The 2015 Productivity Commission’s report on natural disaster funding arrangements in Australia found that governments overinvest in post-disaster reconstruction and underinvest in mitigation activities that would limit the impact of natural disasters. Given the multitude of natural hazards that require mitigation and response from government agencies and the tighter budgets at both state and national levels, natural hazards managers are increasingly under pressure to justify the use and allocation of resources for mitigation efforts.

Governments need to ensure that the benefits justify the cost and that they are getting the best value for money out of these investments. However, most existing government decisions are not informed by formal analyses examining the value for money of the alternatives. There are several reasons for this.

1. Economic analyses of natural hazard management options are rare for some hazards.
2. Many of the benefits of natural hazard management are intangible (or non-market), such as lives saved, health benefits, environmental benefits, and social values.
3. There is a general lack of information to carry out economic analyses.
4. Economic analysis of natural hazards can be complex, and there is a lack of economics capacity in the sector.

To date this study has addressed some of these issues by developing a tool for generating estimates of non-financial benefits (called the value tool) and undertaking integrated economic analysis of management options for floods in Adelaide and for prescribed burning in private land in South Australia’s Mount Lofty Ranges.

The next stage will build on this work and create tools that will help emergency service and land management agencies conduct and utilise more rigorous economic analyses of management options and identify the options that generate the best value for money. These new tools, which consider both market and non-market (intangible) values, will help meet important end-user needs. The intangible values will include social, environmental and health related values so that decisions are made to maximise the benefits to society in the management of natural hazards.

Expected outcomes will be:

• An online platform for the value tool that will be updated and maintained after the study concludes so that end-users can easily integrate intangible values in their analyses.
• Fill major knowledge gaps identified in the literature on intangible values that are affected by the management of natural hazards.
• An economic analysis tool for the evaluation of the tangible and intangible costs/benefits of risk treatment options that enables end-users to evaluate and prioritise the treatment options that are likely to provide the best value for money.
• Training materials relating to the application of economics to the assessment of natural hazard management options.