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benefit/cost economics the "acid test" is ill founded, Stepping back from the perceived logic of benefit/cost today we have a policy that does the following. First, flood control spending has become premised on an economic return, This begs the question whether we are directly or indirectly encouraging investments in high risk areas. Second, the systems are not set up to recognize least-cost alternatives, which may not be justified by a benefit/cost ratio, Why are we spending more money to solve the problem? For example, we can justiJy with a benefit/cost ratio a project to build a $1 O-million levee to partially protect some residences, when we could have had a permanent solution by using the same amount of money to purchase the properties outright and leave the land in open space. Finally, our investment-based approach does not fully consider that the real policy problem facing the U,S, Treasury is cash flow, During the 1990s Congressional debate over disaster funding has shifted from funding the disaster by increasing the national debt, to funding disasters based on offsetting cuts in the budget This is a sound fiscal approach, but its policy ramifications are large, Our current policy does little to match project activities with the goal of minimizing the creation of tomorrow's losses, Instead, it is heavily focused on repairing yesterday's mistakes, ANALYSIS OF BENEFITS AND COSTS Using floodplains in a way that results in periodic flood damage is not, in itself, unwarranted or inefficient It may well be that, in certain situations, the advantages outweigh the intermittent cost of damage from floods, Further, some activities can only be conducted near the water. Principles of national economic efficiency require, however, that the benefits of floodplain occupancy exceed all associated costs, not merely those borne by the individual or enterprise that is located at risk. Benefit/cost analysis has been the established decisionmaking tool for project evaluation in federal water resources programs, and receives widespread use for engineering projects in generaL It was well suited to planning for traditional purposes, such as flood control, where both project costs and benefits were accounted for in a common unit of measurement-the dollar, It becomes problematic for less traditional applications that involve environmental, cultural, and other benefits that do not lend themselves to standardized, simplistic units of measure, Although it is a useful tool for making economic decisions, benefit/cost analysis should not be the only consideration in determining what activity or project to fund, . The estimated costs of proposed alternatives to flood problems should include both implementation costs (direct financial outlays for design, real estate acquisition, construction, operation and maintenance, and project monitoring) and economic opportunity costs-any current benefits that would be foregone if the solution is implemented. This would also include any "negative benefits" in the form of project-induced damage to be expected in the future, It is important that the opportunity costs of foregone benefits be accounted for and brought to the table to inform the decision, . The calculations of benefits on proposed nonstructural projects must be calculated in the same way as for structural projects-to include avoided damages as additional benefits, Land and easements should be considered part of the total project cost, not a local sponsor requirement Removal of these systemic biases will allow nonstructural alternatives to move forward on their own merits. Association of State Floodplain Managers .20- National Flood Programs in Review 2000