Flood risk management and adaptation under sea-level rise uncertainty

This project aims to contribute to insurance flood risk management by introducing a real options framework for pricing catastrophic risk in coastal regions. The proposed approach allows us to take into account economic growth, the uncertainty of sea-level rise, and the stochastic volatility of storm surge. We can then formulate optimal adaptation pathways when both hard protection measures and soft measures are available. Based on the optimal adaptation pathways, we will determine the expected insurance claims and the Value at Risk of insurance losses from coastal regions. The project will help to examine whether a planned adaptation strategy is sufficient for coastal regions in the coming decades.