3.5 Mitigation Incentives
Botzen & Van Den Bergh, (2008) reference the UK’s historic lack of collaboration between the state
and the insurance industry leading to insufficient public investment in flood protection. However, the UK
flood insurance market is said to be mature. It is the UK government that has the primary responsibility
to invest in adequate flood protection, not the insurance industry. With public spending on flood
protection being relatively low, this - not a lack or market based incentives and mechanism for flood
mitigation - is the ongoing weakness in the UK system (Botzen & Van Den Bergh, 2008). There is a
disconnect between required investment and actual investment, due in part to low incentives for the
state to spend on flood protection; it is the private insurance industry, not government, that is
responsible for paying flood compensation in the UK. Crichton (2003) interprets this as a clear example
of moral hazard on the part of the government.
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