@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} } @conference {bnh-4773, title = {Filling the gaps: how economics can help make important decisions when information is missing}, booktitle = {AFAC18}, year = {2018}, month = {09/2018}, publisher = {Bushfire and Natural Hazards CRC}, organization = {Bushfire and Natural Hazards CRC}, address = {Perth}, abstract = {

When natural hazard managers need to make decisions about the allocation of resources, there is often information missing that cannot be rapidly obtained. In many cases, these decisions have to be made without waiting for the information to become available. But how can natural hazard managers know that their chosen allocation of resources generates good value for money when there is data missing? There are economic tools available that can support decision making in such cases. We explain how economic analyses cope with missing data and uncertainty. Through case studies, we illustrate how economic tools are used to rank the importance of different pieces of information and to find thresholds where the optimal decision changes. We also demonstrate how these tools can fill-in the gaps when there is little knowledge about a topic, for example, how to explicitly represent intangible values in decision making. The ability of economic tools to manage missing data and uncertainty can provide a wealth of information to natural hazard managers that can help them make better decisions.\ 

}, author = {Veronique Florec and Abbie Rogers and Atakelty Hailu 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-4400, title = {Integrating intangible values in economic analyses of flood mitigation: a case study of the Brown Hill and Keswick creeks catchment in Adelaide}, journal = {Australian Journal of Emergency Management}, volume = {32}, year = {2017}, month = {09/2017}, abstract = {

This study undertakes an economic analysis of flood mitigation options for a high flood-risk catchment in Adelaide. To date, economic analyses have focused primarily on estimating the tangible (market) costs and benefits of mitigation strategies and have largely ignored the intangible (non-market) costs and benefits. This analysis improves upon previous studies by conducting a benefit-cost analysis that incorporates the intangible costs and benefits of mitigation. The benefit transfer method was used to include intangible values in the analysis. It was found that, for this particular case study, the inclusion of intangible values does not change the attractiveness of the mitigation options evaluated and the benefit-cost ratios remain below one.

}, url = {https://ajem.infoservices.com.au/items/AJEM-32-04-17}, author = {Veronique Florec and Morteza Chalak and Atakelty Hailu} } @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-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-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} }