Modelling hydrological, ecological and economic interactions in river floodplains : a case study of the Ouse catchment (North Yorkshire, England)

This thesis answers the following questions. (i) What are the relationships between the values and functions of natural river floodplains? (ii) Under the complicated trade-offs among direct-use and indirect-use values, how should we use river floodplains? (iii) What are the institutions and incentives that are necessary for the optimal management? In this thesis, we (1) define the appropriate social optimisation problem for floodplain management, (2) provide theoretical models for the static and dynamic problems, (3) develop an applied model and calibrate parameter values from data on the Ouse catchment, and (4) carry out simulations in the context of the Ouse catchment in order to evaluate several policy scenarios. The thesis attempts to make three main contributions. First, it has tried to improve understanding the essential problems of floodplain management (two types of environmental externalities). Second, it has tried to clarify the policy options for the optimal floodplain management. Third, it has explored methods for integrating the hydrology, ecology and economics of floodplains. The crucial point is that we must take account of environmental externalities. There are two types of externalities. First, the development of floodplains has opportunity costs in terms of lost ecosystem services. Second, the development of floodplains increases flood risks to people downstream (imposes a unidirectional spatial externality). In policy simulations, we obtain the three main results. First, the impact of floodplain development on the expected cost of flood risk is substantial as compared with prices of developed lands, which implies the importance of relevant floodplain management. Second, based on an empirical analysis, floodplains in upstream zones currently tend to be overdeveloped because of unidirectional spatial externalities. Third, price policies relatively function well to internalise external costs and achieve the optimal path, and are robust to irreversibility and uncertainty.