Formulating and Evaluating Measures for Flood Risk Management Econ Analysis PROSPECT Formulating and Evaluating Measures for Flood Risk Management Econ Analysis PROSPECT

Expanding the Approach to Planning Corps’ Strategic Plan A holistic focus on water problems and opportunities. Attention to the watershed A systems approach Collaboration, partnerships, and teamwork An emphasis on efficiencies 12 Actions for Change Integrated, comprehensive, systems-based Risk-based concepts, communication EC Planning under the Environmental Operating Principles Corps’ Strategic Plan A holistic focus on water problems and opportunities. Attention to the watershed A systems approach Collaboration, partnerships, and teamwork An emphasis on efficiencies 12 Actions for Change Integrated, comprehensive, systems-based Risk-based concepts, communication EC Planning under the Environmental Operating Principles

Goal: Maximize National Economic Development Benefits consistent with protecting the environment (i.e., maximize net excess benefits, benefits minus costs) Determines the extent of Federal investment Maximize National Economic Development Benefits consistent with protecting the environment (i.e., maximize net excess benefits, benefits minus costs) Determines the extent of Federal investment The basis for damage reduction benefits is the comparison of the Without Project Condition (existing condition) against the With Project Condition (project in place) at some point in time or over a period of time (e.g., 50 years). Justification:

Guidance p Traditional methodology applies to both structural and nonstructural p Specific methodology for nonstructural p Traditional methodology applies to both structural and nonstructural p Specific methodology for nonstructural For Flood Risk Management Benefit Evaluation For Flood Risk Management Benefit Evaluation

p ER , Appendix E, 31 Mar 2005 p IWR Report 88-R-2, National Economic Development Procedures Manual, Urban Flood Damage ER , 1 March 1996 p ER , 1 March 1996 (R&U) p ER , Appendix E, 31 Mar 2005 p IWR Report 88-R-2, National Economic Development Procedures Manual, Urban Flood Damage ER , 1 March 1996 p ER , 1 March 1996 (R&U) Guidance For Flood Risk Management Benefit Evaluation--traditional methodology

p Implementation Guidance for Section 219, Water Resources Development Act of 1999, Nonstructural Flood Control Projects Important to the evaluation of Evacuations and Relocations p Implementation Guidance for Section 219, Water Resources Development Act of 1999, Nonstructural Flood Control Projects Important to the evaluation of Evacuations and Relocations For Flood Risk Management Benefit Evaluation -- specific methodology Guidance

Data Requirements for Economic Analysis Data Requirements for Economic Analysis With which to develop without project condition -- average annual equivalent damages under without project, base condition for a given interest rate and price level.

p Data requirements required for analysis: Structure Inventory Depth-damage Relationship H&H Water Surface Profiles For near term and “most likely” future conditions 8 flood frequencies for input into HEC-FDA Risk and Uncertainty parameters p Data requirements required for analysis: Structure Inventory Depth-damage Relationship H&H Water Surface Profiles For near term and “most likely” future conditions 8 flood frequencies for input into HEC-FDA Risk and Uncertainty parameters Data Requirements for Economic Analysis

p Integration tool HEC-FDA with Risk and Uncertainty  Express uncertainty in: Depth-damage Curves Structure Values Content Values First-floor Elevation Structure Types Flood Warning Times Flood Evacuation Effectiveness p Integration tool HEC-FDA with Risk and Uncertainty  Express uncertainty in: Depth-damage Curves Structure Values Content Values First-floor Elevation Structure Types Flood Warning Times Flood Evacuation Effectiveness Data Requirements for Economic Analysis (Continued)

5 data elements for each structure p type -- match with depth-percent damage curves p value--replacement value less depreciation p location--with reference to river/stream stationing X and Y coordinates p ground elevation--derive from TIN, contour maps Z coordinate p first floor correction/threshold of flooding -- critical to damage estimation 5 data elements for each structure p type -- match with depth-percent damage curves p value--replacement value less depreciation p location--with reference to river/stream stationing X and Y coordinates p ground elevation--derive from TIN, contour maps Z coordinate p first floor correction/threshold of flooding -- critical to damage estimation Develop Structure Inventory Data Requirements for Economic Analysis

Example of Tax Appraisal District Property Record as Attribute File

Hypothetical Example--data elements Develop Structure Inventory Without Project Damages Computation p Type One-Story Residential, No Basement p Value $75,000 replacement cost less depreciation p Exterior Brick Veneer, Square Feet = 2,500 p Location Greens Bayou Cross Section p Ground elevation 84.5 feet msl p First floor elevation 86.5 feet msl p Type One-Story Residential, No Basement p Value $75,000 replacement cost less depreciation p Exterior Brick Veneer, Square Feet = 2,500 p Location Greens Bayou Cross Section p Ground elevation 84.5 feet msl p First floor elevation 86.5 feet msl

Depth-Damage Relationship p percent damage to structure and contents based on value of structure by increment of flood stage/elevation p includes uncertainty in estimation p percent damage to structure and contents based on value of structure by increment of flood stage/elevation p includes uncertainty in estimation EGM 01-03, Generic Depth-Damage Relationship

As per EGM Depth-percent Damage Curves with Uncertainty Residential, One-story, No Basement, $75,000 Value $0 $10 $20 $30 $40 $50 $60 $70 $ DEPTH OF FLOODING RELATIVE TO FIRST FLOOR ELEVATION DOLLAR DAMAGES IN THOUSANDS LOWER LIMIT-STRUCTURE DAMAGEUPPER LIMIT-STRUCTURE DAMAGE LOWER LIMIT-CONTENT DAMAGEUPPER LIMIT-CONTENT DAMAGE

Without Project Depth-Percent Damages DEPTH OF FLOODING FLOOD STAGE DEPTH DAMAGE CURVE MEAN STRUCTURE DAMAGE $0.00 $1.88 $10.05 $17.48 $24.08 $30.08 $35.33 $39.90 $43.95 $47.40 $50.40 $52.88 $54.90 $56.55 $57.90 $58.88 $59.63 $60.15 $60.53 DEPTH DAMAGE CURVE MEAN CONTENT DAMAGE $0.00 $1.80 $6.08 $9.98 $13.43 $16.50 $19.28 $21.60 $23.63 $25.35 $26.78 $27.90 $28.80 $29.40 $29.78 $30.00 (One-story, No Basement Residential Valued at $75,000)

Near-Term Without Project Frequency-Damage No uncertainty presented FLOOD EVENT FLOOD STAGE ANNUAL PROBABILITY OF OCCURRENCE STRUCTURE FLOOD DAMAGES CONTENT FLOOD DAMAGES TOTAL FLOOD DAMAGES $0.00 $8.66 $18.40 $25.82 $29.42 $31.49 $34.28 $35.27 $0.00 $5.35 $10.78 $14.32 $16.16 $17.25 $18.72 $19.25 $0.00 $14.01 $29.18 $40.13 $45.58 $48.74 $53.00 $54.52 (One-story, No Basement Residential Valued at $75,000)

Integration Technique Graphically Displayed ELEVATION FREQUENCY DISCHARGE DAMAGE EXPECTED ANNUAL FLOOD LOSS

Frequency Damages Annualized as Expected Annual Damages

Now what?

p Are damages of sufficient magnitude to warrant Federal action? p Are there sufficient number of properties to cover fixed cost of possible remedy? (applies to nonstructural) p Are damages of sufficient magnitude to warrant Federal action? p Are there sufficient number of properties to cover fixed cost of possible remedy? (applies to nonstructural) Goal of NED analysis: p Establish Federal Interest with a positive Benefit-Cost Ratio p Optimize Plan by Maximizing Net Excess Benefits--money spent most economically efficiently p Establish Federal Interest with a positive Benefit-Cost Ratio p Optimize Plan by Maximizing Net Excess Benefits--money spent most economically efficiently What Can We Afford to Do?

March p Structural measures Modify flood behavior, change flood profile Modify flood behavior, change flood profile Dams and reservoirs, levees, walls, diversion channels, bridge modifications, channel alterations, pumping, and land treatment Dams and reservoirs, levees, walls, diversion channels, bridge modifications, channel alterations, pumping, and land treatment p Nonstructural measures Modify damage susceptibility Modify damage susceptibility Flood warning and preparedness; Evacuation and relocation; Land use regulations; Flood proofing; Area renewal policies Flood warning and preparedness; Evacuation and relocation; Land use regulations; Flood proofing; Area renewal policies Flood Risk Management Measures

Primary Difference in Implementation of Nonstructural Measures Primary Difference in Implementation of Nonstructural Measures Affect Change to Privately-Owned Land

March Evaluation of Without Project Condition

March Channel Modification

March Levee

p Elevation: elevate structure on fill/beams/etc. Raising-in place, raising to target p Flood Proofing, Dry: seal/waterproof p Floodwalls and Berms p Flood Proofing, Wet: flood proof first floor, elevate contents p Floodwarning p Relocation/Buyout/Acquisition p Elevation: elevate structure on fill/beams/etc. Raising-in place, raising to target p Flood Proofing, Dry: seal/waterproof p Floodwalls and Berms p Flood Proofing, Wet: flood proof first floor, elevate contents p Floodwarning p Relocation/Buyout/Acquisition Nonstructural Measures Change to stage-damage curve only

Which Measures Apply? p Damage profile, distribution of damages p Activities in watershed/floodplain: upstream, downstream, existing and projected land use p Environmental concerns p Non-Federal sponsor’s preference? p Damage profile, distribution of damages p Activities in watershed/floodplain: upstream, downstream, existing and projected land use p Environmental concerns p Non-Federal sponsor’s preference?

p Where are the Bennies? p Which categories are appropriate for each measure? p Where are the Bennies? p Which categories are appropriate for each measure? Economic Benefit Calculation

Benefit Categories for Structural Measures p Inundation Reduction p Reduction in FIA Overhead p Location Flood Proofing Costs Reduced p Intensification Restoration of Land Values p Inundation Reduction p Reduction in FIA Overhead p Location Flood Proofing Costs Reduced p Intensification Restoration of Land Values

March New activity moves into the protected floodplain ü Benefits calculated as whichever is less of: –Increased potential damages in the changed land use assuming without project conditions; or –Cost of fill/flood proofing Location Benefits

March Intensification Benefits Existing activity is intensified ü Benefits calculated as: –Increased income as a result of intensified activity »Increased land values »Computation of costs and revenues

BENEFITS TO NONSTRUCTURAL MEASURES p Inundation Reduction p Reduction in FIA Overhead p Value of New Use of Floodplain for Relocations/Buyouts p Inundation Reduction p Reduction in FIA Overhead p Value of New Use of Floodplain for Relocations/Buyouts

Claimable Benefits p Reduction in primary flood damages to structures and contents Dry Flood Proofing Elevation Berms and Floodwalls

Floodwarning Claimable Benefits p Reduction in primary flood damages to contents p Reduction in damages to vehicles p Reduction in primary flood damages to contents p Reduction in damages to vehicles

Relocation: Floodplain Evacuation/Buyout Relocation: Floodplain Evacuation/Buyout Claimable Benefits p Reduction in primary flood damages to structures and contents p Reduction in FIA overhead p Value of new use of vacated land p Recreation benefits p Reduction in damage to public property, utilities, roads p Reduction in post-emergency evacuation/cleanup costs p Reduction in primary flood damages to structures and contents p Reduction in FIA overhead p Value of new use of vacated land p Recreation benefits p Reduction in damage to public property, utilities, roads p Reduction in post-emergency evacuation/cleanup costs Relocation

Elevation : Elevate structure on fill/beams/etc. Raising-in-Place, Raising to Target Elevation : Elevate structure on fill/beams/etc. Raising-in-Place, Raising to Target Elevation

Structure Flood Proofed by Abandoning First Floor and Moving Living Quarters to Upper Levels Raising-in-Place

(Comparison of Raising a 1-story, No Basement Residential Structure) Stage-Percent Damage Curve WITHOUT PROJECT RAISE 2 FEET RAISE 3 FEET RAISE 8 FEET 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% FLOOD STAGE PERCENT DAMAGE

Hypothetical Example DAMAGES REDUCED PWE BENEFITS PWE COSTS PWE NET EXCESS BENEFITS AAEV NET EXCESS BENEFITS EXISTING $8.51 RAISE 2 FT $2.34 $6.17 $92.41 $79.43 $12.98 $0.87 RAISE 3 FT $0.23 $8.28 $ $82.69 $41.29 $2.76 RAISE 8 FT $0.00 $8.51 $ $96.39 $30.98 $2.07 Evaluate and Optimize Raising Residential Structure

Optimization of Raising-in-Place $0.87 $2.76 $2.07 $0 $1 $2 $3 RAISE 2 FT RAISE 3 FT RAISE 8 FT PLANS FOR RAISING NET EXCESS BENEFTIS IN THOUSANDS Net Excess Average Annual Equivalent Benefits Comparison-- Raising in Place

Dry Flood Proofing: Seal/Waterproof Dry Flood Proofing

Dry Flood Proofing : seal/waterproof and Levees, Floodwall, and Berms Comparison of Stage-damage for Flood Proofing a 1-story, No Basement, Residential Structure 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% FLOOD STAGE PERCENT DAMAGE WITHOUT PROTECTION 2 FT PROTECTION 3 FT PROTECTION 4 FT PROTECTION

Optimization of Protection Height PWE AAEV DAMAGES PWE NET EXCESS REDUCED BENEFITS COSTS BENEFITS EXISTING $ FT PROTECTION $1.71 $6.80 $ $11.20 $90.56 $ FT PROTECTION $0.50 $8.00 $ $16.40 $ $ FT PROTECTION $0.00 $8.51 $ $26.70 $ $6.72 Dollars X 1,000 Dry Flood Proofing : Seal/waterproof also Levees, Floodwalls, and Berms

Optimization of Protection Height Net Excess Average Annual Equivalent Benefit Comparison -- Floodwall Height $6.05 $6.91 $6.72 $5.60 $5.80 $6.00 $6.20 $6.40 $6.60 $6.80 $ FT PROTECTION 3 FT PROTECTION 4 FT PROTECTION PLANS FOR PROTECTION NET EXCESS BENEFTIS IN THOUSANDS

Wet Flood Proofing: Flood Proof first floor, Elevate contents Wet Flood Proofing

Wet Flood Proofing: Hypothetical - Change to Content Damages Only Damage Frequency Curve For One-story, No Basement Residential Structure $75,000 Value $0 $10 $20 $30 $40 $50 $ EXCEEDANCE PROBABILITY DAMAGES IN THOUSANDS WITHOUT PROJECT RAISE CONTENTS

Flood Warning

Flood Warning Response WARNING TIME IN HRS PERCENT CONTENT DAMAGE REDUCTION AAEV CONTENT DAMAGES REDUCED 0.00 $ $ $ $ $ $ $ $ $ $ $ $ $1.10

Flood Warning Lead Time Damages Prevented Flood Warning Lead Time Damages Prevented Lead Time in Hours Percent Content Damage Reduced Day, Harold. “Flood Warning Benefit Evaluation-Susquehanna River Basin,” NOAA Tech Memo, WBTM HDRO-10, March, 1970.

Flood Warning: Damage Reduction Estimate Average Annual Equivalent Content Damages Reduced For One-story, No Basement, Residential Structure, $75,000 Value $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $ WARNING TIME IN HOURS THOUSANDS OF DOLLARS

Relocation: Floodplain Evacuation/Buyout Claimable Benefits p Reduction in primary flood damages to structures and contents p RE: Implementation Guidance for Section 219 of WRDA ‘99 p Reduction in FIA overhead p Value of new use of vacated land p Recreation benefits p Reduction in damage to public property, utilities, roads p Reduction in post-emergency evacuation/cleanup costs p Reduction in primary flood damages to structures and contents p RE: Implementation Guidance for Section 219 of WRDA ‘99 p Reduction in FIA overhead p Value of new use of vacated land p Recreation benefits p Reduction in damage to public property, utilities, roads p Reduction in post-emergency evacuation/cleanup costs Relocation

Nonstructural Flood Control Projects ² Directs that Corps calculate benefits for nonstructural flood damage reduction similarly to methods for structural projects ² Corps now calculates benefits for evacuation/relocation projects as total flood damages reduced, not just the externalized flood damages as previously required. ² Real Estate costs used for benefit-cost calculation will use comparable flood-free lands costs in the valuation of floodplain land. ² Directs that Corps calculate benefits for nonstructural flood damage reduction similarly to methods for structural projects ² Corps now calculates benefits for evacuation/relocation projects as total flood damages reduced, not just the externalized flood damages as previously required. ² Real Estate costs used for benefit-cost calculation will use comparable flood-free lands costs in the valuation of floodplain land. Implementation Guidance for Section 219, WRDA ‘99

Relocation: Floodplain Evacuation/Buyout Other Considerations  Opportunities for Ecosystem Restoration, however, ecosystem restoration may require a separate local sponsor, depending on situation and sponsor’s extent of authority  Need to act swiftly to execute buyouts once the public becomes aware of the impending action  Need to demolish structures and clear debris immediately to minimize vandalism and protect the surrounding neighborhood  Opportunities for Ecosystem Restoration, however, ecosystem restoration may require a separate local sponsor, depending on situation and sponsor’s extent of authority  Need to act swiftly to execute buyouts once the public becomes aware of the impending action  Need to demolish structures and clear debris immediately to minimize vandalism and protect the surrounding neighborhood Buyout

Recreational Benefit Analysis The success of a relocation/buyout solution may be contingent on the recreational opportunities created from the open space created.

Recreation Benefit Analysis Nonstructural FRM projects allow adding recreation benefits to justify the overall project and there is NO LIMIT to the recreation allowed so long as primary purpose benefits cover at least 50 percent of the costs. Nonstructural FRM projects allow adding recreation benefits to justify the overall project and there is NO LIMIT to the recreation allowed so long as primary purpose benefits cover at least 50 percent of the costs.

that include Nonstructural Flood Risk Management (Cost = $8M), Ecosystem Restoration (Cost = $2M), and Recreation p The cost of recreation may not exceed 1/2 of the total cost for flood risk management and recreation (recreation = $8M) p For recreation associated with ecosystem restoration, the Federal cost of ecosystem restoration + the Federal cost of recreation may not exceed by more than 10% the Federal cost of the Ecosystem Restoration Project without prior approval of ASA(CW) (recreation = $200,000) p The cost of recreation may not exceed 1/2 of the total cost for flood risk management and recreation (recreation = $8M) p For recreation associated with ecosystem restoration, the Federal cost of ecosystem restoration + the Federal cost of recreation may not exceed by more than 10% the Federal cost of the Ecosystem Restoration Project without prior approval of ASA(CW) (recreation = $200,000) For Multipurpose Projects

3 Evaluation Methods for Recreation Analysis Travel Cost Method (TCM) Contingent Valuation Method (CVM) Unit Day Value

Recreation Decision Tree YES NO YES NO Is an applicable regional model available? Use regional model (TCM or CVM) Do uses affected involve specialized recreation activities? Develop a regional model or conduct a site-specific study (TCM or CVM) Do estimated annual visits affected exceed 750,000? Do expected costs exceed 25 percent of expected total project costs? Do specific annual Federal recreation costs exceed $1,000,000 (FY 1982) Use unit day values

Use Unit Day Value if… The Annual Visitation < 750,000 and Opportunities Created Tend to Be Generalized and You Can Justify Not Using the CVM or the TCM The Annual Visitation < 750,000 and Opportunities Created Tend to Be Generalized and You Can Justify Not Using the CVM or the TCM

Incorporate input from the public and knowledgeable experts to assign points to recreational features for UDV Make sure ecosystem restoration is not compromised by recreational features if pursuing both

References EGM 09-03, Unit Day Values for Recreation, FY 2009 published annually EGM 09-03, Unit Day Values for Recreation, FY 2009 published annually

A Moment To Say A Word About … COSTS (Not now, dear, I have a headache)

References p ER , Appendix D-3, “NED Cost Evaluation Procedures” and p National Economic Development Procedures Manual--National Economic Development Costs, DACWC72-90-D-0002, Task Order 0010, June 1993 p ER , Appendix D-3, “NED Cost Evaluation Procedures” and p National Economic Development Procedures Manual--National Economic Development Costs, DACWC72-90-D-0002, Task Order 0010, June 1993

When Costing Relocations/Evacuations… p Use Economic Costs, not Project Costs for economic benefit-cost calculations p When establishing costs for relocations, DO NOT include betterments as an economic cost. p Ask Cost Estimating to please identify any betterments among the project costs before they give them to you for your net excess benefit calculation. p Use Economic Costs, not Project Costs for economic benefit-cost calculations p When establishing costs for relocations, DO NOT include betterments as an economic cost. p Ask Cost Estimating to please identify any betterments among the project costs before they give them to you for your net excess benefit calculation.

Use Economic Costs (proxy land values) in the Benefit-Cost computations Use Project Costs (actual property values) in the PCA

New guidance requires Good communication among Economics, Real Estate, and Cost Estimating to develop Economic and Project Costs

Relocation Assistance and Real Property Acquisition Policies Act of 1970, P.L Allowable Expenses for Displaced Property Owners Reimburses the following expenses incurred: Moving and related expenses Reasonable expenses in searching for a replacement business or farm Differential payments for replacement housing Increased interest payment for mortgage to include points paid and loan origination fees Closing costs, title searches, notary fees, surveys, drawings of plats, recording fees, etc. Reimburses the following expenses incurred: Moving and related expenses Reasonable expenses in searching for a replacement business or farm Differential payments for replacement housing Increased interest payment for mortgage to include points paid and loan origination fees Closing costs, title searches, notary fees, surveys, drawings of plats, recording fees, etc.

Moving and related expenses transport within 50 miles packing and unpacking advertising for packing insurance premiums covering loss while in transit/storage removal, reinstallation, reestablishment, reconnections of utilities not acquired uninsured losses to property while in transit payment of time lost, not to exceed $100 temporary housing in time of emergency dislocation other reasonable expenses as deemed necessary by District Engineer Moving and related expenses transport within 50 miles packing and unpacking advertising for packing insurance premiums covering loss while in transit/storage removal, reinstallation, reestablishment, reconnections of utilities not acquired uninsured losses to property while in transit payment of time lost, not to exceed $100 temporary housing in time of emergency dislocation other reasonable expenses as deemed necessary by District Engineer