Reducing Coastal Risk on the East and Gulf Coasts (2014) / Chapter Skim
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4 Principles for Guiding the Nation's Future Investments in Coastal Risk Reduction
4 Principles for Guiding the Nation's Future Investments in Coastal Risk Reduction
Pages 111-132
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From page 111... ...
What general principles might be used to guide future investments in U.S. coastal risk reduction?
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From page 112... ...
The benefit-cost approach recommends investment in coastal risk reduction when the benefits of the investment exceed the costs, considering both probability and consequences along a continuum of possible events. Thus, the level of risk reduction provided by projects under a benefit-cost approach is not predetermined but would vary based on the costs and benefits provided.
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From page 113... ...
Starting from Point A, the status quo, investments in risk reduction initially have positive net benefits as the value of risk reduction exceeds the costs of investment. As risk levels decline toward zero, the costs of making further investments increase faster than the value of risk reduction and net benefits of further risk reduction begin to fall, eventually driving net benefits negative.
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From page 114... ...
Second, the residual risk associated with coastal risk reduction projects in the United States is much greater than residual risk permitted in modern dam safety criteria, in part because dams represent an engineered hazard, whereas coastal risk reduction projects are designed to protect against natural hazards.
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From page 115... ...
. inconsistency would require resolution before the criteria could reasonably be applied to the evaluation of coastal risk reduction projects.
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From page 116... ...
Risk Perception and Setting Acceptable Risk Setting the level of acceptable risk for any hazard is not a purely scientific or engineering matter but rather involves a societal value judgment. In a democratic society, the involvement of the public is essential for setting acceptable-risk standards.
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From page 117... ...
. Setting acceptable coastal risk standards would, therefore, be challeng 1 See http://www.ntsb.gov/data/aviation_statistics.html.
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From page 118... ...
is a commonly applied level of risk reduction in many inland flood control projects and some coastal risk reduction projects. Until the mid-1970s, Congress supported relatively high levels of risk reduction (e.g., the Standard Project Hurricane [see Box 1-2]
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From page 119... ...
By using a common monetary metric, the benefit-cost approach also allows for incorporation of other costs or benefits associated with coastal risk reduction strategies, such as the value of reduced damages to property, loss of life, or business interruptions, as well as changes in the value of ecosystem services. It can be difficult to quantitatively include other benefits besides risk reduction in the riskstandard approach.
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From page 120... ...
For example, consider a coastal risk reduction project for a community with 10 homes each worth $1 million versus another coastal risk reduction project for 50 homes each worth $100,000. The first project reduces the risk to property worth
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From page 121... ...
However, many observers would favor the second project over the first, in part because it affects more people and the people affected may have less ability to cope with loss. USACE Benefit-Cost Analysis in Coastal Risk Reduction Benefit-cost analysis has been used widely to evaluate government programs including investments in water projects (Howe, 1971; Brouwer and Pearce, 2005)
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From page 122... ...
What Should Count as a Benefit or a Cost? Questions about whether all of the benefits or costs of investments in coastal risk reduction can be accurately measured in monetary terms raises the issue of whether benefit-cost analysis should attempt to be inclusive of all benefits and costs or whether there should be multiple accounts that are evaluated in different currencies that are not directly comparable (Polasky and Binder, 2012)
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From page 123... ...
As noted in Chapter 2, these changes are not anticipated to take effect until after revisions to the accompanying detailed interagency guidelines are released, and congressional action has so far blocked USACE implementation of the Principles and Requirements. In principle, benefit-cost analysis should include all benefits and costs of investments in coastal risk reduction including changes in the value of ecosystem services, the value of reduction in risk of fatalities or injuries, as well as the reduction in losses to property and infrastructure, and the
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From page 124... ...
In fact, a major benefit of investments in advanced warning of approaching storms or improved transportation infrastructure is a reduction in the expected number of fatalities and injuries. Despite the gains in this area, coastal storms still pose a potential for causing fatalities and injuries, and as such are an important consequence of coastal catastrophes that should be included in the accounting of benefits and costs of coastal risk reduction.
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From page 125... ...
Benefit-Cost Analysis in the Context of Long-Lived Projects Long-lived investments require an explicit consideration of the future, which necessitates a decision on how to compare present versus future benefits and costs. Investments in coastal risk reduction often generate long-lasting benefits in the form of reduced risk or increases in ecosystem services, or costs in the form of ongoing operation and maintenance expenses or reductions in ecosystem services.
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From page 126... ...
Requiring coastal communities to foot the entire bill for investments in risk reduction can place unaffordable burdens on these communities, especially for those with lower or middle incomes. In addition, some benefits from coastal risk reduction generate widespread benefits that go well beyond just the residents of the coastal community being protected, such as recreation or tourism benefits for nonresidents.
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From page 127... ...
Coastal risk planning currently under way in the Netherlands (Box 4-1) represents an example of a hybrid approach that accounts for benefits and costs of investment but adds constraints based on acceptable fatality risk.
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From page 128... ...
As a result of this catastrophe, coastal risk began to be treated in a more rational and uniform way. The First Delta Commission advised in 1960 that flood protection levels should be determined based on the value of the property to be protected and the cost of protection (i.e., benefit-cost analysis)
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From page 129... ...
Proposed standards are derived on the basis of an optimal dike investment strategy denoting when, where, and how much to invest. The damage cost also includes the cost of human life and other aspects that are difficult to value in monetary terms, with minimal tolerable fatality risks considered separately from total costs and benefits.
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From page 130... ...
CONCLUSIONS AND RECOMMENDATIONS Investments in coastal risk reduction generate significant benefits to society by reducing risk to people and property, but they also involve significant costs. Increases in development and population along the coast, along with sea-level rise, only increase the stakes involved in protecting vulnerable coastal areas.
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From page 131... ...
The recently updated federal guidance for water resources planning -- the 2013 Principles and Requirements for Federal Investments in Water Resources -- provides an effective framework to account for life-safety, social impacts, and environmental costs and benefits in coastal risk reduction decisions. The Principles and Requirements, developed by the White House Council on Environmental Quality in response to a 2007 congressional mandate, represents the first step toward federal water resources policy reform.
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From page 132... ...
design level of coastal risk reduction. The 100-year flood criterion used in the National Flood Insurance Program was established for management purposes, not to achieve an optimal balance between risk and benefits.
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