Firms’ contribution to flood risk reduction – scenario-based experiments from Jakarta and Semarang, Indonesia

The importance of private sector engagement on risk reduction is increasingly mentioned over the last years. The Sendai Framework for Disaster Risk Reduction 2015-2030 stresses that the private sector should be a crucial partner in achieving disaster resilience. However, the contribution by the private sector is still rare and mostly undertaken by large multinational firms with just a few positive impacts on the local level.

Particularly manufacturing firms are heavily exposed to floods in Indonesia; Jakarta and Semarang are prominent examples. Broader flood risk reduction measures are still insufficiently developed. Therefore, it is argued that firms can reduce the flood risk through collective adaptation measures. We understand collective adaptation as collaborative activities to reduce risks that firms are either initiating or participating together with other firms, the community, NGOs and authorities.

Our own research has revealed that particularly small and medium-sized enterprises (SMEs) rarely engage in collective flood adaptation. Based on our findings, this paper examines which circumstances determine the willingness of SMEs to contribute to flood risk reduction. Instruments in order to increase the willingness to collective adaptation are also discussed.

Scenario-based experiments with 120 SMEs have been conducted in Jakarta and Semarang. These scenarios contain different risk reduction measures (polder system, river expansion and sensitization program), each with different actors’ constellation of contribution. Comparative logistic regressions have been applied to determine context-specific factors, e.g. risk behavior, firm-specific characteristics or level of flood-proneness that influence the willingness to contribute to flood risk reduction.

Overall, the paper provides deeper insights in understanding firms’ engagement in flood risk reduction and gives answers of how firms can be motivated to become an active player on building resilience.