Material Detail

This essay briefly introduces FEMA’s hazard mitigation assistance programs, cost-effectiveness, benefit-cost analysis, and discount rates. The essay discusses the consequences of the unjustifiably high 7% discount rate that FEMA applies in its evaluation of the cost-effectiveness of proposed hazard mitigation projects, raising particular concern about the misleading inconsistency with which FEMA reports the benefits of hazard mitigation, calculated using a 2.2% discount rate, compared to the high 7% discount rate that FEMA applies in its standard benefit-cost analysis for proposed mitigation projects. The high discount rate undermines FEMA’s efforts to promote resilience to natural hazards, particularly in light of the increasing frequency and intensity of natural hazards brought about by climate change. The essay further challenges FEMA’s assertion that its approach to establishing cost-effectiveness for proposed mitigation projects cannot be modified due to inflexible instructions included in the Office of Management and Budget Circular A-94. It concludes with recommendations to improve FEMA’s approach to demonstrating cost-effectiveness and to lower the discount rate included in its analyses.

This will delete the comment from the database. This operation is not reversible. Are you sure you want to do it?

Thank you for reporting a broken "Go to Material" link in MERLOT to help us maintain a collection of valuable learning materials.

If you feel this material is inappropriate for the MERLOT Collection, please click SEND REPORT, and the MERLOT Team will investigate. Thank you!

You are being taken to the material on another site. This will open a new window.

Do not show me this again