Integrating non-market values in economic analyses of flood mitigation: a case study of the Brown Hill and Keswick creeks catchment in Adelaide

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'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.

Issue Date:
Apr 26 2017
Publication Type:
Working or Discussion Paper
Total Pages:
JEL Codes:
Q54; Q58
Series Statement:

 Record created 2017-04-27, last modified 2018-01-23

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