceedance probability line. This line, colloquially known as the 100-year flood event, defines land with a 1% chance of flooding each year.

Drawing this line creates more valuable and less valuable lands. Landowners on the border are incentivized to advocate for change, sometimes depending on how the 1% line is modeled. Developers can – and have – argued that certain blocks should be acceptable for development. This can be attractive to local councils wishing to encourage economic development and broaden their tax base. When boundaries change and less valuable land is converted to residential land, developers are rewarded with higher profits as communities and future homeowners get closer to the next flood.

Figure 1: Lismore, New South Wales with areas inside the 100 year high water line shown in light blue. The dark blue lines show where the levee wall structures were built. Source: Lismore Town Council.

In some cases, such as Lismore, developers building within the 1% line are permitted to install mitigation measures, such as land filling, raising grades, constructing backfilling and the installation of large pumps. They are usually required to also construct an additional 500mm freeboard above the 1% flood level.

Work done? Not enough. When a developer successfully advocates for the redefinition of “flood-prone” to “developable,” it sets a precedent that strengthens future development proposals. More development creates more risk, causing new flood control measures to be proposed, which are justified on the basis of encouraging more investment and development. The cycle continues.

Landsat satellite time-lapse of developments in the floodplains of Lismore, NSW (1984-2022). False color images highlight developments in yellow. Dr. Tim Werner.

When a developer converts flood-prone land into houses, he assumes the consequences that a flood could bring him. But when that building is sold, liability for flood damages shifts to the new owner. It’s common to portray these owners as naïve or irresponsible, but they buy a council-approved home based on expert modeling.

The home owner pays their rates, like everyone else, and has every right to assume that professionals have determined the safety of the development. When large-scale floods strike, these homeowners are as entitled as anyone else to government aid and relief.

This latest act of goodwill – extremely difficult for any government to refuse – effectively shifts the costs of disaster mitigation, relief and recovery to the Australian taxpayer. As John Handmer has argued, “flood risk is characterized by private sector profit, while the costs are borne by the public sector, individuals and small businesses”.

Environmental factors: distorting nature means relying more on engineering

Floods are valuable natural processes. In many agricultural regions, a bumper crop follows flooding due to the extra moisture and deposited nutrients.

But when parts of the environment are turned into concrete, the ability of the land to absorb drops of flood water and technical protections become even more necessary.

Dams, embankments, storm drains and pumps that protect developments are only effective up to a point. Such structures effectively eliminate small-scale flooding, which would otherwise have helped recharge aquifers, increase the level of “green water” stored in soils, deposit sediments, promote soil fertility and prevent compaction and subsidence.

As a result, engineered solutions stop small-scale flooding and the benefits that flow from it, while failing to prevent large-scale flooding – and giving floodplain dwellers a false sense of security.

What can be done?

To some degree, we are all involved in a system that encourages some people to profit from the construction of flood-prone housing. When homes are flooded, it is the public who subsidizes these developments with disaster relief and structural flood mitigation.

As climate change alters the traditional boundaries of floodplains, we face the urgent need to address the forces that drive us to develop floodplains.

A key first step is to harden the boundaries and limit the opportunities to “nibble” in the floodplains. Holding developers and builders accountable to owners even after the sale would be beneficial, although such arrangements are virtually unprecedented.

Evacuation or abandonment of floodplains is inevitable. The Lismore Voluntary Home Purchase Program aims to remove flood-prone structures within the 1-in-20-year flood-prone area. Despite efforts like this, floodplain removal has only been successful a handful of times – and those gains are often quickly erased.

For now, Australians living in flood-prone areas should consider making their homes more flood resistant to limit the impacts of small and medium floods, as these are likely to spread geographically due to of climate change.

Domestically, Australia must address the hidden incentives driving encroachment if we are to avoid settling in areas where we cannot safely live.

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