Catalyzing Climate and Disaster Resilience: Processes for Identifying

4
Catalyzing Climate and Disaster Resilience: Processes for
Identifying Tangible and Economically Robust Strategies
benefits from risk reduction. Second, risk reduction also may not pay in high cost
specialized systems that are designed to respond to individual rather than multiple
hazards. This is particularly true if such systems are over-designed or depend on
institutions or technical maintenance that are difficult to sustain in the interval between
hazard events. Third, unless the value of life is monetized, risk reduction may not
generate economic returns in cases where the main benefit is in terms of lives, rather
than assets, saved. In this case, however, rather than undertaking an economic costbenefit
analysis it is probably more appropriate to compare investments on the basis
of cost per life saved rather than attempt to monetize the value of life. Aside from these
three exceptions, in most cases appropriately designed risk reduction strategies do
represent a sound investment that, as already noted above, is central both to alleviating
poverty and to responding to the expected impacts of climate change on lives and
livelihood systems.
| TABLE 1 | Sample results from cost-benefit analysis of risk management measures in specific case contexts*
Sample interventions
Estimated
B/C Ratio**
Change in B/C ratio with
Climate Change
UTTAR PRADESH FLOOD MANAGEMENT
Construction of embankments for flood control (existing programme).
Ratio shown reflects indirect costs and benefits. A strict engineering
analysis that excludes indirect costs and benefits would, under current
climatic conditions, give a B/C ratio of 4.6.
Maintenance of existing embankments
Distributed mix of community based interventions
1
2
2.5
Likely to decline
Stable
Increases
UTTAR PRADESH DROUGHT MANAGEMENT
Groundwater irrigation (risk reduction alone)
Index based insurance programme
Combination of insurance and irrigation
RAWALPINDI URBAN FLOOD MANAGEMENT
Expressway/Channel
Community pond
River improvement by removing blockages at key choke points
Early warning system as currently installed. This is a dedicated early
warning system that was installed following a major flood event in 2002.
The benefit-cost ratio is not representative of other early warning systems.
Relocation of population and restoration of the flood plain
NEPAL QUALITATIVE COST BENEFIT ANALYSIS
Flood control embankments along Bagmati River: Evaluation included
indirect benefits and costs as well as their distribution
Distributed mix of community level interventions: Note benefit and cost
characteristics are qualitatively different from those associated with
embankments and in many cases can't be directly compared.
1.6
2
2.2
1.88
8.55
25
0.96
Cost per life saved
approximately USD 44,000
1.34
Costs appear to exceed benefits
Benefits appear to exceed costs
Increases to 2
Declines to 1.2
Stable
Not analyzed
Likely to be robust
Likely to be robust or increase
Benefits would increase with
anticipated increases in flooding -
but the greatest increases would
come with improvements in design
Likely to increase
Appears likely to decline
Appears likely to increase
* All B/C ratios shown are for 10% discount rates. Assumptions and details underlying all ratios are discussed extensively in the relevant chapters below.
** A note for non-economists: a B/C ratio above 1.0 indicates benefits outweighing costs. The higher the number, the higher the benefit.
The above said it is essential to recognize that returns from investment in risk
management depend both on the specific details or design of a given intervention and
on the resilience of the underlying strategy. While risk management does in a generic
sense pay, the returns and effectiveness of many guiding strategies and specific
interventions depend heavily on projections regarding future conditions and on other
factors where uncertainty is high. Some strategies and interventions deliver robust