The high cost of the flood — The flood wave is moving north, towards the Baltic Sea ⋆ The Baltic Review

For almost two weeks, southwestern Poland has been struggling with massive flooding. Currently, the flood wave is moving north, towards the Baltic Sea.

A natural disaster such as the current flooding is not only a tragedy for residents and their personal losses but also a severe disruption of the economic situation in all of southwestern and western Poland.

Even though the fight against the natural disaster is ongoing, counting losses and the flood’s impact on the economy has already begun. Despite the flood’s large scope, however, its impact appears to be smaller than the previous major floods of 1997 and 2010. This time it was possible to prevent flooding of major urban centers, like Wroclaw in 1997.

According to official estimates, losses from the 1997 flood amounted to PLN 12 billion, representing 2.3 percent of GDP at the time, and losses in 2010 amounted to PLN 12.5 billion (0.9 percent of GDP at the time).

Currently, the Polish Ministry of Finance has announced itself ready to provide 2 billion zlotys to help individual flood victims. The cost of the destroyed infrastructure will be considerably higher. However, it should be remembered that the basic costs of this disaster should be borne by insurance companies. PZU, Poland’s largest insurer, has announced that it has already received more than 3,000 reports of damage.

European Commission head Ursula von der Leyen, who visited the disaster site, declared to donate €10 billion to all countries in the region affected by the flood. The funds will come from two sources: The Solidarity Fund, which will be used to rebuild road and rail infrastructure, and the Cohesion Fund.

In the case of the Cohesion Fund, however, it should be pointed out that it will not be any additional funds but only an opportunity to use funds already earmarked for individual countries to develop infrastructure and cohesion within the Union.

In the long term, however, flooding can positively impact the economy. Rebuilding the damaged infrastructure will result in increased employment and the possibility of implementing new technologies or upgrading the infrastructure.