---
title: "the same flood, two instruments"
canonical_url: https://ensurance.app/guide/the-same-flood-two-instruments
markdown_url: https://ensurance.app/guide/the-same-flood-two-instruments.md
subtitle: "a river town, the wetland upstream, a policy and a certificate — the decade before, the night of, and the morning after"
category: ensurance
---

# the same flood, two instruments

*a river town, the wetland upstream, a policy and a certificate — the decade before, the night of, and the morning after*

Prevention and insurance are not rivals. They act at different moments on the same water. Prevention lowers how much of the river reaches the town at once. Insurance pays for the water that arrives anyway. A town that funds only the second pays more over the years. A town that funds only the first has no check the morning after.

One river town, one flood, both instruments. The town is unnamed because it is most towns: a main street two blocks from the bank, a school on the low side. Upstream, a wetland and a strip of floodplain forest were slowing the river before anyone in town bought a policy. Nobody paid them. They did the work anyway.

Hold two pieces of paper side by side. The first is a **flood policy** on a house on the low side: a contract in which an insurer promises to pay for covered damage, up to a limit, after a deductible, for a premium. The second is a **certificate** on the wetland upstream, a recorded share in the funded condition of that one place, held through **[ensurance](/manual/ensurance?from=guide)**. The policy pays after, to the family. The certificate pays now, into the wetland, so a lower peak reaches the family.

:::johnson
**the policy is written on the house. the certificate is written on the water's way down.** Insurance makes the flood survivable. The wetland makes it smaller. Both have to be paid for, and only one of them can be paid for after.

[see the wetland's account →](/inland-wetlands.ensurance?from=guide)
:::

![photo by Cuvii (@cuvii) on unsplash](https://images.unsplash.com/photo-1769251298735-2a1dcb1e755a?w=1200&fit=crop)

## the decade before

Start ten years back. The wetland above town was drained in stages: a ditch one year, a tile line the next, a field too wet to plant in April now planted in April. The floodplain forest came down to a fence line. The county straightened the river to move water off farmland faster, and water that used to take two days to pass the town arrived in hours.

In town, the policy did exactly what it said. The family on the low side renewed every year. Two small floods, and the claims were paid after the deductible. The premium rose with the loss history. The underwriter was not being unkind; she was pricing the condition she could see, and it was getting worse. The policy never noticed the ditch. It was not designed to.

Nobody in this town held a certificate on the wetland. It did its work unpaid, and then, ditch by ditch, it stopped. The field is private, the wetland sits in the next county, and the benefit lands on houses, a school, and a water intake, none of which has a budget line called "storage upstream." That is what a certificate would have funded: plugging the ditches, reconnecting the channel to its floodplain, letting the forest strip grow back, paying the landowner to let the field flood in April instead of planting it. The wet field is the town's storage, and someone has to pay for storage.

Picture the county hydrologist at the upstream gauge the spring before the flood, finding the peaks arriving sooner each year. She has the Environment Agency's Working with Natural Processes evidence directory (2017) open on the truck seat. Floodplain and wetland restoration can "reduce or delay flood peaks, but these benefits are site-specific and hard to predict." It "may attenuate high frequency, low return period floods." For larger events across a whole catchment, the evidence is limited. One line is flagged "Important!": reconnection can "increase flooding downstream (for example, peak synchronisation)." Wrong place, and the flood lands on the next town. So she would model it before anyone dug.

## the night of

A stalled front sits on the headwaters for two days. By the second evening the upstream gauge is past anything the county emergency manager has a plan for, and she is at the school on the high side opening a shelter.

With the floodplain, the river leaves its banks upstream where it is allowed to, spreads across the wet field and into the forest strip, and slows. The peak that reaches the town arrives later and lower. Not gone. The emergency manager gets a few more hours to clear the low streets. Without the floodplain, the same water arrives in the straightened channel all at once. For the largest flood, the one that fills the valley wall to wall, the wetland is full by midnight and the water comes anyway. Lowers and delays. Never stops.

Tonight the policy is doing nothing; its work starts tomorrow. Nobody here holds a certificate yet, and had anyone held one, it would be doing nothing tonight either; its work would have been done in the decade before. Tonight there is only the wetland, in whatever condition it was left.

Something close has been modelled at scale. After Hurricane Sandy, Narayan and colleagues (*Scientific Reports*, 2017) modelled storm surge across twelve states and estimated that coastal wetlands avoided about USD 625 million in direct property damage, roughly 1% of the total, with damage about 11% lower on average where wetlands remained. That is coastal surge, not river storage, and it was not uniform: wetlands lowered flood heights and damage across 80% of the region and raised them across 20%. On average, they made Sandy smaller.

## the morning after

The adjuster arrives. She photographs the water line, walks the inventory, and applies the deductible and the limit. Some weeks later a check arrives, and it is the difference between this family rebuilding on this street and this family leaving. The lender required the policy for exactly this morning. That is insurance working, and it is one of the better things people have built.

The check cannot buy back the three weeks in a relative's spare room, and it cannot be sent upstream to make the next crest lower.

A certificate on the wetland would have done nothing this morning either. It pays nobody after a loss. No adjuster, no trigger, no limit, no claim form. The only place it would show up this morning is in a number: a crest lower and later than it would have been. In this town nobody had written one, so the number is whatever the drained wetland left.

The underwriter files the loss. The model updates. Somewhere, the next renewal letter is being drafted.

## the decade after, two towns

Now split the town in two. Both keep their insurance. This is where the certificate finally gets written, in one of them.

The first town only insured. Premiums rose. A few carriers stopped writing on the low side. One homeowner, two years into non-renewal, has called every carrier in the state and has a letter from the lender on the counter. Nothing upstream changed. Each check is a little bigger while the pool paying it is a little smaller. That is not villainy; it is the rational response to a condition nobody funded, and [the flood post on insurability](/guide/flood-insurance-disappearing-how-to-become-insurable?from=guide) describes where it ends.

The second town also ensured. The town, the county, and the utility with the intake bought certificates on the wetland, and the money funded the work. The ditches were plugged. The field floods in April and the landowner is paid for it. Ten years on, the gauge records show the frequent floods cresting lower and later than they used to, because the reconnection was modelled before it was dug. The largest flood still arrives, and at its peak the wetland changes little. That is the morning the check does the work.

The underwriter opens a different file in the second town: lower observed crests on the frequent floods, and a wetland someone is paid to keep in condition. Premiums are priced on expected loss; whether her model sees the wetland is her call, and nobody here promises a discount. The wetland is also habitat and the town's clean water, which no policy was ever going to buy.

## both towns still have insurance

The check stays necessary. Insurance pays for the water that arrives; nothing else does, and a lender will require it. [The risk never moves](/guide/there-is-no-risk-transfer?from=guide); the rain still falls on the same headwaters. What can move is [when the money moves](/guide/finance-has-a-timing-problem?from=guide).

A national government has paid for this at scale. After the high waters of 1993 and 1995 the Netherlands made room for the river the guiding principle of its flood protection in 2000. From 2006, central government and regional authorities carried out measures at 34 locations along the IJssel, Waal, Lower Rhine and Lek: dikes moved inland, floodplains lowered, side channels dug. The programme cost 2.3 billion euros and was completed in early 2019. They paid for room before the water came, alongside the dikes, not instead of them.

## the two pieces of paper

| | the policy on the house | the certificate on the wetland |
|---|---|---|
| when it is paid | every year, before the flood, for a promise that pays after | now, into the wetland, for work being done now |
| what it buys | a promise to pay covered damage, up to a limit | plugged ditches, a reconnected floodplain, a landowner paid to let the field flood |
| who receives | the policyholder and the lender, after the loss is adjusted | the stewards and the landowner upstream, now |
| if no flood comes | the premium is spent; the promise expires at term | the wetland is still working |
| if a frequent flood comes | the check, if the damage clears the deductible | a lower, later crest and a smaller check |
| if the big one comes | the check, up to the limit, after the deductible | little change at the peak; the check does the work |
| what it cannot do | cannot lower the peak | cannot pay anyone after |

## the wetland's account

In ensurance the wetland holds an account in its own name: it can receive money, hold it, and pay the people who do the work. The certificate is a recorded share in that account's funded condition; when someone buys one, a routed cut goes to the stewards and the landowner upstream. If the landowner cooperates and the place has a title, the certificate is a policy, and it can move toward entrust, permanent protection under real property law. Otherwise it is a line, which stops if the payments stop. [The certificates manual](/manual/certificates?from=guide) has the detail.

The live account for this kind of place is [inland wetlands](/inland-wetlands.ensurance?from=guide), with [rivers and lakes](/rivers-lakes.ensurance?from=guide) beside it. The whole thing is small: one participant, a short list of named places. If your town has a wetland above it that nobody is paying, open [the suggest form](/specific/create?mode=suggest&agent=inland-wetlands.ensurance&name=your-wetland&from=guide) and type your wetland's name in the form. It goes to review; if taken up, it gets its own line under inland wetlands.

## frequently asked questions

### is prevention cheaper than insurance?

They buy different things. Insurance buys a check after the loss. Prevention buys a smaller loss. Over a decade, a town that funds both pays for the upstream work and then for smaller claims; a town that funds only insurance pays for every loss at full size and then for the repricing.

### do wetlands stop floods?

No. Wetlands and reconnected floodplains lower and delay flood peaks, with the clearest evidence for frequent, smaller floods; for the largest events the peak changes little and the water comes anyway.

### why don't towns fund upstream prevention?

The wetland is usually on private land, often in another jurisdiction. The benefit is shared, so no single budget owns it. And there has been no instrument that holds the work as a position someone can own rather than a yearly grant. [The four things you can do with a risk](/guide/the-four-things-you-can-do-with-a-risk?from=guide) takes this further.

### what does flood insurance not cover?

In the United States a standard homeowners policy does not cover flood; flood cover is a separate policy with its own limits and, usually, a waiting period. Flood policies commonly do not pay for temporary housing, pay only a limited amount for what was in a basement, and do not cover the land or most of what stands outside the walls.

## read next

[the four things you can do with a risk →](/guide/the-four-things-you-can-do-with-a-risk?from=guide) — the risk manager's own matrix, and the option almost nobody funds.

Or go to [the wetland](/inland-wetlands.ensurance?from=guide), or [explore](/explore?from=guide) another place.

## sources

[Narayan et al. 2017, *Scientific Reports*](https://www.nature.com/articles/s41598-017-09269-z) — modelled storm surge across twelve states during Hurricane Sandy; coastal wetlands avoided an estimated USD 625 million in direct flood damages, a little over 1% of total damage; about 11% lower damage on average where wetlands remained; wetlands reduced flood heights and damages in 80% of the region and increased them in 20%.

[Environment Agency — Working with Natural Processes to reduce flood risk (2017)](https://www.gov.uk/government/publications/working-with-natural-processes-to-reduce-flood-risk) — evidence directory for project SC150005 (completed October 2017; directory dated February 2018), §2.6 headline flood risk messages, quoted above; gov.uk also hosts a 2024 update of the evidence directory, which this post did not use.

[Rijkswaterstaat — Room for the River](https://www.rijkswaterstaat.nl/en/water/water-safety/room-for-the-rivers) — high waters of 1993 and 1995; room for the river as guiding principle from 2000; measures at 34 locations along the IJssel, Waal, Lower Rhine and Lek from 2006 by central government and regional authorities; dike relocation, floodplain lowering, side channels; total cost EUR 2.3 billion; completed in early 2019.

## the series

read first: [what is ensurance?](/guide/what-is-ensurance?from=guide)

1. [ensurance vs insurance](/guide/ensurance-vs-insurance?from=guide)
2. [is ensurance a type of insurance?](/guide/is-ensurance-a-type-of-insurance?from=guide)
3. [the same flood, two instruments](/guide/the-same-flood-two-instruments?from=guide) (this post)
4. [the four things you can do with a risk](/guide/the-four-things-you-can-do-with-a-risk?from=guide)
5. [insurance terms, pointed earlier](/guide/insurance-terms-pointed-earlier?from=guide)
6. [what ensurance cannot do](/guide/what-ensurance-cannot-do?from=guide)