Hydrologic-economic Model
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.
Related Book
Other papers in this volume
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