Loss Avoidance Study
Inland Flooding 12/1/2010 Douglas County, Cobb County
Every year, federal, state and local government agencies and private entities fund mitigation projects that are intended to reduce or eliminate the risk of damage and loss of life from natural disasters. Natural disasters are a threat to health and safety, the built environment, and the economy. Some of the funding for mitigation comes from mitigation grants awarded by the Department of Homeland Security’s Federal Emergency Management Agency, which uses cost-effectiveness as a grant eligibility requirement.
To determine the cost-effectiveness of mitigation projects before funding them, FEMA uses tools that predict damage from probabilistic hazard events. However, because the investment in mitigation is significant, the economic performance of mitigation during actual hazard events is important, particularly to policymakers. Over the last decade, FEMA has developed and refined a methodology for determining the performance of mitigation projects in actual post-project hazard events and has completed a number of flood mitigation loss avoidance studies using the methodology. The flood methodology is detailed in FEMA’s Loss Avoidance Study: Riverine Flood Methodology Report (FEMA, 2010a).
Flooding has played a significant role in Georgia’s history of natural disasters. Every year, damage from flooding costs residents, businesses, and taxpayers millions of dollars in repairs. In September 2009, Georgia experienced some of the worst flooding in the state’s history. Torrential rains caused record-breaking flows in many streams and rivers, and in many locations, water levels exceeded 500-year flood elevations. The flooding resulted in 10 deaths; damage to 20,000 homes, businesses, and other buildings; and a loss of $500 million.
With support from the State of Georgia and FEMA, communities throughout the state have sought to reduce the risk of flood damage by implementing flood hazard mitigation projects—both building modification projects and localized, flood reduction projects. Building modification projects can involve acquisition/demolition, acquisition/relocation, elevation, or floodproofing.
In 2010, FEMA partnered with the Georgia Emergency Management Agency (GEMA) to conduct a loss avoidance study to evaluate the cost-effectiveness of the mitigation. For the study, FEMA and GEMA selected 29 building modification projects in Chattooga, Cobb, DeKalb, Douglas, and Gwinnett counties that were completed between 1997 and 2009. Cost-effectiveness was evaluated by comparing the cost of the projects to the losses avoided in all floods that had occurred since the projects were completed, including the flooding in 2009.
The 29 building modification projects included 185 buildings. All but one project involved residential buildings that had been acquired and demolished. The other project involved the demolition of a school and rebuilding it outside the 500-year floodplain. Thirteen buildings were eliminated from the study (3 because they were acquired after the September 2009 flood event and 10 because of insufficient hydrologic and hydraulic data), leaving 172 buildings in the study.
The aggregate losses avoided for the 172 buildings were valued at $27,426,369, and the aggregate project investment was valued at $48,885,368 (both values in 2010 dollars), resulting in a Return on Investment of 56% for all storm events studied. The results of the study demonstrate the cost-effectiveness of the selected projects on an aggregate basis.