How Much Natural Hazard Mitigation is Enough?

Monday, 17 February 2014
Grand Ballroom B (Hyatt Regency Chicago)
Seth Stein , Northwestern University, Evanston, IL
Defending against natural disasters is a high-stakes game of chance. Sometimes nature surprises us, when an earthquake or hurricane has unexpectedly large effects. Other times, nature outsmarts us, doing great damage despite expensive mitigation, or causing us to divert resources to mitigate overestimated hazards.

 This situation may seem surprising because of the steady advances being made in the science of natural hazards. Much of the problem comes from the fact that formulating effective natural hazard policy involves using a complicated combination of science and economics to analyze a problem and explore the costs and benefits of different options, in situations where the future is very uncertain. In general, mitigation policies are chosen without such analysis. Typically, communities have not looked at different options, and choose one or having one chosen for them without knowing what they're paying or what they're getting. This is like buying insurance without considering how much a policy will cost and what the benefits would be. Not surprisingly, the results are often disappointing.

 To do better involves developing policies that make sense, given our limited resources, limited knowledge about the hazards, and thus limited ability to estimate possible future damage. The issue can be posed in terms of finding a level of mitigation that minimizes total cost to society. That cost is the sum of mitigation costs, such as earthquake resistant construction, plus the expected loss for future events. The expected loss is the sum of losses in various expected events times the assumed probability of each event. The optimal level of mitigation is the minimum of the cost curve. Less mitigation decreases construction costs but increases the expected loss and thus total cost. More mitigation gives less expected loss but higher total cost. Our ability to find such an optimal level of mitigation that balances resources used for hazard mitigation with other societal needs (schools, hospitals, etc.), thus depends on our ability to estimate the probabilities of future events and their effects, and the uncertainties in these estimates.

Fortunately, our analysis illustrates two crucial points. First, a nonoptimal mitigation strategy - which is usually the case because the decisions are made politically rather than via economic analysis - still does more good than doing nothing as long as it is not so extreme that the mitigation costs exceed the benefit of reduced losses. Second, inaccurate hazard and/or loss estimates – which we always have - still are useful as long as it they not too much of an overestimate. Given that natural hazards assessments and estimates of the resulting losses have large uncertainties, it is encouraging that any estimate that does not greatly overestimate the hazard and loss leads to a mitigation strategy that is better than doing nothing. Hence although there is no unique solution, thoughtful analysis can help society do better.