Darrin Punchard, AICP, CFM, principal consultant:
Today, in an era of having to do more with less, decision makers at all government levels are seeking low risk and high reward investments of their time and money.
When it comes to evaluating the return on investing in resilience to natural hazards, many aim to find the “no regrets” decisions – that is, the measures or projects that yield benefits even in the absence of future hazard occurrences. A simple example is the relocation or clearing of vulnerable structures from a flood hazard area that goes beyond risk reduction to achieve multiple co-benefits such as enhancing open space, connecting trails, increasing public access or recreational opportunities, and preserving the natural and beneficial functions of floodplains. This of course makes good sense and the value of these additional social and environmental benefits is becoming more widely recognized in federal and state mitigation grant funding programs.
However, as many communities are beginning to realize, the increased severity and probability of future and repetitive hazard events is becoming more certain, and the cost-effectiveness of mitigation projects is becoming equally more certain based simply on the projected damages and loss to be avoided.
In 2005, an independent study by a council of the U.S. National Institute of Building Sciences documented how every $1 spent on earthquake, wind and flood hazard mitigation projects saves society an average of $4 in terms of future reduced losses. The report further demonstrated that every dollar spent on flood mitigation projects saves $5. Similar studies across the globe resulted in similar findings.
I’ve been fortunate enough in my work to see and quantify these types of savings for first-hand. Most recently, I supported Charlotte-Mecklenburg Storm Water Services in the development of plans and tools that show a return on investment of nearly 6 to 1, based primarily on losses avoided through floodplain acquisition projects.
All this evidence makes it difficult to argue against the value of structural flood mitigation projects that minimize an existing and perhaps increasing risk. However, what’s most fascinating to me is to consider the monetary benefits of hazard avoidance in the first place. What is the return on investment for those communities or organizations that are able to adopt policies or higher standards that prevent risk to begin with? 50 to 1? 100 to 1? I’m not suggesting that avoidance won’t come with some costs, including opportunity costs for otherwise income and revenue-generating real estate and, of course, many communities are already “built out” with initial avoidance no longer an option. Yet it’s an important question to consider, especially for those seeking how best to leverage limited resources and maximize returns for building future flood resilience.
