Flooding leads to millions of pounds worth of economic damage

In Calderdale, West Yorkshire, the winter floods of 2019/2020 led to £43.3min in direct losses and £25.1m in indirect losses, according to researchers at the University of Leeds. 

As part of the study, researchers worked with local and regional authorities to develop a tool to examine the direct financial costs and wider indirect economic costs of flooding on small and medium-sized enterprises (SMEs).

According to the findings, medium-sized companies reported direct economic losses of 24% of their monthly turnover on average, while for smaller firms losses were 113%.

Areas hit hardest were equipment, business interruption and exterior repairs. It took an average of four months for businesses to return to the pre-flood level of sales.

The 2019/2020 winter floods caused premises to close for an average of 13 days, with the loss of 57 jobs and a 31% drop in sales for the first month after flooding.

As a result, for each £1 of direct losses such as loss in trade due to business interruption, there are £0.63 additional losses across the local and regional economy.

The lead author is Dr Paola Sakai, a climate change economist at Leeds’ School of Earth and Environment said: ‘SMEs are the lifeblood of local economies. At present, SMEs that have previously been flooded or are based in a floodplain find it very difficult to secure flood insurance.

‘With temperatures rising globally, we are expected to experience an increase in extreme weather events – with flooding the UK’s main climate-related threat.

‘As a result, both SMEs and the insurance industry will suffer, as more businesses become ineligible for flood insurance.’

Professor Colin Mellors, chair of the Yorkshire Regional Flood and Coastal Committee added: ‘Flooding impacts on communities in many ways – businesses and infrastructure, as well people’s homes.

‘The YRFCC has been very pleased to encourage and support this important research from the outset. SMEs are a crucial part of our economy and have often been severely affected by flooding, some repeatedly.  A unified methodology for understanding that impact more fully and helping show how SMEs can be better supported will greatly assist our broader resilience agenda.

‘We very much welcome the findings of the research and hope that they will inform future approaches in respect of those SMEs vulnerable to flooding and coastal risks.’

Photo by Don Lodge