Published works

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, ‘The Australian Government is committed to the use of cost–benefit analysis to assess regulatory proposals to encourage better decision making’ (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 ‘non-market valuation’, 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.