Economically optimizing elevation of new, single-family residences for flood mitigation via life-cycle benefit-cost analysis

Abstract

Construction with freeboard—vertical height of a structure above the minimum required—is commonly accepted as a sound investment for flood hazard mitigation. However, determining the optimal height of freeboard poses a major decision problem. This research introduces a life-cycle benefit-cost analysis (LCBCA) approach for optimizing freeboard height for a new, single-family residence, while incorporating uncertainty, and, in the case of insured homes, considering the costs from losses, insurance, and freeboard (if any) to the homeowner and National Flood Insurance Program (NFIP) separately. Using a hypothetical, case study home in Metairie, Louisiana and U.S. Army Corps of Engineers design depth-damage functions for generic inland flooding, results show that adding 2 ft of freeboard at the time of construction might be considered the optimal option given that it yields the highest net benefit, but the highest net benefit-cost ratio occurs for the 1 ft freeboard. Even if flood loss reduction is not considered when adding freeboard, the savings in annual insurance premiums alone are sufficient to recover the construction costs paid by the homeowner if at least one foot of freeboard is included at construction. Collectively, these results based on conservative assumptions suggest that at the time of construction, even a small amount of freeboard provides a huge savings for the homeowner and (especially) for the financially-strapped National Flood Insurance Program. For community planners, the results suggest that wise planning with reasonable expectations on the front end makes for a more sustainable community.

Future crop risk estimation due to drought, extreme temperature, hail, lightning, and tornado at the census tract level in Louisiana

“…The first Intergovernmental Panel on Climate Change (IPCC) report (Cutter et al, 2012) confirmed these assertions by reporting that societal exposure (and therefore risk as defined here) is a product of development processes on hazardous landscapes and also is an anticipated key driving force contributing to future vulnerability to extreme weather events (Pielke Sr et al, 2007;Hinkel et al, 2010). There remains a paucity of risk assessment work at a scale more local than countylevel, especially while also considering changing hazard intensities (Gnan et al, 2022a(Gnan et al, , 2022bMostafiz et al, 2022b, Mostafiz et al, 2022Rahim et al, 2022).…”

Freeboard Life-Cycle Benefit-Cost Analysis of a Rental Single-family Residence for Landlord, Tenant, and Insurer

“…The building AAL (𝐴𝐴𝐿 ) is estimated using the method presented in Gnan (2021) and Gnan et al (2022a). Flood depths derived from Monte Carlo simulations (e.g., Brodie, 2013;Hennequin et al, 2018;Kind, 2014;Kind et al, 2020;Qi et al, 2013;Rahim et al, 2021Rahim et al, , 2022aRahman et al, 2002;Taghinezhad et al, 2020;Yu et al, 2013) with the fitted Gumbel extreme value distribution (e.g., Al Assi et al, 2022;Bhat et al, 2019;Gnan et al, 2022b;Kim & Lee, 2021;Manfreda et al, 2021;Mostafiz et al, 2021a;2022b;Rahim et al, 2022b;Singh et al, 2018) are translated to building loss percentages using the U.S. Army Corps of Engineers (USACE; 2000) depth-damage function (DDF) designed for the home's attributes (e.g., onestory or two-or-more stories, with or without basement).…”

“…The flood premium deductible for a building is represented within the flood loss, as the policyholder is liable for the specified deductible and loss above coverage while NFIP covers the remaining balance within coverage. Thus, the building AAL is apportioned as either landlord loss (𝐴𝐴𝐿 ) or NFIP loss (𝐴𝐴𝐿 ) using the methodology presented in Gnan (2021) and Gnan et al (2022a).…”

“…Average annual content loss (𝐴𝐴𝐿 ) is estimated using the method presented in Gnan ( 2021) and Gnan et al (2022a;2022b). To estimate 𝐴𝐴𝐿 , depths derived from Monte Carlo simulations are translated to content loss percentages using the appropriate USACE (2000) DDF, with the estimate then partitioned between the tenant (𝐴𝐴𝐿 ) and NFIP (𝐴𝐴𝐿 ) for each simulation (Gnan, 2021;Gnan et al, 2022a). The loss percentages are then multiplied by 𝐵𝑉, and the average of all the simulated events is the 𝐴𝐴𝐿 .…”

“…While FEMA (2008) reports the cost for each freeboard increment (𝐼) as a range of percentage estimates of total building cost, this work applies the upper limit as a conservative measure (Supplementary Table 2). Landlord annual freeboard cost (𝐿 ) and total upfront freeboard cost (𝐶 ) are calculated using the methodology presented in Gnan (2021) and Gnan et al (2022a).…”