“Non-Typical” Economic, Environmental, and Other Flood Risk Management Benefits

What are non-typical FRM benefits? Evacuation-Transition-Reoccupation Evacuation-Transition-Reoccupation Increased Living Expenses Increased Living Expenses Health Costs Health Costs Traffic Diversions Traffic Diversions Emergency Response Emergency Response Public Assistance Public Assistance Environmental Damage Environmental Damage

What are underutilized FRM benefits? Emergency Response (Search and Rescue) Emergency Response (Search and Rescue) Clean Up (Debris Removal) Clean Up (Debris Removal) Administrative (SBA Loans, Other Agencies) Administrative (SBA Loans, Other Agencies) Damages to Roads and Public Works Damages to Roads and Public Works Damages to Utilities Damages to Utilities

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 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 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 Hard to make site specific without recent verified data from historical events

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 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 Specific pre-determined Questions are directed to subject matter experts for various damage scenarios Their responses are used to populate algorithm to estimate damages Their responses are used to populate algorithm to estimate damages

ARCF Non-typical NED Categories for EE

Preliminary EE Results

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

USACE Environmental Operating Principles (condensed version) l 1. Strive to achieve Environmental Sustainability. l 2. Recognize the interdependence of life and the physical environment. l 3. Seek balance and synergy among human development activities and natural systems. l 4. Continue to accept corporate responsibility and accountability. l 5. Seek ways and means to assess and mitigate cumulative impacts. l 6. Build and share an integrated scientific, economic & social knowledge base. l 7. Respect the views of individuals and groups interested in Corps activities; listen to them actively and learn from their perspective. See ER for implementation policy guidance

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

Environmental Restoration has been a successional process Flood Risk Management

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 Flood Damage Reduction Mission without Environmental Concern

Finding Environmental Opportunities is not a New Concept

AKA: 1. Good Environmental Design 2. Impact Avoidance 3. Impact Minimization 4. Mitigation 5. The Environmental Alternative

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

Breakthrough !! Recognition that Environment has non-monetary value Projects can be justified on non-monetary values WRDA 86 §1135

but you must show significant Flood Damage Reduction and Ecosystem Improvement Dual Purpose Projects may be justified using a combination of traditional economics and non-traditional ecosystem values

SCRB Method  Separable Cost-Remaining Benefits (SCRB)  Adopted by interagency agreement March 1954 as preferred method  ER reaffirmed its preferred status

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

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

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

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

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.

SCRB Example

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

Flood Damage Reduction - Ecosystem Restoration SCRB Example Flood Damage Reduction Ecosystem RestorationTotal Average Annual Benefits1,930 Non-monetary 1,930 + Non-monetary Single Purpose Alternative Cost2,9305,3508,280 Limited Benefits/Costs1,9305,3507,280 Separable Costs1,6505,0706,720 Remaining Benefits Percent of Total50% 100% Joint Costs--280 Allocated joint cost140 - Total allocation7,000 1,7905,210

Other Social Effects (from IPET Report) Drowning Drowning Infection Infection Homicide Homicide Suicide Suicide Accidents Accidents Injury Injury Illness Illness Fraud Fraud

Other Social Effects (OSE) Account Community’s Resiliency & Social Vulnerability Community’s Resiliency & Social Vulnerability Environmental Justice Environmental Justice Quality of Life Indicators Quality of Life Indicators Solid academic literature Solid academic literature Widely used Widely used Recommended by GAO Recommended by GAO Models Models Hedonic Models Hedonic Models Loss of Life Estimation Loss of Life Estimation

Regional Economic Development (RED) Typically regional economic impacts of a project can be classified into one of three categories: 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. 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. 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. Induced effects are changes in consumer spending patterns caused by increases in employment and income as ‘direct’ and ‘indirect’ industries increase their employment.

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

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

Measurement challenges – that we will need to think through Can OSE and RED be qualitative or quantitative? Can OSE and RED be qualitative or quantitative? Technical challenges in measuring them Technical challenges in measuring them Need to measure for existing conditions, future w/ and w/o project conditions 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? 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 Significance of effect influences need to measure quantitatively