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Non-Typical Economic, Environmental, and
Other Flood Risk Management Benefits
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What are non-typical FRM benefits?

• Evacuation-Transition-Reoccupation
• Increased Living Expenses
• Health Costs
• Traffic Diversions
• Emergency Response
• Public Assistance
• Environmental Damage

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What are underutilized FRM benefits?

• Emergency Response (Search and Rescue)
• Clean Up (Debris Removal)
• Administrative (SBA Loans, Other Agencies)
• Damages to Roads and Public Works
• Damages to Utilities

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What are the potential value of and underutilized
non-typical FRM benefits?

• THESE BENEFITS CAN REPRESENT AS MUCH AS 25 TO
  35 OF THE BENEFIT BASE ON A TYPICAL FRM PROJECT
• But they can be very difficult to quantify,
  difficult to model and differentiate between
  alternatives
• Hard to make site specific without recent
  verified data from historical events

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Expert Elicitation Non-Typical Damage Categories

• In instances where it may be too time consuming
  or expensive to collect essential historical
  data, EE can be used as a substitute
• Specific pre-determined Questions are directed to
  subject matter experts for various damage
  scenarios
• Their responses are used to populate algorithm to
  estimate damages

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ARCF Non-typical NED Categories for EE
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Preliminary EE Results
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Environmental Benefits

• Flooding is natural flood damage reduction is
  not
• Flood damage reduction measures can have
  environmental consequences
• Some are intended, some are not
• Some are anticipated, some are not
• Some are beneficial, some are adverse
• Unanticipated, unintended consequences may be the
  worst type

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USACE Environmental Operating Principles
(condensed version)

• 1. Strive to achieve Environmental
  Sustainability.
• 2. Recognize the interdependence of life and the
  physical environment.
• 3. Seek balance and synergy among human
  development activities and natural systems.
• 4. Continue to accept corporate responsibility
  and accountability.
• 5. Seek ways and means to assess and mitigate
  cumulative impacts.
• 6. Build and share an integrated scientific,
  economic social knowledge base.
• 7. Respect the views of individuals and groups
  interested in Corps activities listen to them
  actively and learn from their perspective.

See ER 200-1-5 for implementation policy guidance
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Three Reasons for Principles

• 1. To create unity of purpose within the Corps
  when dealing with environmental issues
• 2. To reflect a new tone and direction for
  dialogue on environmental matters
• 3. To ensure that conservation, environmental
  preservation and restoration are considered in
  all Corps activities at same level as economic
  issues

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The Marriage of
Environmental Restoration
Flood Risk Management
has been a successional process
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Flood Damage Reduction Mission without
Environmental Concern
Flood Damage Reduction
with Increasing Environmental Awareness, FWCA
CWA NEPA ESA Ecosystem Restoration made a
Stand Alone Mission, WRDA 86 1135 WRDA 90 303
WRDA 96 206 Integrated Flood Risk
Management and Ecosystem
Restoration Purposes, WRDA 99 212
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Finding Environmental Opportunities is not a New
Concept
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AKA 1. Good Environmental Design 2. Impact
Avoidance 3. Impact Minimization 4.
Mitigation 5. The Environmental Alternative
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We have delayed or walked away from many good
projects that were economically marginal by not
claiming environmental improvements as benefits
for non-structural and structural projects
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Breakthrough !! Recognition that Environment has
non-monetary value
Projects can be justified on non-monetary values
WRDA 86 1135
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Dual Purpose Projects may be justified using a
combination of traditional economics
and non-traditional ecosystem values
but you must show significant Flood Damage
Reduction and Ecosystem Improvement
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SCRB Method

• Separable Cost-Remaining Benefits (SCRB)
• Adopted by interagency agreement March 1954 as
  preferred method
• ER 1105-2-100 reaffirmed its preferred status

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SCRB Definitions

• Cost Allocation is the process of equitably
  distributing project costs among project
  purposes.
• Separable costs - costs incurred specifically to
  add a purpose to a project
• Joint costs - the difference between the total
  project costs and the sum of all separable costs

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Formulation Requirements for SCRB Allocation

• Cost allocation requires formulation of specific
  plans
• Multipurpose plan
• Multipurpose plans less each purpose
• Most likely alternative single purpose plan

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Allocation Equity

• Use of the SCRB method results in the following
  maximum and minimum cost limits for each purpose
• Maximum
• Benefits to each purpose
• Cost of the least cost alternative for each
  purpose.
• Minimum separable costs
• Most likely proportional sharing of joint costs
  of multipurpose added to minimum

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Major Key Points

• You know all there is to know
• The allocation method is relatively straight
  forward Those who benefit pay
• Problems relate to the inputs that are required

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Ecosystem Restoration Example

• To determine alternative project cost for
  ecosystem restoration purposes
• Determine the cost of the next most efficient
  plan producing the same ecosystem output and
  meeting the planning objectives
• If the plan formulation is done correctly, the
  cost of the ecosystem restoration portion of the
  multipurpose plan represents a more efficient
  investment. If not, reformulate.

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SCRB Example
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The Project Flood Damage Reduction and
Ecosystem Restoration

• Total Cost Dual-purpose Project 7,000
• Cost without Ecosystem Restoration 2,930
• Cost without Flood Damage Reduction 5,350
• Flood Damage Reduction Benefits 1,930
• Ecosystem Benefits Non-monetary

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Flood Damage Reduction - Ecosystem Restoration
SCRB Example
Flood Damage Reduction Ecosystem Restoration Total
Average Annual Benefits 1,930 Non-monetary 1,930 Non-monetary
Single Purpose Alternative Cost 2,930 5,350 8,280
Limited Benefits/Costs 1,930 5,350 7,280
Separable Costs 1,650 5,070 6,720
Remaining Benefits 280 280 560
Percent of Total 50 50 100
Joint Costs - - 280
Allocated joint cost 140 140 -
Total allocation 7,000
1,790
5,210
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Other Social Effects(from IPET Report)

• Drowning
• Infection
• Homicide
• Suicide
• Accidents
• Injury
• Illness
• Fraud

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Other Social Effects (OSE) Account

• Communitys Resiliency Social Vulnerability
• Environmental Justice
• Quality of Life Indicators
• Solid academic literature
• Widely used
• Recommended by GAO
• Models
• Hedonic Models
• Loss of Life Estimation

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Regional Economic Development (RED)

• Typically regional economic impacts of a project
  can be classified into one of three categories
• Direct effects which represent the initial change
  of the new expenditure stream on industries in
  direct support of the new project. These direct
  industries will require support.
• Indirect effects are changes in inter-industry
  transactions as supplying industries respond to
  new demands placed on them by direct
  industries.
• Induced effects are changes in consumer spending
  patterns caused by increases in employment and
  income as direct and indirect industries
  increase their employment.

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Evaluating RED

• Construction impacts in project area Creates
  direct, indirect and induced jobs for local
  economy (why not NED Transfers)
• Non-NED Flood damage reduction- interruption of
  activities due to flood

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Portfolio Management

• Why is this an important project?
• Why is this project more important than other
  projects?
• In addition to whether a project delivers high
  priority outputs successfully meets established
  budget criteria
• RED and OSE accounts could help answer why
  important?
• Ex saves x lives, keeps local economy viable

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Measurement challenges that we will need to
think through

• Can OSE and RED be qualitative or quantitative?
• Technical challenges in measuring them
• Need to measure for existing conditions, future
  w/ and w/o project conditions
• In addition to the difference between w/ and w/o
  project conditions, can we distinguish between
  alternatives?
• Significance of effect influences need to measure
  quantitatively

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