TABLE 6.5 Estimated Benefits and Costs of Flood Study Methods

Study Methoda

Unit Cost per Mile

Total Discounted Benefitsb (million dollars)

Total Discounted Costsb (million dollars)

Benefit-Cost Ratio






Limited detailed study, North Carolina method





Detailed study





Combination, North Carolina method





aThe APPROX-NED study is assumed to have 20% of the flood damage losses avoided by the detailed study, and the limited detailed study North Carolina method to have 60% of the flood damage losses avoided by the detailed study.

bA 7% annual discount rate was used to transform gains and losses occurring in different time periods to a common unit of measurement in accordance with OMB (1992).


that does not yield a base flood elevation, resulted in net costs to the state and that the other methods produced net benefits (Table 6.5; NCFMP, 2008). The net benefit of statewide mapping would have been $173 million using all limited detailed studies and $398 million using all detailed studies. However, when the decision on which method to use was based on factors such as demographics, development plans, quality of existing data, flood history, and the nature of the terrain—the approach followed by the state—the net benefits were $511 million.

Statewide Benefit-Cost Analysis

The NCFMP followed the FEMA (1997) benefit-cost methodology to determine the net benefits of more accurate maps for North Carolina (NCFMP, 2008). Benefits were determined by extrapolating the results of the three case studies to the entire state and calculating additional savings from fewer flood-related business interruptions, reduced costs of map reviews (including mandatory flood insurance purchase determinations by lenders as part of the mortgage lending process, flood insurance policy ratings when a policy is sold, and building permits by local officials), and use of the data by multiple agencies. Engineering and mapping costs and the increased cost of construction for new buildings located in previously unmapped or undermapped areas were quantified and other cost estimates were taken from FEMA (1997). For 2000 through 2050, the NCFMP found a benefit-cost ratio of 2.3. This is comparable to FEMA’s (1997) assessment of 2.1 for map modernization.


The potential benefits (and beneficiaries) of more accurate flood maps are numerous. By far the greatest benefit calculated was avoided losses to planned new buildings (FEMA, 1997; NCFMP, 2008) and avoided repairs to infrastructure (FEMA, 1997) through more accurate identification of flood elevations and the areal extent of the floodplain. Only detailed studies and most limited detailed studies provide base flood elevations.

In North Carolina, detailed and limited detailed studies rely on lidar data, rather than the U.S. Geological Survey’s National Elevation Dataset. Lidar surveys cost $27 million for the entire state, yet the benefits of carrying out detailed and limited detailed studies outweigh these costs. This is significant because the analysis in Chapter 3 showed the importance of high-resolution, high-accuracy terrain data such as lidar in the accuracy of flood maps.

The NCFMP (2008) study is the first detailed analysis of the economic benefits of improved flood map accuracy in a digital environment. One of its key contributions is demonstration of a method to realistically assess the value of modernized mapping programs and to choose the type of flood study method. Although the analysis focused on areas subject to riverine flooding, the method would also work for areas subject to coastal flooding.

Both the FEMA (1997) and the NCFMP (2008) studies calculate a benefit-cost ratio of more than 2, but the exact economic benefits are unknown because of uncertainties in the assumptions, variations in costs and benefits across the country, and the difficulty

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