@article {bnh-8039, title = {Value Tool for Natural Hazards: Guidelines}, number = {361.2018}, year = {2018}, month = {06/2018}, institution = {Bushfire and Natural Hazards CRC}, address = {MELBOURNE}, abstract = {

The {\textquotedblleft}Value Tool for Natural Hazards{\textquotedblright} comprises of a Value Tool Database, which provides a collection of non-market value estimates relevant to natural hazards, and these Value Tool Guidelines, which describe how to use the values collated in the Database. The purpose of the Value Tool is to provide an accessible list of non-market value estimates for policy makers to use in decision making about natural hazard management.

The non-market or intangible benefits and costs of natural hazards are large in many cases, and should be accounted for in prioritising investment in natural hazard mitigation. We recommend that non-market values should be considered in natural hazard decision making as follows:

The Guidelines provide an overview of non-market values and benefit transfer for natural hazard decision making as follows:\ 

The Value Tool Database and Guidelines provide guidance on how the non-market value estimates should be used, and the policy contexts under which they are best suited for use. We recognise that the non-market valuation literature is incomplete with respect to providing highly accurate value estimates for all of the value types that might be affected by a natural hazard (see Section 3). However, we advocate that the use of an approximate number is usually better than no number, when it comes to decision making. It is better to have some information about the intangible benefits of a decision, than to ignore them completely: the error, and decision bias, resulting from the latter is likely to be far greater than the error from using an inaccurate number.

Provided the policy maker is aware of the potential for this error, uses a conservative approach for transferring values, and undertakes appropriate sensitivity analysis in analyses that use those values, then the values can provide useful, quantitative information for decision making. As noted above, in some cases, where a value transfer is too unreliable, we don{\textquoteright}t recommend using the values in a quantitative analysis, but suggest using them in a qualitative manner to inform thinking about particular policies.

}, keywords = {guidelines, hazards, natural, tool, Value}, issn = {361}, author = {Abbie Rogers and Fiona L Gibson and Peter Boxall and Michael Burton and Jacob Hawkins and Robert Johnston and Marit Kragt and John Rolfe and David J Pannell} } @article {bnh-4209, title = {Economics of natural hazards: annual project report 2016-17}, number = {322}, year = {2017}, month = {09/2017}, institution = {Bushfire and Natural Hazards CRC}, address = {Melbourne}, abstract = {

To make natural hazard mitigation efforts efficient and equitable, it is important to understand the full range of costs and benefits and how these costs and benefits are distributed among different segments of the community. However, economic assessments of flood mitigation benefits generally tend to be incomplete and focused on tangible and direct benefits only. Indirect and intangible costs are rarely included in this type of assessments. In reality,
intangible values can be large and, in some cases, they can be the most dominant component. The purpose of the Economics of Natural Hazards project is to address this shortcoming by, first, developing a Value Tool that help decision makers estimate intangible values and, second, by undertaking integrated economic modelling of mitigation options in ways that allow for the integration of intangible values. This annual report provides details on the Value
Tool developed by the project and the results from the first case study investigating flood mitigation options for the Brown Hill Keswick catchment of Adelaide. The report also summarises the projects engagement activities over\ the year.

}, issn = {322}, author = {David J Pannell and Atakelty Hailu and Veronique Florec and Abbie Rogers and Fiona L Gibson} } @conference {bnh-3880, title = {Including the intangible benefits of bushfire mitigation in economic analyses: a {\textquoteright}value tool{\textquoteright} for informed decision making}, booktitle = {AFAC17}, year = {2017}, month = {09/2017}, publisher = {Bushfire and Natural Hazards CRC}, organization = {Bushfire and Natural Hazards CRC}, address = {Sydney}, abstract = {

Understanding the costs and benefits of bushfire mitigation is imperative for governments to be able to prioritise the strategies that provide the best value for money. The economic damages caused by bushfires and the costs of mitigation are relatively well documented and can be large. But the social and environmental benefits of bushfire mitigation, which can potentially be even larger, have not been well documented. As a result, these types of intangible benefits are often neglected in decision making. We have created a {\textquoteleft}value tool{\textquoteright} that makes information about these intangible benefits accessible to decision makers for use in economic studies such as benefit-cost analyses.

The value tool identifies the types of intangible values that might be affected by bushfires or their mitigation, in terms of health, environmental and social effects. We have compiled a database of different studies that have measured these values in dollar terms reflecting how much they are worth to the community. This means they can be directly compared with other monetary estimates of costs and benefits related to bushfire mitigation. The database comes with a set of user-friendly guidelines that illustrate how the intangible values can be used to make decisions and prioritise bushfire mitigation strategies. For example, a bushfire manager will be able to use the value tool to identify the types of intangible values that might be affected by a prescribed burning plan, such as protecting wildlife and minimising distress to local communities, and find dollar estimates for each of these values. The value tool also provides estimates of intangible values relevant to other types of natural hazards.

}, author = {Abbie Rogers and Fiona L Gibson and Veronique Florec and Atakelty Hailu and David J Pannell} } @article {bnh-4234, title = {Integrating non-market values in economic analyses of flood mitigation: a case study of the Brown Hill and Keswick creeks catchment in Adelaide}, number = {354}, year = {2017}, month = {11/2017}, institution = {Bushfire and Natural Hazards CRC}, address = {Melbourne}, abstract = {

This study undertakes an economic analysis of flood mitigation options for a high flood risk catchment in Adelaide, South Australia: the Brown Hill and Keswick creeks catchment. Several proposals for flood mitigation investments have been presented, including creek capacity upgrades, high flow bypass culverts and detention dams. For flood managers to know which option or options provide the best value for money, it is necessary to compare the costs and the benefits of all available options. To date, economic analyses have focused primarily on estimating the tangible (market) costs and benefits of mitigation strategies, but have largely ignored the intangible (non-market) costs and benefits. This analysis improves upon previous studies by conducting a cost benefit analysis that incorporates the intangible costs and benefits of mitigation. We used the benefit transfer method to include eight different intangible values that can be affected by floods or by the implementation of the proposed mitigation options. We found that for this particular case study in the Brown Hill and Keswick creeks catchment, the inclusion of intangible values does not change the results of the analysis significantly; the results with and without intangibles are relatively similar. This is because intangible values are relatively small compared to the potential tangible flood damages as intangible value losses represent only between 6 and 21\% of total damages. In order to better understand people{\textquoteright}s preferences and the trade-offs they make, a survey based nonmarket valuation research would need to be conducted amongst the residents at risk of flooding. Such a study would provide values that are specific to the catchment and could be compared with the intangible values from the literature that have been assembled for this study.

}, issn = {354}, author = {Morteza Chalak and Veronique Florec and Atakelty Hailu and Fiona L Gibson and David J Pannell} } @article {bnh-3861, title = {Launceston flood risk mitigation assessment - June 2016 floods: suburb of Newstead}, number = {339}, year = {2017}, month = {10/2017}, institution = {Bushfire and Natural Hazards CRC}, address = {Melbourne}, abstract = {

Launceston is floodprone and located within the Tamar River floodplain at the confluence of the Tamar, North Esk and South Esk Rivers in Tasmania. Launceston has been subjected to 35 significant floods since records began, with the 1929 flood considered to be the worst (Fullard, 2013). A new Launceston Flood Authority was established in 2008 to design, construct and maintain existing and new flood levees. To replace the existing deteriorated levees a flood mitigation initiative was completed in 2016 to provide Launceston with reliable flood protection up to the 200 year Annual Recurrence Interval (ARI) event (Fullard, 2013).

However, this flood mitigation initiative did not extend to Newstead, a suburb in the east of Launceston, with the suburb consequently not protected from floods. Therefore, a new levee was proposed to protect the properties in Newstead from future floods. The cost of the proposed levee was estimated to be $580,000 along with an annual maintenance cost of $10,000 (Fullard, 2016).

Geoscience Australia was funded to undertake a project to conduct a Cost Benefit Analysis (CBA) of the proposed flood levee in Newstead as a variation to its current project (BNHCRC, 2017a) within the Bushfire and Natural Hazards CRC (BNHCRC). The project stakeholders included the CRC, Tasmanian Department of Premier and Cabinet, Tasmanian State Emergency Service, the City of Launceston, Launceston Flood Authority and Northern Midlands Council.

This report provides the details of the CBA of the proposed flood levee along with consideration of several other mitigation options as researched within the BNHCRC flood mitigation project.

}, isbn = {978-0-9941696-8-6}, issn = {339}, author = {Maqsood, T and Martin Wehner and Itismita Mohanty and Neil Corby and Mark Edwards and Fiona L Gibson and Rogers, Michael J.} } @article {bnh-2923, title = {Economics of natural hazards: Annual project report 2015-2016}, number = {177}, year = {2016}, month = {08/2016}, institution = {Bushfire and Natural Hazards CRC}, address = {Melbourne}, abstract = {

The project tackles from an economics perspective issues relating to non-financial benefit estimation, risk analysis, and development of decision-making frameworks that would help deliver value for money from public investments in natural hazard management. It has a broad scope in terms of natural hazards, including fires, earthquakes, floods, cyclones and tsunamis. It aims to improve the management of bushfires and other natural hazards by delivering the following outcomes:

The research team has extensive experience in non-market valuation, integrated modelling and the economics of environmental and natural resource management and policy. The team has also recruited four outstanding environmental economists with extensive experience in.\ The project has continued to engage well with the end user community and other potential collaborators. Project staff have been keen to help identify research priorities and deliver research outcomes that are based on a broader analysis of the costs and benefits of mitigation options and inform management and policy choices accordingly. The project{\textquoteright}s major accomplishements for the year include the following:

}, issn = {177}, author = {David J Pannell and Atakelty Hailu and Fiona L Gibson and Veronique Florec and Morteza Chalak and Abbie Rogers} } @conference {bnh-2947, title = {Integrated economic assessment of flood management options for Adelaide}, booktitle = {AFAC16}, year = {2016}, month = {08/2016}, publisher = {Bushfire and Natural Hazards CRC}, organization = {Bushfire and Natural Hazards CRC}, address = {Brisbane}, abstract = {

cent of the overall cost of Australian natural disasters is the consequence of flooding and this, on average, costs approximately $600 million per annum (Gentle et Bureau of Transport Economics, 2001; Productivity Commission 2015). These average figures do not reflect the severity of the impact that some floods can cause. For example, the magnitude and extent of the recent (2011) Queensland floods was vast, with an overall cost estimates above $6.8 billion.


There is a growing recognition that Australia{\textquoteright}s disaster funding arrangements are not efficient and do not create the right incentives for managing risks (Productivity Commission 2015). There is underinvestment in disaster mitigation and overinvestment in post-disaster interventions. Across Australia, flood maps have become a major mitigation strategy. Other mitigation strategies include structural solutions such as levees, dams, diversion channels, floodgates, and detention basins as well as non-structural solutions such as early warning and evacuation systems and community education programs. The structural solutions are typically capital intensive and costly. On the other hand, the assessment of flood mitigation benefits generally tends to be partial and focused on tangible and direct benefits. As a result, investment decisions can be suboptimal.\ For optimal and equitable investment in mitigation, it is important to understand the full range of costs and benefits and also how these costs and benefits are distributed among different segments of the community. Therefore, it is important that cost and benefit assessment methods depict an adequate picture of the costs and benefits of possible risk mitigation measures. Otherwise, even simple option evaluation procedures such as cost-benefit analysis are not precise. A panel of experts convened under the European Union{\textquoteright}s {\textquoteleft}Costs of Natural Hazards{\textquoteright} (CONHAZ) project identified key areas for improvement in cost/benefit assessment and these include the need for more focus on non-structural measures, and indirect and intangible costs (Meyer et al. 2013). Intangible values, normally excluded from benefit cost analysis, can be significant or even the most dominant set of values in some cases.


The purpose of this presentation is to address the shortcoming in relation to intangible values in the context of flood mitigation option analysis for the Brown Hill and Keswick catchments in Adelaide. The catchments include both rural and urban areas and involve local government councils for Adelaide, Burnside, Mitcham, Unley and West Torrens. This analysis focuses on a set of flood mitigation options that are currently under consideration following a public consultation. Previous analysis done on these options suggests that the benefit-cost ratios appear unfavourable. However, the analysis was done without the inclusion of intangible values. In this presentation we argue why intangible values should be included and provide estimates that show how our understanding of the costs and benefits of mitigation options would change with the inclusion of intangible values to account for the health, environmental and social impacts of floods. Intangible values relevant in the context of natural hazards in general are shown in Table 1.

}, author = {Morteza Chalak and Veronique Florec and Atakelty Hailu and Fiona L Gibson and David J Pannell} } @conference {bnh-2934, title = {Non-market valuation in the economic analysis of natural hazards}, booktitle = {AFAC16}, year = {2016}, month = {08/2016}, publisher = {Bushfire and Natural Hazards CRC}, organization = {Bushfire and Natural Hazards CRC}, address = {Brisbane}, abstract = {

To achieve value for money from investments in management of natural hazards (including mitigation, emergency response and clean up) economists advocate the use of tools like Benefit: Cost Analysis (BCA) to evaluate actions or policies (e.g. Milne et al. 2015). Many governments worldwide encourage the use of BCA for policy evaluation. For example, according to its Best Practice Regulation Handbook, {\textquoteleft}The Australian Government is committed to the use of cost{\textendash}benefit analysis to assess regulatory proposals to encourage better decision making{\textquoteright} (Australian Government 2010, p. 61).


Some of the relevant benefits and costs related to natural hazard management are relatively difficult to quantify, particularly in financial-equivalent terms. There are a number of advantages from expressing non-financial impacts in financial-equivalent terms: to compare the benefits and costs of policy or management actions in order to evaluate whether they are worthwhile policies or actions; to rank alternative investments in terms of value for money; and to make rigorous business cases for investment.\ Economists have developed a range of techniques to do so, known as {\textquoteleft}non-market valuation{\textquoteright}, but they remain underutilized in the natural hazard sector. The first purpose of this presentation is to identify the methods available to quantify non-market values in financial-equivalent terms. Non-market valuation techniques use empirical evidence about human behaviour or statements in surveys to quantify preferences for the provision of a public good or service.

}, author = {Fiona L Gibson and David J Pannell and Abbie Rogers and Marit Kragt and Atakelty Hailu} } @article {bnh-4116, title = {Non-market valuation in the economic analysis of natural hazards}, number = {1604}, year = {2016}, month = {05/2016}, institution = {School of Agricultural and Resource Economics, Unviersity of Western Australia}, type = {Working Paper}, address = {Crawley}, abstract = {

Natural hazards have a wide range of impacts, including on factors that are normally unpriced because they are not bought and sold in markets. Key examples include impacts on human health, the environment, ecosystem services and other outcomes relevant to social welfare. Economists seek to quantify these impacts in financial-equivalent terms in order to be able to compare them with market impacts and include them in Benefit: Cost Analysis (BCA) of policies and strategies to mitigate risks. Estimating these so-called non-market values can be difficult. This paper reviews the methods available for doing so, presents a comprehensive list of the non-market values that might be affected by natural hazards and reviews the existing literature that estimates non-market values relevant to natural hazards. We find that there are few applications specifically in a natural hazard context. We conclude with a discussion on the limitations of non-market valuation in the natural hazard context.

}, issn = {1604}, url = {http://ageconsearch.umn.edu/record/236941}, author = {Fiona L Gibson and David J Pannell and Peter Boxall and Michael Burton and Robert Johnston and Marit Kragt and Abbie Rogers and John Rolfe} } @article {bnh-2341, title = {Economics of natural hazards: Annual project report 2014-2015}, number = {134}, year = {2015}, month = {02/11/2015}, institution = {Bushfire and Natural Hazards CRC}, address = {Melbourne}, abstract = {

The project tackles from an economics perspective issues relating to non-financial benefit estimation, risk analysis, and development of decision-making frameworks that would help deliver value for money from public investments in natural hazard management. It has a broad scope in terms of natural hazards, including fires, earthquakes, floods, cyclones and tsunamis. It aims to improve the management of bushfires and other natural hazards by delivering the following outcomes:

The research team has extensive experience in non-market valuation, integrated modelling and the economics of environmental and natural resource management and policy. The team has also recruited four outstanding environmental economists with extensive experience in.

Over the year, the project has actively engaged with end users and the growing list now includes agencies from SA, NSW, TAS, VIC, and WA: Fire and Emergency Services Commission (SA); Attorney General{\textquoteright}s Department; Rural Fire Services (NSW); State Fire Management Council (TAS); South Australian Metropolitan Fire Service; NSW National Parks \& Wildlife Service; Department of Environment, Water and Natural Resources (SA); and State Emergency Mangement Committee (WA). The projects major accomplishements for the year include the following:

}, issn = {134}, author = {David J Pannell and Atakelty Hailu and Fiona L Gibson and Veronique Florec} } @article {BF-4329, title = {Integrated economic assessment of fire risk management strategies: Case studies in Central Otago, New Zealand, and Mount Lofty Region, South Australia}, year = {2014}, month = {24/02/2014}, abstract = {There are various options available to fire managers for strategically reducing losses from future fires. With limited funds, an increasing population to protect from fire, and an increasing tendency for people to live in fire-prone areas, fire managers face a significant resource allocation challenge. Knowing which fire-risk mitigation strategies provide the best value for money is potentially of great benefit. However the assessment of fire prevention strategies is complex, requiring integration of a large volume of information of various different types (technical, social, economic). The aim of this study is to provide insights into the question of which fire-prevention strategies provide the best value for money? The approach taken in this analysis was inspired by INFFER (the Investment Framework for Environmental Resources), particularly by its application to the Gippsland Lakes. The management problem addressed in that study was similarly complex as the fire management problem. It was addressed using a quantitative analysis that integrated information about risk, management, costs, and values, in a spatial context, with high levels of stakeholder consultation. A broadly similar approach is applied in this study. We present a quantitative decision framework to provide an integrated assessment of the benefits and costs of fire risk management strategies. Key findings from the project follow below. It is important to remember that these are specific pilot studies (and hence the outcomes relate to the two study areas and the scope of the analyses conducted). Generalisations about prescribed burning for other areas and circumstances should not be drawn from these studies. This project shows that the methodology works and can provide valuable decision-making inputs to fire management programs. Various fire risk management strategies have potential to generate benefits, but they should be applied in a targeted way. This was particularly the case for prescribed burning in the Mount Lofty region study (South Australia), where a general prescribed burning strategy across all sub-regions does not provide value for money but prescribed burning in targeted sub-regions does. Some strategies have particularly high costs and these are unlikely to provide value for money unless they can generate exceptional levels of fire prevention. The high cost usually occurred because strategies required actions over a large area and therefore incurred costs over a large area. Benefits from reductions in fire spread from one zone to another were relatively low in both case studies. The majority of benefits were generated from strategies that were applied within or close to the valuable assets. Although information about fire spread was relatively weak, results were not sensitive to changes in the assumptions about spread within a plus/minus 50 per cent range. On average, benefits from reducing asset losses are much larger than benefits from reducing suppression costs. The most severe fires tend to cause the majority of losses, even after allowing for the fact that the most severe fires are rare events. This means that the majority of benefits from fire management occur in rare events. In between those rare events, strategies that offer good value for money on a long-term probabilistic basis may have costs in excess of benefits in most years. The quantity and quality of available data was low for a number of key parameters. Some information was not collected, and some was not in an easily interpretable format. In both case studies (Mt Lofty Ranges, South Australia and Central Otago, New Zealand) the model results were found to be sensitive to several variables about which uncertainty was high. These provide a potential focus for future data collection.}, author = {Fiona L Gibson and David J Pannell} } @article {14, title = {Integrated economic assessment of fire risk management strategies: Case studies in Central Otago, New Zealand, and Mount Lofty Region, South Australia}, volume = {44}, year = {2014}, month = {24/02/2014}, institution = {Bushfire CRC}, address = {Melbourne, Australia}, abstract = {

There are various options available to fire managers for strategically reducing losses from future fires. With limited funds, an increasing population to protect from fire, and an increasing tendency for people to live in fire-prone areas, fire managers face a significant resource allocation challenge. Knowing which fire-risk mitigation strategies provide the best value for money is potentially of great benefit. However the assessment of fire prevention strategies is complex, requiring integration of a large volume of information of various different types (technical, social, economic).

The aim of this study is to provide insights into the question of which fire-prevention strategies provide the best value for money? The approach taken in this analysis was inspired by INFFER (the Investment Framework for Environmental Resources), particularly by its application to the Gippsland Lakes. The management problem addressed in that study was similarly complex as the fire management problem. It was addressed using a quantitative analysis that integrated information about risk, management, costs, and values, in a spatial context, with high levels of stakeholder consultation. A broadly similar approach is applied in this study. We present a quantitative decision framework to provide an integrated assessment of the benefits and costs of fire risk management strategies.

Key findings from the project follow below. It is important to remember that these are specific pilot studies (and hence the outcomes relate to the two study areas and the scope of the analyses conducted). Generalisations about prescribed burning for other areas and circumstances should not be drawn from these studies. This project shows that the methodology works and can provide valuable decision-making inputs to fire management programs.

Various fire risk management strategies have potential to generate benefits, but they should be applied in a targeted way. This was particularly the case for prescribed burning in the Mount Lofty region study (South Australia), where a general prescribed burning strategy across all sub-regions does not provide value for money but prescribed burning in targeted sub-regions does.

Some strategies have particularly high costs and these are unlikely to provide value for money unless they can generate exceptional levels of fire prevention. The high cost usually occurred because strategies required actions over a large area and therefore incurred costs over a large area.

Benefits from reductions in fire spread from one zone to another were relatively low in both case studies. The majority of benefits were generated from strategies that were applied within or close to the valuable assets. Although information about fire spread was relatively weak, results were not sensitive to changes in the assumptions about spread within a plus/minus 50 per cent range.

On average, benefits from reducing asset losses are much larger than benefits from reducing suppression costs.

The most severe fires tend to cause the majority of losses, even after allowing for the fact that the most severe fires are rare events. This means that the majority of benefits from fire management occur in rare events. In between those rare events, strategies that offer good value for money on a long-term probabilistic basis may have costs in excess of benefits in most years.

The quantity and quality of available data was low for a number of key parameters. Some information was not collected, and some was not in an easily interpretable format.

In both case studies (Mt Lofty Ranges, South Australia and Central Otago, New Zealand) the model results were found to be sensitive to several variables about which uncertainty was high. These provide a potential focus for future data collection.

}, keywords = {fire management, risk management}, isbn = {978 - 0 - 9875218 - 6 - 6}, author = {David J Pannell and Fiona L Gibson} }