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<br />VERSION 1.0 1/12/95 <br /> <br />THE ROLE OF BENEFIT-COST ANALYSIS <br /> <br />CHAPTER 1 <br />THE ROLE OF BENEFIT-COST ANALYSIS <br />IN HAZARD MITIGATION PROJECTS <br /> <br />, <br /> <br />Introduction <br /> <br />Acknowledge- <br />ments <br /> <br />Hazard <br />Mitigation <br />Projects <br /> <br />The Benefit-Cost <br />Program <br /> <br />This manual and accompanying software were prepared by Goettel & <br />Horner Inc. for the use of the Federal Emergency Management Agency <br />(FEMA) in conducting benefit-cost analyses of hazard mitigation <br />projects. This module is applicable to Riverine Flood hazard mitigation <br />projects; other modules are applicable to Coastal A-Zone Flood, <br />Coastal V-Zone Flood, Hurricane Wind, and Seismic hazard mitigation <br />projects. <br /> <br />Hazard mitigation projects are specifically aimed at reducing or <br />eliminating future damages. Although hazard mitigation projects may <br />sometimes be implemented in conjunction with the repair of damages <br />from a declared disaster, the focus of hazard mitigation projects is on <br />strengthening, elevating, relocating or otherwise improving buildings, <br />infrastructure or other facilities to enhance their ability to withstand the <br />damaging impacts of future disasters. In some cases, hazard <br />mitigation projects may also include training or public-education <br />programs If such programs can be demonstrated to reduce future <br />expected damages. <br /> <br />Benefit-cost analysis provides estimates of the "benefits" and "costs" of <br />a proposed flood hazard mitigation project. The benefits considered <br />are avoided future damages and losses which are expected to accrue <br />as a result of the mitigation project. In other words, benefits are the <br />reduction in expected future damages and .losses (i.e., the difference in <br />expected future damages before and after the mitigation project). The <br />costs considered are those necessary to implement the specific <br />mitigation project under evaluation. <br /> <br />Costs are generally well determined for specific projects for which <br />engineering design studies have been completed. Benefits, however, <br />must be estimated probabilistically because they dei)end on the <br />improved performance of the building or facility in future floods, the <br />timing and severity of which must be estimated probabilistically. <br /> <br />1-1 <br />