@article {bnh-8120, title = {Economics of natural hazards - final project report}, number = {666}, year = {2021}, month = {07/2021}, institution = {Bushfire and Natural Hazards CRC}, address = {Melbourne}, abstract = {

The key aim of our project was to provide evidence on the economic, social, and environmental impacts of natural hazards, in order to help hazard managers make better decisions about the allocation of resources for the mitigation of natural hazards impacts. Using the tools and materials we have created in this project, our end-users will be better equipped to estimate the tangible (market) and intangible (non-market) impacts of natural hazards and assess how mitigation investments may reduce those impacts.

With this aim in mind, our main focus has been the development of tools and materials that make it easier for natural hazards managers to estimate the value of mitigation, integrate intangible (non-market) values in economic analyses of mitigation, and evaluate the difference it makes to include non-market values. Our goal has always been to provide managers with the tools they need to be able to make better decisions and have the evidence to back up their decisions.

Our project delivered 5 key outcomes:

  1. We launched an online platform for the Value Tool for Natural Hazards (a searchable database of the best available non-market value estimates relevant to natural hazards).
  2. We conducted a non-market valuation study that filled a major knowledge gap identified in the non-market values literature (i.e. the values of cultural heritage, social disruption and mental health, and how these are affected by natural hazards) and updated the Value Tool with the data from this study.
  3. We developed the Economic Analysis Screening Tool (EAST) for the evaluation of the (market and non-market) costs and benefits of mitigation options.
  4. We created a Free Online Video Course on the economics of natural hazards, using drawings and simple examples to explain key economic concepts and how they are applied to evaluate different mitigation options.
  5. We conducted an online training course on how to use economics in natural hazards management and delivered it to 4 different groups of end-user managers and practitioners.

All outcomes of the project had a utilisation focus and were developed in conjunction with our end-users. We spent a significant amount of time understanding our end-users{\textquoteright} challenges in order to create products that can help them make better decisions using economic analysis. We used their feedback to improve the tools developed and make them more accessible.

The work from this project has been published in 4 peer-reviewed publications, 8 conference papers and technical reports, 3 posters presented at conferences, and 4 online resources (see Project Publications section in this report).

}, keywords = {analysis, EAST, economics, mitigation, Natural hazards, natural hazards management, Policy, Value Tool}, issn = {666}, author = {Veronique Florec and Abbie Rogers and David J Pannell} } @article {bnh-7808, title = {Guidance note for replication of case studies - Black Saturday, Tropical Cyclone Oswald, Queensland floods and Toodyay bushfire}, number = {643}, year = {2021}, month = {01/2021}, institution = {Bushfire and Natural Hazards CRC}, address = {Melbourne}, abstract = {

There are two main considerations in the first step of our methodology:

It is preferable to identify the disaster-affected areas at finer units because this approach will yield more precise estimates for the disaster effects.

Generally speaking, SA2s [1] provide finer units for analysing the disasters that struck regional areas because LGAs are relatively large in regional areas. By contrast, when analysing disasters that hit metropolitan/urban areas, LGAs provide the finer geographic variation while also capturing the jurisdictional differences that might be relevant to disaster impacts.

Before embarking on each case study, we carried out detailed ArcGIS work using Geographic Information System (GIS) tools. In identifying the disaster-hit SA2s or LGAs, we first overlaid the disaster zones on statistical and administrative maps. In particular, we used disaster maps to apply location-based analysis, that is, to vectorise and transform our raster data to map coordinates by using the ESRI shapefile formats provided by the Australian Bureau of Statistics (ABS). Here, it is important to achieve an almost perfect overlap between the raster and our target data in terms of the location, shape, and attributes of geographic features for different statistical units. In the following step, we determined the disaster-hit SA2s or LGAs.

In determining the comparison groups, again it is important to consider the nature of the disaster-hit areas. For regional disasters, it is more appropriate to choose neighbouring areas that are not hit by the disaster but share similar economic, geographic and topographic characteristics with the disaster-hit areas. For disasters that strike metropolitan areas, comparability is likely to be obtained from other metropolitan areas. In Australia, typically, capital cities mimic each other in terms of their economic, demographic and geographic characteristics. For example, Brisbane, Melbourne, Sydney, Perth and Adelaide are located on river banks and have agriculture-based hinterlands.

Below we describe how we specifically determined disaster-hit areas for each case study.

[1] SA2s in Australia host 3,000{\textendash}25,000 people, with an average population of about 10,000 individuals.

}, keywords = {Black Saturday, brisbane floods, case studies, cyclone oswald, economics, toodyay bushfire}, issn = {643}, author = {Mehmet Ulubasoglu} } @article {bnh-7890, title = {Optimising post-disaster recovery interventions in Australia - final project report}, number = {649}, year = {2021}, month = {03/2021}, institution = {Bushfire and Natural Hazards CRC}, address = {Melbourne}, abstract = {

Australians are all too familiar with disasters arising from natural hazards, such as bushfires, cyclones, and floods. With climate change, we face the possibility of more frequent and intense natural hazards where they occur as in new and unexpected places.

As we enter an uncertain decade, we find ourselves increasingly asking: What does a disaster-resilient Australia look like? How can we help our most vulnerable Australian communities endure the cumulative effects of frequent disasters? Amid tightening fiscal budgets, how can we make the right policy choices for our communities and economy to prosper in this new reality?

Answering these questions requires deep thinking in order to be able to support our communities, businesses, and the broader economy, and help them become more disaster resilient; to not only adapt to a {\textquotedblleft}new normal{\textquotedblright} but thrive in a changing climate. From a policy perspective, this becomes more pertinent when we consider that the average annual total economic costs of natural disasters of Australia are forecast to reach $39 billion per year by 2050 (Deloitte Access Economics, 2017).

This project has estimated the impact of four disasters in recent Australian history on income of individuals residing in disaster-hit areas. By defining individuals{\textquoteright} ability to return to their pre-disaster income levels as economic resilience, we focused on the following case studies: The 2009 Victorian Black Saturday bushfires, the 2009 Toodyay bushfires, the 2013 Tropical Cyclone Oswald, and the 2010-11 Queensland floods. Through real-life case studies, our research helps illustrate how these events{\textemdash}of different types, localities, and scales{\textemdash}impact and ripple through communities and the broader economy over time.\ 

We have employed the difference-in-differences modelling approach to pinpoint the income changes due to the disasters. That is, we compared the income levels of individuals living in the disaster-hit areas (treatment group) with incomes of those who resided in comparable areas that were not directly hit by the disaster (control group). The control group provides us with the income path that would have been expected for the disaster-hit population had the disasters not happened, and thus enables us to compute any income deviations (losses or gains) in the disaster-hit areas. To identify the economic vulnerabilities, we analysed in detail the income changes with respect to individuals{\textquoteright} demographic attributes and sectors of employment. Our primary dataset is the Australian Longitudinal Census Dataset of 2006, 2011 and 2016, which includes 5\% representative sample of the Australian population and provides data on a range of our economic, demographic, and sectoral variables.

The research has found that the extent of the economic impact of disasters on individuals{\textquoteright} income depends on the type, intensity, and location of the disaster. This finding departs from most policy assumptions, which tend to put all the disasters into the same basket when designing relief and recovery programs.

However, there are also common vulnerable groups across different disasters. We found that certain sectors, such as agriculture and accommodation and food services (of which tourism is part) tend to be the most adversely affected sectors across all types, locality and severity of disasters.

An additional clear insight obtained in this research is that {\textquoteleft}economic smallness{\textquoteright} is a point of vulnerability. In particular, low income earners, small-business owners and part-time workers are more likely to lose income following a disaster. Middle and high-income earners, full-time workers and owners of larger businesses are far less likely to lose income; indeed, they might even earn more.

Part of the reason why the {\textquoteleft}economically smaller{\textquoteright} demographic groups are vulnerable to disasters is that they are employed in disaster-sensitive sectors. Thus, the sectoral vulnerability is translated into demographic vulnerability.

We also found that time frame for recovery matters. For example, following the 2009 Victorian Black Saturday bushfires, low-income individuals and the female workforce experienced lower income levels that persisted until 2016. This contrasts with high-income earners, who despite having lost income in the short term, were able to bounce back to their original income trajectory by 2016. Even though it is intuitive to think that economic resilience levels could be different across different demographic and sectoral groups, this project brings this intuition to the fore, and documents exactly what those less resilient groups are, as well as the associated income losses (or gains).

Overall, this research has revealed disaster costs that would not normally be identified by the direct damage estimates. For example, the direct total (tangible and intangible) damages of the 2009 Victorian Black Saturday bushfires were $7 billion (Deloitte Access Economics 2016). However, we found that, following the Black Saturday bushfires, agricultural employees who lived in the fire-ravaged areas lost an average of A$8,000 in annual income for the following two years. Employees in the accommodation and food services industries lost an average of A$5,000 per annum. The indirect loss estimates are typically bypassed in the wake of disasters, as the policy community typically focuses on the direct damage estimates when assessing the economic costs of disasters.

This research has also demonstrated that the burden of lost income due to the disasters is not borne equally. That is, the income gap routinely increased after disasters. For example, following the 2010-11 Queensland floods, the difference between those on low and middle incomes in the\ Brisbane River Catchment area\ increased by about $7,000 a year. This meant that the poor became poorer following disasters in Australia. In addition, female workers tend to lose income after some disasters compared to their male counterparts. Moreover, the income divide persisted in the medium term after some disasters. This finding of rising inequality is novel for Australia and was not documented previously.

In an earlier phase of this research program, during 2014-15, we studied the nation-wide impacts of floods and bushfires and their effects on economic sectors in Australia. This research used national accounts data from six Australian states for the period 1978-2014, and explored whether and how floods and bushfires as well as extreme weather (i.e. extreme precipitation and temperature) impacted the course of sectoral activity in the overall Australian economy.\  We found that Australia{\textquoteright}s sectoral output is sensitive to floods {\textendash} Australia lost more than two years{\textquoteright} worth of agricultural output during the period 1978-2014 due to floods. Bushfires, on the other hand, do not affect overall output, though they exhibit sectoral effects. The project Optimising Post-Disaster Recovery Interventions in Australia complements this earlier research by studying individuals{\textquoteright} income changes through four case studies.

The policy implications of this research are clear and important. Decision makers need to have a more disaggregated view to understand the economic impact of disasters. Our findings show that socioeconomic vulnerabilities are concentrated in certain demographic groups and sectors of the economy. In addition, both the poor and female employees exhibit lower economic resilience to disasters, in that they may not be fully able to return to their pre-disaster income trajectory in the medium-term. This highlights the potential for disasters to widen income inequality over time.

In a nutshell, this research suggests that policymakers need to better understand the socioeconomics of disasters and formulate public policies to better distribute scarce budgets and resources towards vulnerable socioeconomic groups and employment sectors that are more sensitive to disasters.

In terms of utilisation, the project has focused on generating awareness and provoking thoughts among the policy and wider community regarding economic effects of disasters on individuals. The project has produced four research reports pertaining to each case study, along with four policy briefs that summarized each report. The project also produced demographic profiling analyses for each disaster analysed. The findings from these four case studies were disseminated to a national audience through a webinar in August 2020, and the feedback received was overwhelmingly positive. The project has also published two articles in {\textquoteleft}News and Views: Australian Journal of Emergency Management{\textquoteright} and was featured in two articles in the Fire Australia magazine, which helped share the results with the emergency management sector. Finally, our demographic profiling analysis on the VIC Black Saturday bushfires and associated findings have been cited and discussed in the recent CSIRO Report to the Prime Minister Morrison on climate and disaster resilience (CSIRO, 2020).

The project has also made strong media engagement about its findings. These media outputs included, two articles in The Conversation, several radio interviews on the economic impact of bushfires (including two at ABC Radio National {\textquotedblleft}The Money{\textquotedblright} program with Richard Aedy, ABC North Queensland, South Korean eFM), a number of national newspaper articles, quotations and citations, several media releases made by the media team at Deakin University.

Looking ahead, we expect to disseminate our research reports and policy briefs more widely to public and private organisations in Australia. We also expect to disseminate our findings through media and policy engagement in the next bushfire season to create further awareness and provoke thoughts on how Australia can enhance the economic resilience of its communities. The project team is currently involved with new projects on the health and wellbeing analysis of Black Saturday bushfires and Queensland Floods as direct outcomes of the present project. Finally, we will be progressing a number of working papers that have greatly benefited from and been informed by our BNHCRC research program methodology and learnings.

To conclude, we believe that this project is the end of the beginning rather than beginning of the end regarding potential research projects in the economics of disasters in Australia.

}, keywords = {economics, interventions, optimising, post-disaster, recovery}, issn = {649}, author = {Mehmet Ulubasoglu} } @article {bnh-7753, title = {Economic analysis of natural hazard mitigation using the Quick Economic Analysis Tool}, journal = {Australian Journal of Emergency Management}, volume = {35}, year = {2020}, month = {10/2020}, pages = {48-55}, abstract = {

An effective way to reduce the impacts of natural hazards on communities is by mitigating the risks. However, mitigation requires time and resources, which are usually limited. To use resources effectively, planners and managers are best prepared when they know their options and which of these options provides the best value for money. When there is not enough information, or an analysis would take several months or years to complete, having access to quick economic analyses in weeks rather than months would be very useful. This paper describes a Quick Economic Analysis Tool, developed at the University of Western Australia, to conduct quick analyses. A case study is used of two prescribed burn annual rates and are compared with results of an in-depth analysis of the application of different prescribed burn annual rates over the long-term that took several years to complete. The results from the quick analysis, despite a few differences, were comparable to results from an in-depth analysis and provided enough information to determine the value for money that each prescribed burn annual rate generated. This study showed that the quick analysis tool would allow fire managers to identify options worthy of business cases and to capture the information needed to increase confidence in their decisions.

}, keywords = {economic analysis, economics, Natural hazards, Prescribed burning, risk mitigation}, url = {https://knowledge.aidr.org.au/resources/ajem-october-2020-economic-analysis-of-natural-hazard-mitigation-using-the-quick-economic-analysis-tool/}, author = {Veronique Florec and Abbie Rogers} } @conference {bnh-6409, title = {Disasters and economic resilience in small regional communities: the case of Toodyay}, booktitle = {AFAC19 powered by INTERSCHUTZ - Bushfire and Natural Hazards CRC Research Forum}, year = {2019}, month = {12/2019}, publisher = {Australian Institute for Disaster Resilience}, organization = {Australian Institute for Disaster Resilience}, address = {Melbourne}, abstract = {

We explore the effects of a small bushfire on the income trajectory of employed residents of Toodyay, a regional town in Western Australia. Our study reveals how detailed profiling, using public data, can overcome statistical limitations in disaster risk reduction exercises and better direct post-recovery interventions to minimise disruptions to important income streams in small regional towns.

Download the full peer reviewed research proceedings from the Bushfire and Natural Hazards CRC Research Forumhere.

}, keywords = {Disaster risk reduction, economics, resilience}, url = {https://knowledge.aidr.org.au/resources/australian-journal-of-emergency-management-monograph-series/}, author = {Mehmet Ulubasoglu and Farah Beaini} } @article {bnh-5420, title = {Economics of Natural Hazards Annual Report 2017-2018}, number = {455}, year = {2019}, month = {02/2019}, institution = {Bushfire and Natural Hazards CRC}, address = {Melbourne}, abstract = {

Our project aims to provide information on the economic, social and environmental impacts of natural hazards (tangible and intangible), in order to help hazard managers in their decision making. The purpose of our research is to help emergency service and land management agencies better prioritise their investments in mitigation. Using economic tools and expertise, we assess the impacts of hazard mitigation on intangible (non-market) values, in order to shed light on the real (total) costs and benefits of natural hazards (tangible and intangible) and help agencies better allocate their resources for mitigation.

}, keywords = {economics, environment, Multi-hazard, Natural hazards}, author = {Veronique Florec and Abbie Rogers and Atakelty Hailu and David J Pannell} } @article {bnh-5929, title = {Economics of natural hazards annual report 2018-2019}, number = {512}, year = {2019}, month = {09/2019}, institution = {Bushfire and Natural Hazards CRC}, address = {Melbourne}, abstract = {

Our project aims to provide information on the economic, social and environmental impacts of natural hazards (tangible and intangible), in order to help hazard managers in their decision making. We investigate the impacts of hazard mitigation on intangible (non-market) values, to shed light on the real (total) costs and benefits of natural hazards.

Our main focus is on developing tools and materials that will provide natural hazards managers with information on the value of mitigation and how intangible (non-market) values affect the costs and benefits of mitigation activities.
Our project will have 4 key outcomes:

  1. Provide an online platform for the intangible values database (called the Value Tool for Natural Hazards). The tool will be updated and maintained beyond the project so that managers can easily integrate intangible values in their analyses.
  2. Fill major knowledge gaps identified in the literature on intangible values that are affected by the management of natural hazards and improve the value tool with this new knowledge.
  3. Develop a Quick Economic Analysis Tool for the evaluation of the (tangible and intangible) costs and benefits of mitigation options that enables managers to conduct economic analyses in weeks rather than months.
  4. Create a Free Online Course on the application of economics to the assessment of natural hazard management options.

This year, we have progressed in the 4 outcomes outlined above:

  1. A website has been created for the Value Tool. Both the database and the guidelines can now be downloaded from http://valuetoolnaturalhazards.com. As per the agreement between UWA and BNHCRC, the tool will be freely accessible to end-users and external users. The website also includes the relevant disclaimer information and instructions that users of the tool must agree to comply with.
  2. A survey instrument has been designed and road-tested in a focus group for the original non-market valuation study. The next step in this process will be to test the survey in the Shire of York (WA), where we will estimate non-market values associated with cultural heritage and mental health.
  3. The draft (Beta) version of the Quick Economic Analysis Tool (QEAT) has been completed. QEAT is currently being improved to include an easy-to-use sensitivity analysis, to be able to perform the analysis of several management options concurrently and to include a summary dashboard where all results are summarised in an easy-to-read manner. These additions are key aspects that our end-users have mentioned in the past as important to include in a tool such as this one. The Tool now needs to be validated with case studies.
  4. Equipment for creating the online videos is being purchased (e.g. green screen for background, microphone and tripod for computer). Filming of the videos will commence in July 2019.

The utilisation outputs from our project this year involved the development and distribution of tools that help natural hazard managers integration intangible (non-market) values in their decision making. The Value Tool for Natural Hazards and the accompanying guidelines are now available online and can be easily downloaded by end-users of the BNHCRC or other organisations. The Beta version of the Quick Economic Analysis Tool (QEAT) is in the process of being improved to include key aspects that were highlighted by end-users as important to include in a tool as this one.

This year there were 4 publications from the project: 3 peer-reviewed and one non-peer reviewed (see Project Publications 2018-2019 section below).

}, keywords = {Bushfire, cost-effective, cyclone, earthquake, economics, Emergency management, Flood, Natural hazards, risk management}, issn = {512}, author = {Veronique Florec and Abbie Rogers and Atakelty Hailu and David J Pannell} } @article {bnh-5955, title = {The value of disaster research: a review of the literature}, number = {505}, year = {2019}, month = {09/2019}, institution = {Bushfire and Natural Hazards CRC}, address = {Melbourne}, abstract = {

Increasingly, funders, governments, stakeholders and end-users expect to see tangible evidence that an investment in research is a worthy use of resources; that it informs policy and practice; or to justify the provision of current and future funding. The value of research is measured by assessing the extent to which research has impact. Research impact is defined as {\textquotedblleft}a demonstrable contribution that research makes to the economy, society, culture, national security, public policy or services, health, the environment, or quality of life, beyond contributions to academia{\textquotedblright} (Alla et al.). These value-outcomes are achieved via the pathways of knowledge generation, capacity building, creation of scientific methods, researcher and end-user network collaborations, and policymaking support. Bushfire and natural hazard research evidence is utilised by emergency and fire agencies, governments, policymakers, and householders and landowners.

Research impact assessment is undertaken with the aim of addressing advocacy, analysis, accountability and allocation. It is also a valuable tool for use whilst planning research to ensure a greater impact. A major problem associated with research impact assessment is that of attribution: it is extremely difficult to assign causality for any outcome to a specific piece of research. This difficulty is exacerbated by the usually large time lag between research findings and policy impact, behaviour change, or change in environment or economy.

Various frameworks have been developed to assess the impact of research; whilst the majority of those reviewed were developed for the healthcare sector, there are more broad frameworks which have evolved to encompass a breadth of research areas and level of research. Impact has generally been categorised as economic (direct influence on the economy of the researcher, agency, population, or government as well as knowledge, market and network spill overs); academic (influence within academia, researcher and end-user collaborations, capacity building, training and leadership); and social or societal (a broad category including social values, national security, influence on policy and decision making).

Economic impact has largely been measured using cost-benefit analysis or a return on investment approach (including a social return on investment). Over the effect life cycle, public research is valued at 3 to 8 times the initial investment. Median annual rates of return are between 20\% and 50\% but this varies considerably between sectors. (Georghiou (2015)) . At an aggregate level, the return on investment in Australian disaster research has been estimated at between $1.17 to $1.40 for each dollar invested (Access Economics, 2003, Access Economics, 2008) . As most of the research within the natural hazard sector does not produce goods or services which pass through a market, a non-market method of valuing outcomes is required. The application of public value theory has created methodologies including public value mapping to understand the non-economic and non-scientific goals of research; that is, the core values (public values) of the research.

There is no specific framework for assessing the value of research in the bushfire and wildfire context, however adaptation of the {\textquotedblleft}pathways to research impact{\textquotedblright} tool created by Cruz Rivera et al. (2017) may be helpful in achieving appropriate impact measurement.\ 

}, keywords = {cost-effective, economics, Emergency management, Natural disasters, Policy, risk management}, issn = {505}, author = {Ken Strahan and Adriana Keating and John Handmer} }