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Estimating the Value of Foresight: Aggregate Analysis of Natural Hazard Mitigation Benefits and Cost

Tuesday, September 8, 2009  
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By David R. Godschalk, Adam Rose, Elliott Mittler, Keith Porter, and Carol Taylor West

Hazard mitigation planners claim that foresighted present actions and investments produce significant future benefits. However, they have difficulty in supporting their claims, since previously their evidence typically was derived from individual case studies. Constituents and decision makers are often skeptical, believing that individual cases are either inapplicable to their situation or non-randomly selected to support a particular view. Planners need objective evidence based on a large body of experience to support the case for mitigation. Such is the unique contribution of a recent congressionally-mandated study, Natural Hazard Mitigation Saves (MMC, 2005). Using an aggregate of project-level benefit-cost analyses (estimation of average benefit-cost efficiency based on a random sample from a large data set), the study found that each dollar spent in three federal natural hazard mitigation grant programs--the Hazard Mitigation Grant Program, Project Impact, and the Flood Mitigation Assistance Program-- saves society an average of $4 in future avoided losses. Complementing the aggregate benefit-cost analysis with community-based evaluations, the study yielded valuable insights on how planners can improve long-term community resilience in the face of extreme events. To conduct the overall study, a number of methodological innovations were necessary, including developing a consistent methodology based on modifications and extensions of HAZUS-MH loss estimation software to cover wind damage, business interruption from lifelines, and population displacement. Valuable lessons for mitigation planners and policy makers emerged: the need to consider a wide variety of losses, the importance of mixing qualitative with quantitative analysis, the value of averaging results over a large number of projects, and the need to more explicitly address social issues and data collection in order to reduce vulnerability and enhance resilience to cope with twenty-first century hazards.

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