Investing in Transportation Resilience: A Framework for Informed Choices (2021)

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1 Executive Summary Storms, floods, droughts, and other natural hazards are combining with sea level rise, new temperature and precipitation norms, and other effects from climate change to increase the vulnerability of the nation’s transportation systems. The United States experienced a record-breaking 22 billion-dollar natural disasters in 2020. To varying extents, all damaged or disrupted the operations of transportation infrastructure vital for emergency services, evacuations, and the movement of supplies. Costly infrastructure repairs strained state and local budgets, and the disruptions to transportation net- works and services adversely affected local and regional economies and the safety and well-being of people in affected communities. Long-lived—with design lives of more than 50 years—and ubiquitous, transportation systems have always been exposed to a wide range of natural hazards and their inevitable extremes. However, climate change is com- pounding the intensity and expanding the scale of natural hazards. It is increasing the likelihood of cascading events, where multiple hazards inter- act, and it is creating new stressors on transportation assets constructed for different temperature and precipitation norms. Meanwhile, the smooth and safe functioning of transportation infrastructure is being stressed from everyday use. Across the country, many major transportation assets have outlasted their planned service lives by decades yet continue to be essential for accommodating traffic flows at levels unimagined in their original plan- ning and design. Under these circumstances, ensuring that transportation systems are resilient—that is, able to withstand and recover rapidly from adverse conditions and events—has become vitally important but increas- ingly challenging.

2 INVESTING IN TRANSPORTATION RESILIENCE This report reviews current practices by transportation agencies for evaluating resilience and conducting investment analysis for the purpose of restoring and adding resilience. These practices require methods for measur- ing the resilience of the existing transportation system and for evaluating and prioritizing options to improve resilience by strengthening, adding redundancy to, and relocating vulnerable assets. The review reveals that significant progress has been made over the past decade in integrating resilience criteria into transportation decision making, including the devel- opment, piloting, and use of innovative tools for resilience measurement, evaluation, and investment prioritization. However, the review also finds much inconsistency in how resilience is measured and assessed, even when it is a prominent factor in the transportation investment planning and decision-making process. In addition to reviewing practice, the report examines the research lit- erature on resilience theory to understand concepts and methods that may be suitable for implementation by transportation agencies. The literature review reveals a wide and rich variety of promising analytic methods, as well as ideas for their potential application. However, not surprisingly, the complexity of planning, building, and operating transportation systems can complicate the transition of research into practice, necessitating continued investments in applied research and in the demonstration and piloting of research ideas and concepts in the field. This report’s review of both practice and research suggests that more can be done to make the calculus of resilience a more systematic and deliberate part of transportation asset management and investment decision making. The review suggests that resilience should be measured and assessed using a multi-step, multi-hazard analytic framework. The process of assessing the potential benefits of resilience investments includes detailed inventories of assets that exist and are planned; evaluations of the characteristics and likelihood of natural hazards occurring in the future; and predictions of the vulnerability of the inventoried assets to disruption, damage, and destruction from the hazards. These assessments should be accompanied by determina- tions of the criticality, or value, of each asset’s functionality and estimations of the consequences of damages to the asset and its lost or degraded func- tionality. The avoidance of future losses in functionality, as incurred by infrastructure owners and users and the broader community, represents the societal benefits of effective resilience investments. The Federal Highway Administration (FHWA) has been particularly active in piloting frameworks for resilience analysis that follow this approach. Investing in resilience requires spending funds in the present to gain some benefits that may or may not be realized in the immediate or mid- term future. The decision to make a resilience investment must consider its prospective benefits and likely costs, including financial outlays and other

EXECUTIVE SUMMARY 3 sacrifices, both accrued over the life cycle of the investment. Benefit-cost analysis (BCA) is the analytic tool often used to support such decision making. While translating benefits and costs into monetary values facili- tates BCA, resilience investments can also be evaluated using quantitative, non-monetary measures and qualitative descriptions to account for the full set of possible outcomes, including equity and distributional consequences. Some analysts refer to BCA as social BCA because it considers “all of the benefits and costs to society as a whole, that is, the social costs and the social benefits.”1 A BCA that yields results showing positive net benefits represents the societal gain from a resilience investment that takes into account its life-cycle costs and benefits. To carry out resilience benefit assessments, transportation agencies need high-quality data and analytic tools, and in particular • Information on the characteristics of natural hazards and their likelihood in the location of existing and planned assets; • Science-based and updated projections about future impacts of climate change on natural hazards and on temperature and pre- cipitation norms in these locations; • Strong asset management programs that include evaluations of asset vulnerabilities and estimation of functional values (i.e., criticality); • Mode-specific data and modeling tools to estimate the direct and indirect consequences of asset damage and functional losses; and • Data and modeling tools that can reveal the economic and social importance of the asset to users, directly affected communities, and the broader region. Where there are gaps in essential data and in the needed analytic tools, transportation agencies may need to tap expert judgment. In addition to revealing the importance of transportation agencies having access to high-quality data and analytic tools for making sound investments in resilience, this report points to the importance of pilot activi- ties for showing how resilience evaluations can be made a routine part of investment decision making and for demonstrating the application of these data and tools for this purpose. The report shows how well-structured pilot programs and demonstration projects have been playing an important role in furthering the state of practice and application of resilience analysis for transportation decision making. However, these programs remain limited in their scale and scope, and in the absence of better and more accessible data and analytic tools coupled with more piloting, transportation agencies 1 Boardman, A., D. Greenberg, A. Vining, and D. Weimer. 2006. Cost-Benefit Analysis: Concepts and Practice, 3rd edition. https://doi.org/10.1017/9781108235594.

4 INVESTING IN TRANSPORTATION RESILIENCE are likely to continue to struggle with the translation of resilience from a concept to a decision criterion. While this report could not identify a single metric, or even a small set of metrics, that can be readily developed and generally applied to ease this struggle, it does outline a systematic framework for making resilience a key part of the investment calculus. Analyses that use appropriate metrics within a strong decision support framework can help make the case for investments in resilience. A decision-making framework alone, however, will not suffice because transportation agencies will lack the requisite data and analytic tools for its implementation or the demonstrations of its use. To motivate and facilitate the framework’s use, more direction, prompting, and guidance are needed. The recommendations that follow are offered for these purposes. They are targeted to Congress and the U.S. Department of Transportation, but their aim is to strengthen the resilience practices and capabilities of thousands of state, regional, and local transportation agencies. RECOMMENDATION 1: To ensure the routine and deliberate consideration of resilience to support the selection of major transportation investments, Congress should consider a requirement for which all projects that involve long-lived assets and that are candidates for federal funding undergo well-defined resilience assess- ments that account for changing risks of natural hazards and environ mental conditions stemming from climate change. These assessments could be integrated into environmental impact assessments or other project evalu- ation efforts, such as during benefit-cost analysis. The level of analytical effort expected in these resilience assessments should be reasonably related to the cost of the project being considered. Each project’s selection should include the results of analyses in which resilience benefits are calculated through a multi-step analytic framework that includes assessments of all plausible natural hazards and their likeli- hood, including simultaneous and cascading hazards; the vulnerabilities of the asset to damage and disruption from the hazards; and the adverse con- sequences from the damage and disruption to functionality as they impact the owners and users of the assets and the broader community. RECOMMENDATION 2: The Office of the Secretary of Transportation should promote the use of benefit-cost analysis for project justifications that take into account the resilience benefits estimated using the multi-step analytic framework recom- mended above. The benefits from adding resilience, in the form of reduced

EXECUTIVE SUMMARY 5 future losses, in relation to the life-cycle costs of doing so should be pro- moted as the basis for selecting investments in resilience. Although the practice of BCA is often associated with an over emphasis on the benefits and costs that can be more confidently monetized, the nature of resilience impacts, coupled with the demands of practical decision mak- ing, call for analyses that are attentive to all important effects, whether represented in monetary, quantitative, or qualitative terms. The Office of the Secretary of Transportation should offer guidance on how important benefits and costs that cannot be reduced to monetary units can be appro- priately incorporated in BCA. RECOMMENDATION 3: The Office of the Secretary of Transportation should provide guidance to the U.S. Department of Transportation modal administrations on the devel- opment of analytic methods and tools for estimating resilience benefits that are applicable to transportation agencies in their respective modes. The guidance should build on lessons learned from initiatives by FHWA and other federal and state agencies to pilot analytic approaches like the multi-step framework recommended above for use in assessing resilience on major transportation projects receiving federal funds. The guidance should point to the kinds of data and analytic tools required to perform each step in the assessments, and it should explain how the results can be used in BCA for decision making that incorporates resilience. RECOMMENDATION 4: Congress should direct, and appropriately resource, the Office of the Sec- retary of Transportation to conduct a study to (1) define the types of data that transportation agencies need for resilience analysis in accordance with the framework recommended above; (2) identify potential sources of these requisite data; and (3) advise on possible means for making the data more suitable to this purpose, including filling key data gaps and ensuring timely data updates. This study will require consultation with other federal agencies such as the Federal Emergency Management Agency, the National Oceanic and Atmospheric Administration, the U.S. Forest Service, and the U.S. Geologi- cal Survey, where much of the data needed for resilience analysis are main- tained, on means for transportation agencies to acquire the information in the format and level of detail needed, for keeping it sufficiently up to date, and for obtaining additional information that is not currently gathered. The study should note where new statutory authorities and appropriations may be required to enable these purposes.

6 INVESTING IN TRANSPORTATION RESILIENCE RECOMMENDATION 5: The Office of the Secretary of Transportation should coordinate with the modal agencies on the design and conduct of structured pilots to assess and demonstrate the applicability of each agency’s guidance and suggested tools for estimating resilience benefits according to the recommended multi-step analytic framework. FHWA’s series of pilot programs for highway resilience analysis should be used as a model for these structured mode-specific pilots, which have led to increased state and local transportation agency familiarity with resilience analysis and to continual improvements in FHWA’s guidance on analytic methods and appropriate tools.