By Harro ten Wolde

THE HAGUE, Netherlands, Sept 3 (Reuters) - Nearly 2 billion euros ($2.9 billion) must be spent annually in the coming decades to protect the low-lying Netherlands from coastal flooding, the Dutch government said on Wednesday.

With sea levels projected to climb as much as 1.3 metres (4 ft 3 in) this century and another 2 to 4 metres in the next, current flood and sea defences will not be enough to protect the country of 16 million people, said the commission, led by former agricultural minister, Cees Veerman.

The Delta Commission, which shares its name with the Delta project that fortified water defences after a deadly flood in 1953, put forward 12 recommendations, including building dikes, creating river water basins and adding land to the coastline.

"The urgent need to act on this advice is high," the commission concluded, saying more stringent criteria would be needed to assess the level of threats to the country, a quarter of which lies below sea level.

The Netherlands -- literally the Low Countries -- has a long history of pioneering technology to help it claw back land from the sea and fight recurrent flooding.

The Delta Commission published its report days after Hurricane Gustav subsided from the U.S. Gulf Coast after threatening a repeat of 2005's devastating flooding in New Orleans from Hurricane Katrina.

The commission said a "Delta fund" should be created, with money coming from natural gas income and long-term state bonds.

"Financing of the fund should be independent from political short-term priorities or the economic cycle," the group said.

Among the group's recommendation is a proposal to add land to the 350 km Dutch coast in a way that promotes the build up of sand, helped by the sea.

Dutch firms have led a number of major coastal projects around the world, and U.S. officials sought Dutch advice on water management after floods devastated New Orleans in 2005.

The Dutch firms that hope to benefit from the plans are the world's largest dredger Boskalis <BOSN.AS> and rival Van Oord.

After floods killed more than 1,800 people in 1953, the Delta project was launched to raise dikes, close sea estuaries and construct a huge storm-surge barrier, which has attracted millions of tourists.

About 65 percent of national income, valued at 1.8 trillion euros, comes from the threatened area, where 9 million people live, the commission said.

Since several government departments will be responsible for the project, the prime minister should take a coordinating role, while a permanent commission should monitor it, it said.

Lawmakers have suggested building an artificial island in the shape of a tulip, inspired by Dubai's Palm Island project, a development that Dutch dredging companies helped build. The commission did not include such an island in its conclusions. (editing by Elizabeth Piper)

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