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Mapping the Zone: Improving Flood Map Accuracy (2009)

Chapter: 6 Benefits and Costs of Accurate Flood Mapping

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Suggested Citation:"6 Benefits and Costs of Accurate Flood Mapping." National Research Council. 2009. Mapping the Zone: Improving Flood Map Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/12573.
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Suggested Citation:"6 Benefits and Costs of Accurate Flood Mapping." National Research Council. 2009. Mapping the Zone: Improving Flood Map Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/12573.
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Suggested Citation:"6 Benefits and Costs of Accurate Flood Mapping." National Research Council. 2009. Mapping the Zone: Improving Flood Map Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/12573.
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Suggested Citation:"6 Benefits and Costs of Accurate Flood Mapping." National Research Council. 2009. Mapping the Zone: Improving Flood Map Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/12573.
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Suggested Citation:"6 Benefits and Costs of Accurate Flood Mapping." National Research Council. 2009. Mapping the Zone: Improving Flood Map Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/12573.
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Suggested Citation:"6 Benefits and Costs of Accurate Flood Mapping." National Research Council. 2009. Mapping the Zone: Improving Flood Map Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/12573.
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Suggested Citation:"6 Benefits and Costs of Accurate Flood Mapping." National Research Council. 2009. Mapping the Zone: Improving Flood Map Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/12573.
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Suggested Citation:"6 Benefits and Costs of Accurate Flood Mapping." National Research Council. 2009. Mapping the Zone: Improving Flood Map Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/12573.
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Suggested Citation:"6 Benefits and Costs of Accurate Flood Mapping." National Research Council. 2009. Mapping the Zone: Improving Flood Map Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/12573.
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Suggested Citation:"6 Benefits and Costs of Accurate Flood Mapping." National Research Council. 2009. Mapping the Zone: Improving Flood Map Accuracy. Washington, DC: The National Academies Press. doi: 10.17226/12573.
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6 Benefits and Costs of Accurate Flood Mapping A ll societies have more needs and desires than costs (e.g., implementation of required mitigation resources to fulfill them. Benefit-cost analysis measures) are generally measurable using observed provides a framework to understand and bal- expenditures. Direct benefits (e.g., use of the data to ance the various requirements of society against avail- estimate flood risk more accurately) are easier to mea- able resources. If the benefits are greater than the costs, sure than benefits that are non-market or temporal in the project contributes positively to society. Benefit- nature. Improvements in models, data collection, or cost analysis of maps and their underlying data suggests mapping methods generally yield incremental benefits that increasing the accuracy of maps or portraying (e.g., improved land use regulation). additional information yields positive net benefits For flood map creation and accuracy improve- (Bernknopf et al., 1988, 1990, 1993, 1997; Mileti et ment, most of the direct costs and some of the direct al., 1992; Olson and Olson, 2001; Halsing et al., 2004; benefits are borne by the public sector; other costs NRC, 2006). These “value of information” studies show and benefits are spread across society (Table 6.1). The that the information itself has value, which increases direct costs to FEMA are a function of the level of with greater accuracy or comprehensiveness. effort required to carry out flood studies, evaluate the Few studies have evaluated the net benefits of results, update and maintain the maps, and produce improved flood map accuracy. The most comprehensive and distribute paper and digital products. The direct assessment was undertaken by the Federal Emergency costs to users include the time and effort required Management Agency (FEMA) in 1997 and updated in to use the maps and request updates, as well as the 2000. This chapter describes the benefits and costs of monetary costs of complying with insurance and land more accurate flood maps and summarizes the results use regulations. of benefit-cost analyses carried out by FEMA and the The benefits of more accurate flood maps accrue State of North Carolina. The benefit-cost analyses to individuals, communities, and society as a whole. focused on mapping, not related topics such as flood Flood-related information is a public good—that is, hazard mitigation. a product or service that can be shared by many users simultaneously without detracting from its value to any BENEFITS AND COSTS one of them. Flood maps are used an estimated 30 mil- lion times each year by government agencies, FEMA Most of the costs and some of the benefits of contractors, lenders, insurance agents, land developers, more accurate flood maps can be quantified, draw- realtors, community planners, property owners, and ing on studies of floods and other kinds of hazards (e.g., Bernknopf et al., 1993; NRC, 2006). Direct Where market prices do not exist because the commodity (flood costs (e.g., collection of elevation data) and indirect information) is not “traded,” non-market valuation is sometimes used to estimate benefits. 79

80 MAPPING THE ZONE TABLE 6.1  Benefits and Costs of Improved Map Accuracy Category Impact Benefits Costs Land use: Reduced loss of life • Able to target higher-risk areas floodplain • Able to identify evacuation needs regulations Reduced loss of • Able to target higher-risk areas • Increased construction costs property • Lower-risk areas less restricted • Loss of land to development • Building restrictions match risk • Need to update regulations • Less time and money spent on contesting maps and inform the public of • Eventual payback on freeboard costs changes • Wise floodplain investment, including infrastructure Reduced loss of • Fewer business interruptions • Increased construction costs business • Fewer public service interruptions Preservation of • Natural storm water management • Loss of land to development natural functions of • Improved water quality floodplains • Increased ecological diversity Insurance Rates • Structures insured at appropriate levels • Rates may increase for some • More consistent insurance ratings through better information about risk Coverage • More insurance purchased because of improved understanding of risk Property values • Lower (or no) devaluations because of better information on risk • Change in practices that have led to devaluations Emergency Resource deployment • More efficient allocation in planning and response services SOURCE: Compiled from FEMA (1997) and NRC (2006). others for insurance purposes, land management, miti- better target land use regulations. Owners of proper- gation, risk assessment, and disaster response. Because ties that were incorrectly designated within the flood- these uses are not mutually exclusive, it is appropriate to plain benefit by having building restrictions lifted or sum the benefits, as is done in conventional benefit-cost lessened, which will lower future construction costs, analyses (e.g., NRC, 2006). eliminate mandatory retrofitting, and enable the land Several categories of benefits emerge from to be used in more ways. Adding building and land b ­ enefit-cost analyses of flood maps (FEMA, 1997; use restrictions to properties that should have been NCFMP, 2008) and work on flood and seismic designated within the floodplain can lead to measures h ­ azards ­(Bernknopf et al., 1993; Chivers and Flores, to protect equipment, inventories, and personal posses- 2002; NRC, 2006). Most of these benefit categories sions. Although up-front costs are higher, developing arise from improvements in both horizontal accuracy and using land commensurate with the true risk will (i.e., proper depiction of the floodplain boundary) reduce future losses of life, property, and business. A and vertical accuracy (i.e., proper assessment of risk), benefit-cost analysis of National Flood Insurance Pro- although the nature and level of benefits may differ gram (NFIP) building standards in coastal areas found for each type of accuracy. These benefit categories and that the benefits of freeboard exceed the construction their associated costs are summarized in Table 6.1 and costs by 3 to 7 percent ( Jones et al., 2006). described below. Another possible benefit of more accurate maps is that fewer individuals will contest floodplain ­boundaries Land Use and levels of risk, saving time and money. Greater trust in the maps could also lead to more, but wiser, invest- More accurate flood maps provide a more reliable ment. Finally, management of floodplains to preserve measure of risk and enable floodplain managers to important natural functions (e.g., slowing storm water runoff, buffering water quality) benefits the entire com- Presentation to the committee by Paul Rooney, FEMA, on munity. Although some work has been done on valuing August 20, 2007.

BENEFITS AND COSTS OF ACCURATE FLOOD MAPPING 81 these beneficial functions (e.g., CDWR, 2005), many are still unquantified. BOX 6.1  Impact of Improved Flood Maps on Insurance Insurance More accurate flood maps can increase or decrease insur- ance premiums of individual property owners, as the following Better estimates of flood risk enable structures to examples from two counties in New Jersey illustrate. In Monmouth be insured at appropriate levels, which benefits both County, more accurate flood maps created using lidar (light individuals and the nation. Those for whom flood detection and ranging) elevation data resulted in an additional insurance is not mandatory will not be required to 3,680 structures being redesignated as within the floodplain. The property owners with mortgages are now required to pay for flood purchase it, while those who need or want it can pur- insurance, causing financial hardship for some (e.g., people living chase the right amount (e.g., Box 6.1). Two problems on a fixed income). Passaic County flood maps were updated to remain. First is the problem of those who need but do include flood mitigation measures installed along Molly Ann’s not carry flood insurance (e.g., owners of mortgage-free Brook by the U.S. Army Corp of Engineers. The more accurate properties in the floodplain). Nationwide about half maps had the opposite effect of the revised Monmouth County of the single-family homes in Special Flood Hazard maps, removing 56 homes and 6 commercial buildings from the floodplain designation and relieving many homeowners of the Areas (SFHAs) are insured, although market penetra- mandatory requirement for flood insurance. tion in the areas hit by the 2008 Midwest flood was less ________ than 10 percent (coastal areas have higher participa- SOURCE: S. Kempf, 2008, Community flood maps: A tale tion) (Maurstad, 2008). Greater accuracy may lead to of two NJ cities, Association of State Floodplain Managers News­ improved understanding of flood risk and ultimately letter, May. to more widespread insurance coverage. In addition, insurance rates and coverage will be more accurate and consistent because the risk ratings will be more accurate and consistent. Second is the problem of moral hazard wherein the availability of flood insurance encourages be fewer questions about the accuracy or interpretation people to build in places they might not otherwise. of the map in mortgage determinations. Accurate pricing of insurance premiums, relative to risk, may reduce this problem. Temporal Considerations Property Values The accuracy of flood maps changes with time and so do the benefits and costs. Costs are highest at Numerous studies have analyzed the impacts of the outset when flood-related data are being collected, flooding, coastal storms, and the NFIP on property modeled, and analyzed (Bernknopf et al., 1993; FEMA, v ­ alues (e.g., Montz and Tobin, 1988; Holoway and 1997). The more detailed the flood study method, the Burby, 1990; Chivers and Flores, 2002; Bin and Polasky, greater are the data, modeling, and analysis demands, 2004; Hallstrom and Smith, 2005; Smith et al., 2006), and the higher are the initial costs (Table 2.1). Costs although additional information is needed to connect can decrease significantly when maps exist and require property values and map accuracy. The impacts of more only updates or reanalysis. accurate maps on property values are both location Maps created using state-of-the-art techniques and specific and hard to measure. In cases where buildings the most current information provide the best possible in the floodplain are devalued relative to buildings in representation of flood hazard, at least for a short time. areas with lower flood risk, more accurate floodplain These accurate maps provide the immediate benefit of boundaries could either increase or decrease property enabling society to better prepare for and respond to values. An adverse impact could be lessened because future flooding. Thereafter, development and changes the risk will be better understood and property values in hydrology and hydraulics will degrade map accuracy, could be assessed at appropriate levels. More accurate while mapping updates and incorporation of knowl- maps may also be less costly to use because there will edge from previous flood events will increase map

82 MAPPING THE ZONE accuracy. The accumulation of information from flood munities; FEMA, 2000). The updated analysis yielded events has intermediate and long-term benefits. Post- incremental benefits of $1.33 billion and incremental flood inspections yield information needed to improve costs of $799 million, for a benefit-cost ratio of 1.7. models and update the maps. For example, inundation The analysis also estimated how the new construction maps of the June 2006 floods in New York are being benefit would change over time. The benefits to new used to update Flood Insurance Rate Maps created in construction are greatest in areas that are unstudied 1985. Knowledge about how the built environment or studied through approximate methods because no responds to floods and coastal surges leads to improved flood elevation data are available to site new buildings. building design and safer siting and thus to reduced As more flood elevation data become available through future damage, social losses, and the need for federal map modernization, the benefits for new construction disaster assistance. Similarly, experience responding to decline. FEMA estimated that factoring in this declin- floods leads to more robust plans for emergency services ing benefit decreases the benefit-cost ratio to 1.5. and thus minimizes future loss of life and property. The FEMA’s Office of Inspector General audited its information gained also contributes to society’s under- cost estimate for the Map Modernization Program in lying knowledge base across multiple disciplines. 2000 (OIG, 2000). It found that FEMA’s methodol- ogy was sound and no major costs were overlooked, but FEMA BENEFIT-COST ANALYSES that the estimate could be significantly in error because costs were not always verified or drawn from reliable In 1997, FEMA analyzed the incremental costs sources, some assumptions (e.g., cost of flood ­studies) and benefits of modernizing its Flood Hazard Mapping have a major effect on cost, and cost savings from Program (FEMA, 1997). The analysis considered all partnerships and technological innovation (e.g., use of costs, including costs for flood data updates, map main- lidar) were not considered. FEMA agreed with most tenance, new mapping, conversion to new standards, of the findings and outlined steps for improving future and customer service. It also calculated three benefits cost estimates in the report’s appendix. The revised that could be quantified with reliable data: costs have not yet been incorporated in a ­benefit-cost analysis. 1. Reduced damage to new residential properties, 2. Reduced damage to new non-residential struc- NORTH CAROLINA CASE STUDY tures, and 3. Reduced costs of map reviews. Many benefits and costs are too varied to assess generically—case studies are required to understand The first two were calculated by determining the them at the local level, where implementation occurs. annual damage that would be prevented by designing The North Carolina Floodplain Mapping Program new construction using more accurate flood data and (NCFMP) determined the costs and three benefits of subtracting the increased construction costs for com- more accurate maps in three different physiographic plying with NFIP requirements (up to 5 percent). The regions in North Carolina and also examined the costs third was based on estimates of the time saved by using and benefits of different flood study methods for the improved maps and digital products for mortgage and entire state (NCFMP, 2008). The communities ­chosen permit applications and flood insurance policy ratings. represent the typical level of development within three The study found incremental benefits of $1.75 billion physiographic regions: Pasquotank County in the and incremental costs of $848 million over a 50-year coastal region, Mecklenburg County in the piedmont period, for a benefit-cost ratio of 2.1. region, and the city of Asheville in Buncombe County In 2000, FEMA repeated the analysis, modifying within the mountain region (see Chapter 1, “Case the projected number of new structures in SFHAs and Studies”). Geospatial data necessary to complete the factoring in survey responses on flood map inventory assessment (e.g., parcel boundaries attributed with needs from all mapped communities (the original zoning, building value, and construction date; digital analysis considered only 10 percent of mapped com- flood hazard information) were available for each of

BENEFITS AND COSTS OF ACCURATE FLOOD MAPPING 83 TABLE 6.2  Profile of Case Study Areas Number of Percentage of Number of Percentage of Percentage of Buildingsb Buildingsb Insurance Policiesb Policiesb Buildings Insured Inside Outside Inside Outside Inside Outside Inside Outside Inside Outside the the the the the the the the the the Area Populationa SFHA SFHA SFHA SFHA SFHA SFHA SFHA SFHA SFHA SFHA Pasquotank   39,951   5,652    8,309 40 60 979 279 78 22 17.3 3.4 Mecklenburg 827,445 22,091 178,614 11 89 1,765 1,267 58 42   8.0 0.7 Asheville   69,045   1,307   23,711  5 95 269 83 76 24 20.6 0.4 aIn2006 for Pasquotank and Mecklenburg Counties; in 2003 for Asheville. bDetermined using FIRMs effective prior to creation of the North Carolina Floodplain Mapping Program. Not all the buildings located outside the SFHA are in a delineated floodplain and are in areas covered by the FIRMs. SOURCE: NCFMP (2008). the counties or municipality. Building, population, maps, are placed in lower-rate zones or removed from and insurance information for the study areas is sum- the mandatory insurance requirements of the NFIP. marized in Table 6.2. The percentages of homes in the SFHA carrying To calculate the incremental benefits of more flood insurance are low, given that anyone with a fed- accurate maps, the NCFMP compared Q3 flood data erally backed mortgage is required to carry insurance, digitized from Flood Insurance Rate Maps (FIRMs) but they are generally consistent with national averages with data from new digital FIRMs (DFIRMs) pro- for riverine areas, which range from 10 to 25 percent. duced using detailed study, limited detailed study Both the national and the North Carolina percentages North Carolina, and redelineation methods (Table 6.3). reflect the unwillingness of floodplain residents to The limited detailed study method used by North obtain insurance, perhaps because of their lack of trust Carolina is different from the limited detailed study in the maps or their lack of understanding of what the method used nationally (see “North Carolina Flood maps portray. More credible maps might encourage Mapping Case Study” in Chapter 4). The DFIRMs individuals to take action to minimize their risk, such as contain better flood hazard information than the old carrying flood insurance or elevating their buildings. FIRMs, including The NCFMP selected three types of benefits for analysis, based on the availability of geospatially refer- 1. Identification of new SFHAs or more accurate enced map data: portrayal of existing SFHAs, 2. Determination of base flood elevations (BFEs) 1. Expected annual flood losses avoided to new where none existed, and buildings and infrastructure through accurate identi- 3. Updates of existing BFEs using revised hydro- fication of flood elevations and/or areal extent of the logic and/or hydraulic analyses. floodplain. 2. Expected additional annual flood insurance The areal differences in the SFHAs and other flood premiums to be collected by the NFIP for properties insurance rate zones in the old FIRMs were compared newly designated within the SFHA on more accurate with the SFHAs and other zones in the new DFIRMs maps. This is a benefit because Congress intended the using a geographic information system (GIS). Then NFIP to be funded through collection of premiums. the buildings in each of the zones were counted to 3. Expected annual flood insurance premium sav- determine the number of parcels that changed hazard ings to policy holders who, as a result of more accurate designation as a result of the remapping. This change Q3 data are digital representations of certain flood data on paper Personalcommunication from Mary Jo Vrem, FEMA, on FIRMs, such as 1 percent and 0.2 percent annual chance floodplain July 14, 2008. boundaries and flood insurance zone designations.

84 MAPPING THE ZONE TABLE 6.3  Distribution of Flood Study Methods in the Case Study Areas Linear Study Miles Study Method Asheville Mecklenburg Pasquotank Limited detailed study North Carolina 27    0 40 Redelineation 56    0 81 Detailed study 27 569 40 SOURCE: NCFMP (2008). ­ analysis was performed for five different types of build- the new BFEs). Using population growth from U.S. ings: single-family residential, two- to four-family census projections for the state (Census Bureau, 2005) homes, other residential, nonresidential, and mobile as a proxy for the rate of development, the 20 percent homes. For example, some single-family residential buildout scenario could be realized between 2020 parcels identified as outside the SFHA (Zone B, C, or and 2025. For the 20 percent buildout scenario in X; see Box 2.1) on old FIRMs were found to be within P ­ asquotank County, an estimated $354,000 in annual the SFHA (e.g., Zone AE, AO) on the new DFIRMs. flood losses could be avoided, including The new DFIRMs provide base flood elevations, while many older FIRMs do not. The losses avoided for each • $284,000 by building the lowest floor at or above building were calculated as a percentage of the current the new BFEs, value of the building. This percentage was based on • $65,000 by more accurately determining BFEs, FEMA assumptions for potential property damage to and structures in zones without BFEs (FEMA, 1989). The • $5,000 by using updated detailed studies for study calculated the losses avoided to structures that siting and design of structures. would be built at or above the BFE on vacant parcels zoned for homes or buildings in and outside the SFHA. Annual flood losses and related disaster assis- Depth-damage relationships used in risk assessments tance expenditures avoided for public infrastructure (e.g., HAZUS [Hazards US]; see Chapter 7) were not and buildings were estimated based on payouts for explored. flooding and hurricane disasters between 1993 and Changes in flood hazard zones as a result of ­better 2005. The study found that $1.32 of flood losses have mapping affect insurance premiums. To calculate the occurred to public infrastructure for every $1.00 of incremental benefits of flood insurance premiums flood losses to insured buildings. The NCFMP evalu- better matching risk, the NCFMP quantified the dif- ated average annual disaster-related expenditures to ference in annual flood insurance premiums for each repair or reconstruct public infrastructure (e.g., roads, property based on its location relative to the SFHA on bridges, wastewater facilities, public buildings, public the old FIRM and the new DFIRM. utilities) compared to average annual flood insurance claims throughout the state. It assumed that the same Benefit 1. Flood Losses Avoided for New Buildings ratio could be expected for flood losses avoided by and Infrastructure implementing minimum NFIP floodplain manage- ment regulations based on reliable flood hazard data. The development of vacant parcels (buildout) that In Pasquotank County, the calculated benefit of flood are zoned for building cannot be predicted each year. damages avoided for new infrastructure was $465,000. Therefore, the case study estimated future flood dam- This resulted in the total benefits from structural and age avoided to new or improved buildings by assuming infrastructure loss avoidance of $819,000. that 20 percent, 40 percent, and 60 percent of vacant These benefits would double and triple with the parcels zoned for building were to have structures con- 40 percent and 60 percent buildout scenarios, respec- structed in compliance with NFIP floodplain manage- tively. Analyses of Mecklenburg County and Asheville ment regulations (i.e., with the lowest floor at or above yielded similar results, although the financial benefit

BENEFITS AND COSTS OF ACCURATE FLOOD MAPPING 85 TABLE 6.4  Annual Flood Losses Avoided for Buildings Sited Using Different Study Methods Benefits (thousand dollars per year) Percent Buildout Area Limited Detailed Study North Carolina Redelineation Detailed Study Infrastructure Total 20 Pasquotank   53 130 171   53 819 Mecklenburg NA NA 21,920 NA 21,920 Asheville 287 312 220 287 595 40 Pasquotank 106 260 824 106 1,638 Mecklenburg NA NA 43,830 NA 43,830 Asheville 674 624 440 674 1,190 60 Pasquotank 158 390 1,236 158 2,457 Mecklenburg NA NA 65,750 NA 65,750 Asheville 861 936 660 861 1,785 NOTE: NA = not applicable. SOURCE: NCFMP (2008). of more accurate flood maps is significantly greater in Properties with new or lowered BFEs would have lower Mecklenburg County (Table 6.4), which has higher premiums that would result in annual savings for their population and building values than the other case owners of $498,000. study areas. Overall, the study found that benefits were The NCFMP study estimated that policy ­holders greatest in areas that previously had no defined BFEs. whose properties are no longer identified as being within the SFHA but continue to carry flood insur- Benefits 2 and 3. Flood Insurance ance because reduced (preferred) rates are available Better Matching Risk would save $642,900 in premiums annually in the three study areas. However, property owners who had been Better mapping enables more accurate determina- paying Zone A insurance premiums but cancel their tion of the need for flood insurance and the means of flood policies as a result of the new information expose rating risk. The new DFIRMs increased the number themselves to financial risk and the government to of buildings designated within Special Flood Hazard emergency payments. Recent studies carried out as part Areas by 807 (NCFMP, 2008). The increase in number of the five-year evaluation of the NFIP recommend of property owners who must purchase flood insurance that owners of property located between the 100-year benefits the NFIP, which would collect additional and 500-year floodplains be required to carry flood premiums of $935,600 in the three case study areas. insurance (Galloway et al., 2006; Wetmore et al., 2006). The expected annual increase in premiums reflects Under the 20 percent buildout scenario, premiums to the actual market penetration for each county or the NFIP are estimated to increase by $112,100 and municipality (see Table 6.2), with an expected growth policy holders would save $607,900 annually in the in the number of insurance policies of 4 percent due three case study areas (NCFMP, 2008). to increased enforcement of mandatory purchase requirements, public awareness, and/or confidence in Benefits of Different Mapping Approaches the map products. The number of policies in force for North Carolina increased by 4 percent between 2006 To determine which flood study method yields and 2007. Of the property newly designated within the greatest net benefits, the NCFMP examined four the SFHA, 491 buildings now have BFE data where methods: approximate studies using the National none previously existed. The BFE data allow a finer Elevation Dataset (APPROX-NED), limited detailed discrimination of flood insurance rate zones, lowering studies, detailed studies (see Table 2.1), and a combina- premiums for ­owners of buildings with BFEs that are tion of methods used by North Carolina. The analysis lower as a result of updated studies (505 buildings). showed that use of APPROX-NED, the only method

86 MAPPING THE ZONE TABLE 6.5  Estimated Benefits and Costs of Flood Study Methods Total Discounted Total Discounted Unit Cost Benefitsb Costsb Study Methoda per Mile (million dollars) (million dollars) Benefit-Cost Ratio APPROX-NED study $1,423 $335.42 $391.40 0.86 Limited detailed study, North Carolina method $1,908 $582.32 $404.59 1.44 Detailed study $6,539 $922.13 $519.22 1.78 Combination, North Carolina method $2,419 $933.21 $417.23 2.24 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). SOURCE: NCFMP (2008). that does not yield a base flood elevation, resulted in net CONCLUSIONS costs to the state and that the other methods produced net benefits (Table 6.5; NCFMP, 2008). The net ben- The potential benefits (and beneficiaries) of more efit of statewide mapping would have been $173 mil- accurate flood maps are numerous. By far the greatest lion using all limited detailed studies and $398 million benefit calculated was avoided losses to planned new using all detailed studies. However, when the decision buildings (FEMA, 1997; NCFMP, 2008) and avoided on which method to use was based on factors such as repairs to infrastructure (FEMA, 1997) through more demographics, development plans, quality of existing accurate identification of flood elevations and the areal data, flood history, and the nature of the terrain—the extent of the floodplain. Only detailed studies and most approach followed by the state—the net benefits were limited detailed studies provide base flood elevations. $511 million. In North Carolina, detailed and limited detailed studies rely on lidar data, rather than the U.S. Geologi- cal Survey’s National Elevation Dataset. Lidar surveys Statewide Benefit-Cost Analysis cost $27 million for the entire state, yet the benefits The NCFMP followed the FEMA (1997) benefit- of carrying out detailed and limited detailed studies cost methodology to determine the net benefits of more outweigh these costs. This is significant because the accurate maps for North Carolina (NCFMP, 2008). analysis in Chapter 3 showed the importance of high- Benefits were determined by extrapolating the results of resolution, high-accuracy terrain data such as lidar in the three case studies to the entire state and calculating the accuracy of flood maps. additional savings from fewer flood-related business The NCFMP (2008) study is the first detailed interruptions, reduced costs of map reviews (including analysis of the economic benefits of improved flood mandatory flood insurance purchase determinations by map accuracy in a digital environment. One of its key lenders as part of the mortgage lending process, flood contributions is demonstration of a method to realis- insurance policy ratings when a policy is sold, and tically assess the value of modernized mapping pro- building permits by local officials), and use of the data grams and to choose the type of flood study method. by multiple agencies. Engineering and mapping costs Although the analysis focused on areas subject to and the increased cost of construction for new build- r ­ iverine flooding, the method would also work for areas ings located in previously unmapped or undermapped subject to coastal flooding. areas were quantified and other cost estimates were Both the FEMA (1997) and the NCFMP (2008) taken from FEMA (1997). For 2000 through 2050, studies calculate a benefit-cost ratio of more than 2, the NCFMP found a benefit-cost ratio of 2.3. This is but the exact economic benefits are unknown because comparable to FEMA’s (1997) assessment of 2.1 for of uncertainties in the assumptions, variations in costs map modernization. and benefits across the country, and the difficulty

BENEFITS AND COSTS OF ACCURATE FLOOD MAPPING 87 of quantifying some kinds of benefits. Nevertheless, tion of base flood elevations produces the greatest because all of the costs but only some of the benefits increment of benefits. were considered, the results are likely the right order of magnitude, suggesting that more accurate maps Finding. No single approach to map preparation produce net benefits for the nation. is appropriate for all circumstances. The benefits and costs of each method are risk and vulnerability Finding. Significant flood losses could be avoided by dependent. replacing maps that contain inaccurate spatial defini- tions and that lack base flood elevations with maps Recommendation. The flood study method should that accurately define the spatial extent of the SFHA be determined based on the accuracy of the topo- and provide base flood elevations. The marginal ben- graphic data in the county or watershed under efits derived from these more accurate maps exceed study and the current and future risk to those in the the marginal costs of their preparation. Determina- mapped area.

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Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps portray the height and extent to which flooding is expected to occur, and they form the basis for setting flood insurance premiums and regulating development in the floodplain. As such, they are an important tool for individuals, businesses, communities, and government agencies to understand and deal with flood hazard and flood risk. Improving map accuracy is therefore not an academic question--better maps help everyone.

Making and maintaining an accurate flood map is neither simple nor inexpensive. Even after an investment of more than $1 billion to take flood maps into the digital world, only 21 percent of the population has maps that meet or exceed national flood hazard data quality thresholds. Even when floodplains are mapped with high accuracy, land development and natural changes to the landscape or hydrologic systems create the need for continuous map maintenance and updates.

Mapping the Zone examines the factors that affect flood map accuracy, assesses the benefits and costs of more accurate flood maps, and recommends ways to improve flood mapping, communication, and management of flood-related data.

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