Author(s)

K.-J. Hsu

Abstract

Flood property damage avoided (PDA) is used to measure the impact of reducing damage due to applying a river flooding alleviation project, which is the main approach in professional practice. For a decision-making group and participants in the project, PDA provides a measure where the limiting conditions can be fully recognized and understood. By introducing a social discounting rate, the decision-making processes may be effectively supported with reference material on the cost-benefit evaluation of sustainable flood prevention plans. This paper utilizes the PDA approach for the cost-benefit evaluation of a flood prevention plan to explore the probability characteristics of flood risk and prevention programs. Treated as a random variable in the approach, the expected annual reduction of damages affects the benefits of flood alleviation projects, which should be represented as upper and lower limits at a specific confidence level. The probabilistic property-damage function relates the cost-benefit model and hydrological parameters that are to be explored. Finally, the expectation and variance of the property damage avoided from a flood alleviation project can then be derived. The analysis is extended to a discussion of the effect on the probability attributes of the property damage avoided, which can be used to evaluate flood prevention plans. Keywords: project appraisal, cost-benefit analysis, economic costs, flood risk, property damage avoided approach, probability model. 1 Introduction The feasibility of a hydrologic project requires that benefits exceed costs. In the cost-benefit analysis of flood alleviation projects, one needs to measure the willingness to pay for avoiding flood risks. The benefit of flood alleviation is a non-market good or service, where non-market effects refer to those that are real but involve goods or services that are not traded in markets. Many non-market

Keywords

project appraisal, cost-benefit analysis, economic costs, flood risk, property damage avoided approach, probability model.