Benefit-cost analysis of flood-mitigated residential buildings in Louisiana

Abstract

ABSTRACT Benefit-cost analysis (BCA) is a computational tool that can help to determine the economic benefits of mitigation. Many factors required to be considered in BCA but the lack of information on these factors holds decision-makers to correctly understand the economic benefits of mitigation. This study aims to improve the understanding of the economic benefits of flood mitigation efforts in Louisiana between 2005 and 2015. The mitigation projects were evaluated through a novel methodology using two post-mitigation events and a series of probabilistic events. Two major floods in 2016 in Louisiana were simulated for post-mitigation events. The study with probabilistic events was performed through a case study for residential buildings in Jefferson Parish, Louisiana. A Monte Carlo simulation was used to simulate the elevation of flooding for buildings. The novel approach in methodology shows the effect of loss function uncertainty in the context of avoided loss (AL) analysis with adjusted costs for buildings useful life. The AL and BCA indicate that mitigated buildings were associated with an average AL of $114,206 and benefit-cost ratio (BCR) of 0.76 after the 2016 floods in Louisiana, respectively. Also, the loss analysis with probabilistic events revealed an average BCR of 1.69 for flood-mitigated projects.