What are Some Economic Analysis Approaches for Mitigation Strategies?
The approaches used to identify the costs and benefits associated with natural hazard mitigation strategies, measures, or projects fall into two general categories: benefit/cost analysis and cost-effectiveness analysis. The distinction between the two methods is the way in which the relative costs and benefits are measured. Additionally, there are varying approaches to assessing the value of mitigation for public sector and private sector activities. Benefit/Cost Analysis Benefit/cost analysis is used in natural hazards mitigation to show if the benefits to life and property protected through mitigation efforts exceed the cost of the mitigation activity. Conducting benefit/cost analysis for a mitigation activity can assist communities in determining whether a project is worth undertaking now, in order to avoid disaster related damages later. Benefit/cost analysis is based on calculating the frequency and severity of a hazard, avoided future damages, and risk. In benefit/cost analysis,
