Limitations of current loss estimation methods and recommendations to improve the assessment of post-disaster impacts of extreme events in Poland

Extreme climate and weather-related phenomena, such as intense precipitation, droughts, and hurricanes, have occurred for millennia, but the observed increase in air temperature is causing noticeable changes. They are becoming more frequent and more intense, and they are appearing in regions where they have not been previously recorded. Knowledge of natural weather-related extreme events [floods, flooding, storms, hurricanes or droughts] includes knowledge of their characteristics, nature and the determination of their effects. In recent years, due to the increasing frequency and intensity of extreme events [IPCC 2021], the assessment of their economic, environmental and social impact become particularly important. From this point of view, data on damage and financial losses caused by the occurrence of weather-related extreme events become key information for decision makers to prevent and mitigate future losses.

Documenting information on damages and losses caused by natural extreme events is also important in the process of rectifying the disasters' effects. Data on damages and losses make it possible to develop a strategy of financial aid and assistance to the affected areas and to identify areas of particular vulnerability. Moreover, the data on losses make it possible to monitor climate impacts. In the process of adaptation to climate change, information on damages and losses is used to prepare cost-benefit analysis of adaptation measures and to evaluate the results of their implementation [Ford et al. 2013; European Commission 2018, 2021a, 2021b; Cygler, Dubel 2022].

Reliable information on damages and losses can be obtained by two-stage data compilation. The first stage, the registration stage, is related to damage and loss estimation, which can be done immediately after the disastrous event [post-disaster data collection] or based on the analysis of possible risk and expected damage before the event [pre-disaster data forecasting]. The second stage, the collection stage, concerns the systematic collection and processing of the values obtained in the first stage and the transfer of these data to the system, which collects this information [Sowiński 2008].

The following article focuses on methods for assessing losses after the occurrence of an extreme event. However, it is also important to emphasize aspects related to risk analysis in the context of, for example, flood risk management plans. When assessing the effectiveness of flood protection investments, the benefits of reducing flood risk are considered – avoided losses in private and public assets [residential buildings, industrial facilities, crops, roads, bridges, railways, etc.]. A common approach to estimating flood losses involves using unit asset indicators for individual land use classes [forms of economic land use] and loss functions that link water depth to the loss of asset value in each land use class [Godyń 2014]. Methods for assessing asset values and the risk of potential losses are continually being improved, so recently, an approach based on official statistics, extensive household wealth surveys, and land use data at the micro- and meso-scales has been proposed [Godyń 2021].

Concerning the latter, Preston et al. [2011] indicated that there is growing demand among stakeholders across public and private institutions for spatially explicit information regarding vulnerability to climate change at the local scale. However, the challenges also relate to the technical methods by which an assessment is conducted. The methods of loss estimation and loss-related data collection are subjects of interest to researchers, especially in the context of climate change [Mechler et al. 2019]. These issues are taken up by international organizations, i.e. the Global Facility for Disaster Risk Reduction and Recovery [GFDRR], the United Nations Framework Convention on Climate Change [UNFCCC] or the United Nations Office for Disaster Risk Reduction [UNDRR]. The data on losses are documented by Eurostat

Losses from climate change: €145 billion in a decade - Products Eurostat News - Eurostat [europa.eu]

In the Polish model of valuation for the consequences of natural extreme phenomena was developed by national and local government institutions using experience gained during the disaster recovery process. This method is based only on the estimation of direct damage. Losses are estimated in different ways in different sectors, so each case is governed by distinct regulations. For this reason, each sector needs to be considered individually. In the event of damage to agriculture and the infrastructure of local government units, special local government committees are appointed to assess the consequences of extreme phenomena. The estimation of losses in forestry, water management and maritime economy is the responsibility of the relevant institutions, namely the General Directorate of the State Forests, Regional Water Management Boards, and Maritime Offices. These entities conduct assessments in accordance with internal regulations. The assessment of the effects of extreme phenomena on insured property is carried out by the insurer. Conversely, entrepreneurs assess cost“ “on their own” [Siwiec 2020]. Thus, omitting indirect and hard-to-measure damage, a significant underestimation of the total damage incurred is indicated. Rigorous and normalized valuation of the consequences of extreme events is conducted in the agricultural sector, in local government infrastructure, in the forestry sector, and regarding households' assets and insured property. In other sectors, such as water management, maritime economy or cultural heritage, competent units collect information on losses using internal procedures and forms. Moreover, there is no comprehensive database that holds information on the financial consequences of extreme events in Poland.

This paper aims to highlight the limitations of the current methods of estimating losses caused by natural extreme events in Poland and to propose recommendations that would improve our ability to assess the consequences of extreme events in the country. In the next section, research methods and materials are presented. Then, the research results are summarised and discussed. Next, the relevant recommendations to improve the assessment of extreme events' consequences are proposed, followed by the conclusions.

To obtain information about problems with the methods of loss estimation adopted in Poland, a survey was conducted of experienced participants in the loss estimation process. The participants included government and local government employees, entrepreneurs, academics and others who have assessed damage done by natural extreme events.

The survey was conducted by survey method. The link to the survey was shared through social media and emails addressed to provincial offices, institutes, State Forestry Directorates and other administrative bodies and relevant stakeholders. Approximately 190 people participated in the survey, of which 97 provided complete responses to all nine questions.

A precondition for completing the survey was participation in the process of estimating losses caused by natural extreme events, and this was checked by the two first questions. The survey questionnaire is included in Appendix 1.

As only experienced experts could provide reliable answers, some of the survey questions aimed to identifying the professional competence of the respondents. The respondents were mainly people with many years of professional experience. Those with 21 years or more of work experience accounted for more than 40% of the respondents. Most of the respondents worked in water management [47%], but one in four respondents worked in forestry, and one in ten in agriculture. The largest portion of respondents, nearly 30%, work in state administration at the central level, one in five respondents work in the State Forests, and more than 12% were employed in scientific and research units [institutes, research and development centres or universities] and Provincial Offices. Almost one in four respondents were involved in natural disaster data collection, analysis or processing and visited areas affected by extreme events. More than 16% of respondents were engaged in reporting on the phenomenon and more than 14% dealt with the aftermath. A summary of responses to the metric is presented in Figure 1.

Figure 1.

Respondents were asked to assess the current methods of loss estimation by stating to what extent they agree with the provided statements [Figure 2].

Figure 2.

More than half of the respondents strongly agreed that the current Polish methods for estimating the effects of natural extreme events are time-consuming processes and cause delays in the receipt of financial assistance by the victims [1/4 strongly agreed and 2/5 rather agreed]. Nearly 20% of respondents selected the “hard to say” option. Only 16.5% of respondents disagreed with this statement.

Another statement – “the forms used to assess the consequences of natural extreme events are complex and their completion is difficult” – was agreed with by 45% of respondents [36% rather agreed and over 9% strongly agreed]. Over 25% rather disagreed with the statement and over 8% strongly disagreed. As in the previous case, 20% of respondents found it difficult to provide an answer.

More than half of respondents agreed that the nationally accepted method of assessing the impacts of natural extreme events does not reflect the true extent of damage caused [48% rather agreed and 10% strongly agreed]. One in five respondents rather disagreed with the statement, while only 7.7% strongly disagreed. In this case, 15% of respondents found it difficult to provide an answer.

Particularly noteworthy are answers given to the open question, which concerned the difficulties encountered by respondents in assessing the impacts of natural extreme events. Many respondents indicated similar problems with the method of estimating losses adopted in Poland. The respondents' answers were divided into 5 problem groups: limited information, complicated procedures and difficulty of precise valuation, natural limitations and human resources, which included others not mentioned earlier. They are presented in Table 1.

The first problem emphasized in the answers is the heterogeneity, incompleteness or lack of data on phenomena. This type of limitation is mainly pointed out by employees of institutes and research and development centres. According to the respondents, the gap in reference data increases the uncertainty of assessing the potential impacts of extreme events. The participants brought to the fore the lack of systemic solutions for collecting information on extreme events. The difficulties faced by academics focus on the use of appropriate terms. Nearly synonymous expressions for extreme phenomena are used interchangeably; however, these terms are not equivalent in meaning. This causes communication problems because “in different environments, the same terms mean something completely different”. In turn, the Post-Disaster Damage Assessment Committee Members pointed to information chaos – “a lot of contradictory information arriving at the same time” – as well as difficulty accessing phenomenon data and information flow.

Concerning procedural problems, respondents pay particular attention to the length of the loss estimation process. However, this response varies according to the respondent's role. On the one hand, committee members felt that the time for damage assessment and data analysis was too short. On the other hand, victims emphasised that the damage assessment process takes far too long and delays financial assistance. The survey participants drew attention to the problem of precise valuation by what they interpreted as “the difficulty of clearly relating losses to specific monetary values in PLN”. In addition, they emphasised the difficulty of assessing the property values – “usually the damage concerns used and non-new items, while restoring the value in use comes down to buying a new piece of equipment or a damaged item”.

Difficulties identified during the damage and loss assessment process were due to the lack of regulations to assess long-term effects. According to the respondents, “at the time of the damage assessment, it is not possible to predict what other effects there may be, after a longer period of time after the disaster”. In addition, they considered that “the assessment of the overall extent of damage in terms of material and value is often narrowed down to visible damage and usually does not cover the entire scale of damage, e.g., trees with a torn root system as a result of the instability of stands die in subsequent years”. Due to the large area affected and the short time allotted for damage assessment, committee members cannot be sufficiently thorough.

The third problem group was related to constraints due to environmental conditions. A particular nuisance turned out to be the need for field visits when access to affected areas is difficult, i.e., “high water levels do not allow assessment within the river/stream bed” or “no access to the surface due to trees fallen by the hurricane”. Respondents also highlighted that many different factors could influence the state of damage and that it is not always solely due to the impact of an extreme phenomenon, i.e., “the reason for crop failure may mainly be due to the timing of sowing rather than an extreme natural event”.

Another issue was related to human resources. This type of difficulty was most often encountered by members of committees estimating losses who complained about the lack of employees with appropriate competencies for field work. This was the reason for the increased pressure and “the labour intensity resulting from the massive influx of applications from agricultural producers in the event of damage caused in particular by drought, adverse winter effects”. The members of the commission also highlighted the difficulties contacting the affected people, who often “lie trying to extort compensation”. For the respondents, the problem was also a “discrepancy in the perception of damage between the affected people and the members of the commission”, which became the reason for dissatisfaction with the valuation of the damage. The affected people counted on obtaining significant sums of money without realizing that the financial support provided by the State is not compensation.

In a few cases, respondents, mostly employed in the forestry sector, did not identify difficulties. According to the respondents, “forestry is characterized by a well-developed strategy for dealing with the impact of natural extreme events”. Individuals identified the following problems: “lack of funds or tardiness in allocating them” and “inability to decide on immediate actions”.

In the last question, the respondents were asked to specify what improvements are needed in the adopted method of assessing the impacts of natural extreme events. Nearly one in five respondents indicated that important improvements include: improving communication between data submitters, simplifying the questionnaires used in loss assessment, and allowing electronic submission. More than 16% of respondents identified the following important improvements: the speed of data transfer between units and speeding up the loss assessment process. Nearly 4% pointed to expanding the membership of loss estimating committees and developing improved guidelines and regulations for damage assessment, and others [e.g., systemic data collection, no issues] were selected by 1% of respondents each [Figure 3].

Figure 3.

The results of the research allowed us to identify the problems of the loss estimation method adopted in Poland. They are caused by the lack of systemic solutions to loss data collection issues and by the above-mentioned limitations of the loss estimation method functioning in Poland.

Research has shown that institutions in Poland have developed different methods of damage assessment adapted to their own information needs. Damage assessment in Poland is conducted in many sectors of the economy: agriculture, infrastructure, forestry, water management, marine and insurance. Unfortunately, a standardized and regulated procedure for reporting losses is present only in agriculture, infrastructure and forestry. In other cases, estimates are collected by competent entities based on individualized questionnaires and internal guidelines.

Most problematic situations related to the loss estimation occur in the case of the agriculture, infrastructure and insurance sectors. This is because the estimation procedure in these sectors is relatively complex and involves many actors. Many institutions are involved in assessing the effects of extreme events, and each of them plays a different role in this process. For example, in the case of losses in agriculture, the task of scientific and research units is to provide reliable data about the phenomenon.

The participation of local governments is reduced to the efficient collection of victims' applications and estimation of losses by committees, while the goal of the government administration is the rapid mobilization of financial resources. The victims, on the other hand, demand to receive full financial coverage of their losses as soon as possible after the disaster. This legal situation generates many disputes, which cannot be viewed in isolation from sectoral considerations. Disputes arise over tardiness in setting up commissions, the timing of visits and the lack of staff in the office when there is a mass influx of applications. In such circumstances, regulations are misinterpreted and procedures are bent.

In Poland, there is no system to collect information about all losses caused by natural extreme events in a publicly available national database. There is also no institution to successively collect and analyse this type of material – even the Central Statistical Office collects such information selectively. More detailed analyses are prepared after major floods, but these are exceptional situations. Partial data on the financial impact of extreme events are collected by the State Fire Service [PSP]. Thus, currently, there are no reliable statistics covering the total losses caused by all natural extreme events in the country.

The conducted research made it possible to propose recommendations for assessing the post-disaster impacts of natural extreme events in particular sectors. The recommendations were divided into two groups: activities that can be implemented in the short term – up to three years and activities that require an extensive research process lasting four to seven years [Table 2].

Setting up a System to record losses takes time and a huge amount of money. For this reason, the United Nations Office for Disaster Risk Reduction [UNDRR] recommends using the DesInventar tool to collect data on the impacts of natural extreme events. DesInventar collects information by disaster type and location, which can be defined as a minimum data scope. It covers events of different scales based on summaries prepared by national institutions. Cooperation with UNDRR will make it possible to complete DesInventar relatively quickly and to support the reporting of the Sendai Targets, with which DesInventar is fully compatible [https://www.desinventar.net]. In the longer term, DesInventar may be fed with information from the Polish loss data collection system.

The proposal for action on simplifying loss estimation procedures applies in particular to the agriculture sector. Given that agriculture is the sector most dependent on prevailing weather and weather conditions, the need to estimate the impact of natural extreme events is especially frequent. However, the indicators used in agriculture allow for a precise measurement of the effects, and the difficulties are generated by the process of estimating losses itself. This problem has been addressed in the Drought Mitigation Plans. One of the recommended actions is optimising the rules for granting purpose subsidies to cover a part of the compensation for damages caused by agricultural drought and the conclusion of risk insurance contracts. The measure aims to improve the system of subsidized insurance by, inter alia, improving and unifying the methods of estimating agricultural drought by insurance companies and, in a further step, by commissions estimating losses.

One proposed solution to simplify the procedure for estimating in agriculture is the establishment of loss estimation committees in district offices of the Agency for Restructuring and Modernisation of Agriculture [ARMA]. Since many communities lack Departments of Agriculture experienced in cooperating with farmers, only ARMA has adequate competencies in this respect. The Agency deals with the annual call for applications for direct payments, their payment and the payment of subsidies to deal with the effects of disasters. It manages IT systems, the development of which would allow the submission of applications for damage assessment in an electronic form. Moreover, when applying for damage assessment, farmers are obliged to prepare detailed crop records identical to those included in the application for direct payments. Since the application for direct payments is held by the Agency, the transfer of duties would prevent such redundancies and make it easier for the victims to navigate the complicated procedure.

In this context, the solution of estimating losses using an Electronic Drought Application should gain attention. It allows for shortening the estimation procedure and facilitates the introduction of data into the electronic system. Launching the compensation-related procedure based on the value of the Climatic Water Balance is another potential solution. Since the Electronic Drought Application was introduced in June 2020, it is difficult to assess how it will work in practice. However, the introduction of the online application should not exclude the possibility of submitting a written form, since many farmers do not have access to the internet or a computer. Also, it is recommended that all proposals related to the improvement of estimation procedures of agriculture-related losses should be consulted with agricultural producers.

For the forestry, water management, marine management and cultural heritage sectors, the problem is the lack of national guidelines for estimating losses due to natural extreme events. These guidelines should include information on how to establish loss estimation commissions, deadlines, methods for valuing the damage resulting from the event, and sample damage estimation protocols. It is also recommended to develop a timetable for dealing with the effects of extreme events in these sectors, which would enable the smooth implementation of reconstruction work after a natural disaster.

The loss estimation procedure will also be improved by equipping the commissions with unmanned aerial vehicles with cameras [UAV]. UAVs will be very useful in situations when access to the area is difficult or the visit poses a risk to the health of the commission members. Currently, drones are being used to estimate hunting damage, among other things. By performing a low-altitude raid, the UAV acquires images and videos. In the next step, an orthophoto map is developed, which enables precise indication of the damage in GIS software. On this basis, the area of damage and compensation value are determined [GEOFORUM 2019].

Expanding and popularizing the use of UAVs for the assessment of losses caused by extreme events in infrastructure or water management is possible in the short term. Equipping administration units with UAVs will require appropriate training of personnel, so the outsourcing of such systems may be prudent. Employing additional staff to support the work during the loss estimation period should also be considered.

Insurance companies are an important source of information about the effects of extreme events. Unfortunately, the insurance sector is one of the most problematic, as the companies are not willing to share information about the amount of compensation paid. Detailed data are a trade secret for them. For this reason, the recommended action is to make the databases of individual insurers available to the public based on their internal regulations protecting commercial information. Such databases would allow us to obtain material for research purposes and ex-ante loss calculation.

Another recommendation relates to the State Fire Department. The State Fire Service has an extensive reporting system, but unfortunately, it does not record losses based on a standardized methodology. Therefore, expanding their reporting system to allow for standardized valuation of losses is a potential solution. For this purpose, price books can be used, e.g., Sekocenbud Price Bulletin [Sekocenbud 2020 Insurance Price Bulletin]. The idea is that the reporting system, after entering information about the damage in natural units [e.g., 100 m² of basement flooded by 30%], would automatically value it using price books. As a result, the database maintained by the State Fire Service would be more reliable for valuation of damages caused by natural extreme phenomena.

Further recommendations are made for dealing with disasters that cover a significant area of the country. In the situation of a severe disaster, a special Intergovernmental Team for Estimation of Losses is established, which develops its own method of data acquisition. Drawing up an action plan for comprehensive damage assessment, e.g., within the Annex to the National Disaster Management Plan, would accelerate the provision of financial assistance to the victims. Moreover, the assistance should be provided in a well-considered manner, so it is also necessary to prepare a Recovery Strategy that includes both recovery and resilience-building activities.

The implementation of a loss database is undoubtedly a long-term activity. The database should be based mainly on information concerning direct effects and lost profits, but it can be gradually extended to include data on social effects, e.g., information on the number of people injured as a result of events or the number of fatalities. The database should be open, allowing open provision of data by any institution willing to cooperate. Therefore, it is important to start discussions with insurance companies to supplement the system with information on the amount of compensation paid due to disasters.

In the future, the database can be supplemented by information on the long-term impacts caused by extreme events. The most severe indirect losses are usually recorded by entrepreneurs. Due to business interruption, they lose not only their profit but also, in the long run, their key customers and their image on the market.

In forestry, it is difficult to assess the lost benefits due to the many roles played by forests. Forests are essential in shaping the planet's climate, play a regulatory role in water management, provide raw materials like wood and create conditions for good recreation. Available methods do not take into account all the costs that occur at the time of a catastrophic event.

Social impacts as well as lives and health lost due to the impact of the disaster are also not valued. There are difficulties in estimating the health costs of heatwaves. Of course, there are some ways to estimate this type of damage, but the expression of human life or health in monetary terms is controversial. For this reason, it is recommended to develop methods for valuing social, health and long-term impacts.

The last recommendation concerns the development of methods for the use of remote sensing to investigate losses caused by disasters. In Poland, this issue is gaining importance because remote sensing is a faster and more effective technique than traditional methods, and it works especially well in the agricultural sector. At present, remote sensing is used by: insurance companies for agricultural damage assessment, the Institute of Geodesy and Cartography for crop condition monitoring and drought forecasting [SAPOL4Crop - RPA - Poland – a common system for crop monitoring and yield forecasting] and the National Agricultural Support Centre [KOWR] within the framework of the project “Use of remote sensing for management of the Agricultural Property Stock of the State Treasury - pilot stage” [www.kowr.gov.pl]. The project carried out by KOWR is to assess the condition of crops based on satellite imagery and to identify fields at risk of frost damage, wetting out and drought. Over 450 plots in the Agricultural Property Stock of the State Treasury have been selected for the research. The results of the research will be used to build a damage assessment system using satellite techniques. The system will allow for limiting field works and speed up the delivery of aid to affected farmers, as well as increasing the potential of administration employees to use innovative methods in agriculture. Remote sensing is also widely used in the case of damage to forest stands, e.g., after the passage of a tornado in Bory Tucholskie [Wężyk et al. 2019]. Work has also been undertaken on the use of remote sensing within the infrastructure sector [Witkowska Bielecka 2014], which may enable its future use for the disaster damage assessment. The direction of using satellite methods in the process of estimating take-offs is appropriate. However, their implementation on a Polish scale requires time, thorough research and additional financial resources.

The methods of estimating losses and collecting data on losses in Poland do not guarantee comprehensive information on the impact of natural extreme events. Lack of access to reliable data increases the uncertainty of research on the impact of extreme events on the environment, society and economy. This raises the danger of insufficient awareness of the threat posed by extreme events. At the same time, the estimation of losses caused by natural extreme events is an extremely complicated issue – extremes negatively affect various sectors, and many effects only reveal themselves after a long time. Modern technology can help to prevent losses. However, issues related to the estimation of indirect losses are difficult to measure and their rigorous and precise estimation still poses a challenge for scientists.

Collecting data on extreme events losses is becoming increasingly important in the world, as decision-makers are realizing that effective catastrophe management is possible only in the case of well-researched areas with the important risk-related parameters measured. Making the right risk management decisions becomes especially important when human life and health depend on it. Considering the above circumstances, it is worth taking action in Poland to implement the recommendations proposed in the paper.