Resolution No. 4814 - Laserfiche WebLink

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mitigation project reduces risk does not make it a good project. A $1,000,000 project that avoids an average of $100 per year in flood damages is not worth doing, while the same project that avoids an average of $200,000 per year in flood damages i_ss worth doing. The principles of benefit-cost analysis are briefly summarized here. The benefits of a hazard mitigation project are the reduction in future damages and losses, that is, the avoided damages and losses that are attributable to a mitigation project. To conduct benefit-cost analysis of a specific mitigation project the risk of damages and losses must be evaluated twice: before mitigation and after mitigation, with the benefits being the difference. The benefits of a hazard mitigation project are thus simply avoided future damages and tosses. Because the benefits of a hazard mitigation project accrue in the future, it is impossible to know exactly what they will be. For example, we do not know when future floods or other natural hazards will occur or how severe they will be. We do know, however, the probability of future floods or other natural hazards (if we have appropriate hazard data). Therefore, the benefits of mitigation projects must be evaluated probabilistically and expressed as the difference between annualized damages before and after mitigation. The following simplified example illustrates the principles of benefit-cost analysis; more details are given in the examples in the Appendices. To illustrate the principles of benefit-cost analysis, we consider a hypothetical single family house in the town of Acorn, with the house located on the banks of Squirrel Creek. The house is a one story struture, about 1500 square feet on a post foundation, with a replacement value of $60/square foot (total $90,000). We have flood hazard data for Squirrel Creek (stream discharge and flood elevation data) and elevation data for the first floor of the house. Therefore, we can calculate the annual probability of flooding in one-foot increments, as shown below. Table 1,8 Damages Before Mitigation Flood Depth Annual Probability Scenario Damages and Annualized Flood (feet) of Flooding Losses Per Flood Event Damages and Losses 0 0 2050 $6,400 $1,312 1 0 1234 $14,300 $I ,765 2 0 0867 $24,500 $2,124 3 0.0223 $28,900 $673 4 0 0098 $32,100 $315 5 0.0036 $36,300 $123 Total Expected Annual (Annualized) Damages and Losses $6,312 Flood depths shown above in Table 1.8 are in one foot increments of water depth above the lowest floor elevation. Thus, a "3" foot flood means all floods between 2.5 feet and 3.5 feet of water depth above the floor. We note that a "0" foot flood has, on Public Review Draft August 6, 2004 1~t 1