ASCII, WIFO and CSH publish first damage assessment
According to a recent research brief by the Supply Chain Intelligence Institute Austria (ASCII), the Austrian Institute of Economic Research (WIFO) and the Complexity Science Hub (CSH), the damage caused by the flood events between September 14 and 21, 2024 in Austria amounts to 1.3 billion euros. This estimate includes production losses and damaged inventory at companies directly affected by the flood disaster, as well as losses at companies indirectly affected by supply chain effects. Damage to the agricultural sector was also taken into account at a high resolution. For private households, the estimates of the Austrian Insurance Association (VVÖ) were used. Infrastructure damage was not taken into account due to a lack of available data.
Almost 700 companies severely affected by the floods
On the one hand, direct losses were used to calculate losses in the industrial sector. This includes, for example, the destruction of stocks or interruptions to business activities (e.g. as a result of clean-up work or destroyed machinery). In order to calculate the indirect impact of the floods on the regional economy, an input-output model adapted to natural disasters was selected.
According to official reports, around 900 companies were affected. According to the ASCII model, 841 companies were affected by the floods, 676 of them severely. While some of them certainly suffered devastating losses, the damage in relation to the total annual value added of the federal state of Lower Austria is limited at 0.03 to 0.09 percent. In figures, that is around 300 to 900 million euros. The reference year is 2020.
Natural disasters always hit the agricultural sector particularly hard
Estimates by Österreichische Hagelversicherung, the specialist insurance company for farmers, put the loss at 10 million euros. However, this is not an exact representation of the losses, as a deductible is payable for crop losses and not all farmers are insured. In order to determine the total extent of the loss, geodata was used to identify the crops that were located in the affected fields. This mainly concerns cereals, maize and sugar beet. As a result, a maximum loss amount of 14.7 million euros was calculated.
Record loss for private households
Data from the Austrian Insurance Association (VVÖ) was used for private households. This showed a record loss of 700 million euros on the part of households.
Current compensation model in need of reform
“With this modelling, we can quickly localize economic damage more precisely and show where measures can be sensibly implemented,” says ASCII Director and CSH scientist Peter Klimek, summarizing his institute’s contribution to coping with natural disasters.
“Heavy rainfall and subsequent flooding, as occurred in Central Europe in September 2024, are extreme weather events. They will occur more frequently and, above all, more intensively due to climate change. It is therefore important to develop methods to quickly assess the economic impact. Also in order to be able to introduce coordinated measures and cushion any losses,” says ASCII Deputy Director and WIFO economist Klaus Friesenbichler.
Finally, a comparison with previous flood disasters shows that Austria was generally well prepared for possible flooding, which is why significant economic damage could be prevented. This is also due to the fact that around 60 million euros are invested in flood protection in Austria every year. However, revisions could be made to the compensation model, which makes households and companies affected by damage dependent on the disaster fund and provides little incentive not to build in high-risk zones.
