Proper Benefit Cost Analysis Key in Mitigation Grant Application

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• ...damage. The most common are:
  • • Displacement costs for temporary quarters
  • • Loss of income (residential or business)
  • • Lost wages
  • • Disruption time for residents
  • • Loss of public services
  • • Economic impact of loss-of-utility services
  • • Economic impact of road/bridge closures

  For the economic impact of road and bridge or utility interruptions, FEMA applies specific rates. A per-vehicle, per-hour rate is applied to detours and a per-person, per-day rate to utility interruptions.

• 3) Casualties include deaths, injuries and illnesses. Whenever a specific mitigation project demonstrably reduces the potential for future casualties, it is proper and necessary to count the benefits of reduced casualties. While there is discomfort in placing a dollar value on human life, it is sometimes necessary to valuate the cost of saving lives. Economists recognize that it is impossible to fund every project that has the potential to save a life and that a rational basis is needed to select which such projects are approved and which are turned down. Understanding up front that reducing the risk of death stands to be a project benefit can defuse these controversies (see Statistical StandardValues or Willingness to Pay table).

Statistical Standard Values or Willingness to Pay

Natural disasters commonly result in casualties— including deaths, injuries and illnesses. Casualties are the most devastating impact of a disaster. Like other benefits, the benefits of avoided casualties are calculated as the difference in casualties occurring before and after mitigation. FEMA uses statistical values to place a monetary value on the benefits of avoided casualties. FEMA Benefit Cost Analysis statistical standard values were derived from 2008 FAA “Willingness to Pay”values. In Version 4.8 (dated 2009) they were as follows:

Death $5,800,000.00

Hospitalized $1,088,000.00

Treat & Release $ 90,000.00

Self Treat $ 12,000.00

(FEMA will update these values periodically)

SOURC E : FEMA’s BCA Toolkit 4.8 —2009 Updated Life Safety Benefit Values For 2015, the Value of Statistical Life (VSL) equivalent was increased to $6.6 million. The economic value of injuries avoided is calculated differently in the BCA modules, which include casualty values but are scaled off of this new fatality rate.