A Needed Economic Framework for Flood Plain Management

ABSTRACT

This paper sets forth a desired economic framework for flood plain management. After expressing serious concern that efficient flood hazard mitigation may not be desired as a goal of public policy, six major management issues are outlined. First is the task of reformulation of the problem of flood hazard mitigation from an emphasis on hazard reduction per se to one of an efficient use of flood-prone lands and development of socially acceptable levels of residual risk. Second, there is need to specify more clearly what is the economic rationale for public action (particularly in a national system) in flood hazard mitigation in relation to the role of markets and private choice. Third, analysis is needed to specify in theoretical and in operational terms the efficient level of mitigation. Fourth, the question of what constitutes a proper measure of loss is of Critical importance. Fifth, economic evaluation of existing institutions and policies in the flood hazard field is clearly needed. Finally, benefit-cost studies of selected mitigation measures are proposed. An overlying concern throughout the paper is that present institutional arrangements may act as barriers to efficient policy and obscure the rationale for other kinds of economic analysis.