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This study finds that flood insurance policy design affects economic development in floodplains and, consequently, flood risk in Europe. Therefore, the authors advocate for flood insurance design to be integrated in climate change adaptation policy.

Urban areas amplify global climate costs: The urban heat island effect increases the social cost of carbon to $490/tCO₂, with cities contributing up to 93% of damages, emphasizing their central role in climate action.

Natural disaster losses are increasing both in their frequency of occurrence and severity of impacts worldwide due to climate change and socio-economic development in disaster-prone regions. In addition to public sector investments in disaster protection infrastructure, individuals can manage these losses by implementing disaster risk reduction measures at the household level. However, a host of systematic cognitive biases may prevent the taking of cost-effective forms of risk reduction by individuals. Behavioural public policies have been proposed as a way to address these biases in order to stimulate societal natural disaster preparedness. This article highlights the role of economic experiments for developing behavioural public policies that promote disaster risk reduction actions. Based on a review of the state-of-the-art of the experimental literature, several promising directions for further research in the field are outlined. That is, avenues for further experimental research in behavioural public policy are identified. We find that more experimental research is needed to examine whether: (1) behavioural public policies can complement conventional forms of economic policy that alter financial incentives; (2) methodological advancements in the field of experimental economics can be used to further develop behavioural policies aimed at triggering natural disaster preparedness; and (3) behavioural policies are useful for addressing various under-researched field observations and realities faced by individuals at risk of natural disasters.

The observed increases in hurricane losses are often thought to result solely from societal change. A regression-based analysis of US economic losses reveals an upward trend between 1900 and 2005 that is not explained by increasing vulnerability.

Coastal migration under sea level rise is more likely in higher- than in lower-income contexts. Key determinants of migration include flood risk, response efficacy, self-efficacy, place attachment, and age. Important trade-offs exist between migration and in-situ flood adaptation.

Different estimates of the social cost of carbon make its translation to policy difficult. This Perspective evaluates past estimates of this cost and calculates a lower bound. Results show that dominant values for the social cost of carbon are gross underestimates and suggest that climate policy should be more stringent than previously proposed.

The National Flood Insurance Program is a key tool for managing growing flood risk in the USA. This research shows that premiums based on local risk, rather than national averages, will generate large societal benefits, and investments in large-scale adaptation infrastructure will enhance these impacts.

This study addresses the limitations and constraints of flood adaptation. These limits could result in a growing ‘adaptation gap’ (the difference between actual and desirable flood risk), leading to unbearable risks and pushing communities in flood zones into retreat.

An assessment of economic flood risk trends across Europe reveals high current and future stress on risk financing schemes. The magnitude and distribution of losses can be contained by investing in flood protection, increasing insurance coverage or by expanding public compensation funds. However, these climate change adaptation instruments have vastly different efficiency, equity and acceptability implications. Moreover, the spatial variation in disaster risk can necessitate cross-subsidies between individual countries in the European Union.

Climate change is expected to exacerbate absenteeism as a result of heat stress, with ramifications for labour productivity. Reduced work performance in 2013–2014 in Australia was found to represent an economic burden of around US$6.2 billion.

Reforms are required to maintain a healthy and robust flood insurance market under future climate conditions for the United States. Therefore, policymakers should implement premiums that reflect flood risk and incentivize household-level risk reduction, complemented with regional flood adaptation investments.

Managing future flood risk is necessary to minimize costs and achieve maximum benefit from investment. This study presents a framework to assess urban structural protection under climate change and socio-economic development.

Homeowners are more likely to take flood adaptation measures after experiencing damage, mainly when supported by insurance, and this effect weakens with extreme damage, according to an analysis that uses survey data from 719 flooded homeowners in the Netherlands, Belgium, and Germany.

Quantification of the economic costs of the urban heat island effect for the main cities around the world. The cost–benefit analyses for some mitigation options are presented and their contribution to the global mitigation efforts is discussed.

Flood impact and recovery is influenced by behavioural responses. This Perspective describes how integrating human behaviour and risk perception into flood-risk assessment models may improve identification of effective risk-management strategies.