Award-winning math may save us billions

 

A team from Deltares, Netherlands Bureau for Economic Policy Analysis (CPB), Tilburg University and TU Delft was awarded the Franz Edelman Award for best achievement in operations research for their rational approach to flood protection in the Netherlands.

According to their analysis, three areas in the Netherlands deserve special flood protection: Rotterdam, Almere and the Betuwe.

Professor Kees Roos, expert in mathematics of optimization, was approached in 2006 for the mathematical support of the ideas of the economist Carel Eijgenraam from the CPB. Eijgenraam proposed to adopt national flood protection standards based on cost-benefit analysis.

“Clearly higher dikes mean higher construction and maintenance costs”, Eijgenraam explains. “Our approach is to minimise the long-run sum of the investment costs and the expected flood damage costs. Thus formulated, we have an economic question with a rational solution.” In short, valuable regions deserve better protection.

This was a different approach from the second Delta Commission that advised to reduce the overall risk for flooding by a factor of ten. So, instead of a flooding probability of once in a thousand years, dikes should be reinforced to reduce the change to once in ten thousand years. The cost of the overall overhaul was estimated at 11.5 billion euros over forty years.

“We had to combine probabilities of flooding, which may as well come from the rivers as from the sea, with the economic consequences”, says Roos. “So you have the expected damage plus the investment costs for dike upgrading that you have to minimise. This makes it an optimization problem, which happens to be my expertise.”

Nonetheless, it ended up in a two year long and complicated exercise during which a cost function for dike upgrades was made, as well as a formula for flooding probabilities and one for damage costs.

“If our advice was followed”, said Jaap Kwadijk (Deltares) at the Award Ceremony, “the investment costs are 3.7 billion euro, which is 7.8 billion euro less than the advice of the second Delta Commission.”

The Franz Edelman competition, organized by INFORMS (Institute for Operations Research and Management Sciences) aims to present outstanding examples of operations research, management science and advanced analytics in practice in the world. It is named after the German scientist who dedicated his career to facilitating better decisions through operations research. The jury decided that the project ‘Economically Efficient Flood Standards to Protect the Netherlands against Flooding’ best suited the criteria.

Check also the INFORMS website