Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change—Guidebook (2020)

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88 Introduction to Study Level 2 Analysis A Study Level 2 analysis builds on a Study Level 1 analysis. A Study Level 2 analysis uses existing conditions without climate change only to calculate the new return period for future conditions with climate change, that is, the maximum return period under climate change conditions for which no damages will occur, Tf. A Study Level 2 analysis then calculates future damages with and without hazard mitigation or resilience measures in place. Methodologies, data sources, and analysis tools for doing so are found in Appendix J, Appendix K, and Appendix L. Process Walk-Through with an Example Select Data Inputs and Data Sources The data inputs and sources for a Level 2 analysis are the same as those used for a Level 1 analysis, plus the estimated future flows or design capacity for the adaptation options and estimated damages for future events after adaptation is incorporated. C H A P T E R 8 Study Level 2 Climate Resilience Cost-Benefit Analysis Parameter Value Used in Scenario Data Source(s) Facility of concern Culvert Project file Geographic location of the facility/corridor under consideration Chesterfield, Virginia Site plan, maps Hazard(s) of concern Flood Hazard analysis Current design criteria—flow rate 9,000 cfs Engineering designs and plans Current design criteria—recurrence interval 50-year event AASHTO design manual, U.S. DOT design manual Discount rate(s) to be used in the analysis 7% OMB A-94 Expected useful life of current facility Within 2 years Capital plan, O&M records Expected useful life of replacement facility 50 Virginia DOT design guides Anticipated time frame for implementation of adaptation strategies Less than 2 years Capital plan

Study Level 2 Climate Resilience Cost-Benefit Analysis 89 Complete Level 1 Analysis The same numerical example used in Chapter 7 will be used to illustrate a Study Level 2 analysis. A Study Level 2 analysis begins by using the same data and calculations as in a Level 1 analysis. A worksheet for this Level 2 analysis is included in Appendix H. Table 29 summarizes the results from the example Study Level 1 analysis from Chapter 7. Figure 23 in Chapter 7 makes apparent that the curve developed using only three points has limited accuracy, as damages associated with a discharge under current conditions can exceed damages for the same discharge under climate-adjusted conditions. Correcting for these discrepancies will enable a comparison between future conditions for the base case and future conditions that implement a hazard mitigation or resilience action. Add Points to Curve for Future Discharges and Damages 1. Adding more points for the discharges versus return periods and damages versus dis- charges graphs will correct for discrepancies between existing conditions and future climate-adapted conditions. Two additional points using future return periods for current discharges should be sufficient for developing a more accurate discharge versus return period curve. Use Equation 14 from Chapter 7 to calculate climate-adapted return Parameter Value Used in Scenario Data Source(s) Scenario(s) to be used for analysis Precipitation conditions in 2049 NOAA Atlas 14, SWMM-CAT for warmer, wetter conditions 2045– 2075 Design concepts of adaptation strategies Enlarge culvert, add multiple culverts, use box or arch culvert Engineering Department Cost estimate for each adaptation strategy (life-cycle costs, including any long-term adverse impacts from the adaptation strategy) Cost estimates Historical data, recent bids for similar work, cost-estimating software Identification of any non- quantifiable costs associated with the project None U.S. DOT analysis Estimates of damages sustained from the hazard of concern Loss estimates Historical data, engineering analyses, O&M records, depth- damage curves Estimates of additional benefits resulting from the project, separated by physical/social/environmental if using multiple discount rates Benefits estimates FEMA benefit-cost analysis tools for drought, ecosystem services, and post-wildfire mitigation Identification of any non- quantifiable benefits associated with the project None U.S. DOT analysis Estimated future flows for adaptation options Future 50-, 100-, and 500-year events Level 1 analysis Estimated damages for future events after adaptation is incorporated Future 50-, 100-, and 500-year events Level 1 analysis

90 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change—Guidebook Qf Tf Interpolated Damages, Df Base Case Future Annualized Damages, Daf Tc Damages (in Current $) Annualized Damages, Dac Qc (cfs) 9,000 33 $0 $0 Max return period resulting in no damages Tcnd 50 $0 $0 9,000 9,979 50 $1,060,312 $5,270 Return period resulting in moderate damages Tcmod 100 $1,630,000 $8,150 10,505 11,665 100 $2,162,793 $16,116 Return period resulting in maximum damages Tcmax 500 $3,227,000 $19,428 13,982 15,562 500 $3,591,659 $23,018 Total Annualized Current Damages $27,578 Total Annualized Future Damages $44,404 Project Useful Life PUL 50 Future Damages for Base Case $612,820 Discount Rate (%) i 7 Current Damages for Base Case $380,604 Present Value Coefficient esaCesaBrofsegamaDlanoitiddA108.31CVP $232,216 Present Value of Benefits Benefits $380,604 Max. Acceptable Project Cost $232,216 Current Pre-Resilience Conditions Future (Climate Change) Pre-Resilience Table 29. Summary of results from Study Level 1 analysis. periods for the original 100- and 500-year return periods, that is, discharges of 10,505 cfs and 13,982 cfs. LogT T Log T Log T Q Q Q Q LogT Log Log LogT fint fmod fmod fnd fmod cmod fmod fnd fint fint log log 100 100 50 11,665 10,505 11,665 9,979 1.793 10 62 years 1 1 1 1.793 ( ) ( ) ( )( ) ( )( ) ( ) ( ) = − − ′ − − ′ = − − − − = = =   And LogT T Log T Log T Q Q Q Q LogT Log Log LogT fint fmax fmax fmod fmax cmax fmax fmod fint fint log log 500 500 100 15,562 13,982 15,562 11,665 2.4156 10 260 years 2 2 2 2.4156 ( ) ( ) ( )( ) ( )( ) ( ) ( ) = − − − − = − − − − = = =  

Study Level 2 Climate Resilience Cost-Benefit Analysis 91 These results mean that under assumed climate change conditions, a flow of 10,505 cfs will have a return period of 62 years, as opposed to 100 years under current conditions, and a flow of 13,982 cfs will have a return period of 260 years under assumed climate change conditions, as opposed to 500 years under current conditions. Adding these points to the graph from the Study Level 1 analysis (Figure 21) yields the chart shown in Figure 29. 2. The damages for these newly calculated return periods of 62 and 260 years will have the same value as for the original return periods of 100 and 500 years. Damages associated with a 62-year return period under climate change conditions will be $1,630,000; damages for a 260-year return period under climate change conditions will be $3,227,000. Adding these points to the graph in Figure 23 will result in the graph shown in Figure 30. 50 100 500 33 50 62 100 260 500 1,000 3,000 5,000 7,000 9,000 11,000 13,000 15,000 17,000 1,00010010 Q (c fs ) T (years) Current Future Figure 29. Estimated return periods and associated flows with additional data points for current and future climate conditions for project example. Figure 30. Smoothed curve for peak discharges and associated damages for future climate conditions for example project. 33 50 62 100 260 500 $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 Da m ag es ($ ) Peak Discharge (cfs) Current Future (interp)

92 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change—Guidebook 3. A Study Level 2 analysis adds the impacts that a hazard mitigation or resilience action could have on damages to the asset or corridor after the resilience action has been implemented to accommodate the modeled climate change conditions. This analysis assumes that the resilience action will eliminate future damages under climate change conditions for the future 50-year event (i.e., same as current level without climate change), and that the damages for the post-resilience future 100- and 500-year levels will be the same as the values for the current 100- and 500-year events (i.e., without climate change). Table 30 summarizes the values from the Level 1 analysis and shows the assumptions for a Study Level 2 analysis. It is assumed that the resilience action taken will restore the climate-adjusted conditions to mirror existing conditions. Therefore, the post-resilience values of damages for the climate-adjusted 100- and 500-year return periods are assumed to be the same as damages under current conditions, as shown in Table 30 and Table 31. 4. To determine the damages for the 62- and 260-year return periods, calculate a linear interpolation using the damage-discharge values assumed in Step 2 of this chapter. 0 10,505 9,979 $1,630,000 $0 (11,665 9,979) $508,529 $500,000 13,982 11,665 $3,227,000 $1,630,000 (15,562 11,665) $2,579,512 1 2 D D rint rint   ( ) ( ) ( ) ( ) = + − − − = = + − − − = 5. Calculate the annualized damages using Equation 10 from Chapter 7 (reproduced here; some differences between the spreadsheet calculations and those shown here are from rounding errors): D D D T T D D D D arint rnd rint rnd rint arint armod arint armax 2 1 1 $0 $508,529 2 1 50 1 62 $989 $508,529 $1,630,000 2 1 62 1 100 $6,534 $1,630,000 + $2,579,512 2 1 100 1 260 $12,964 $2,579,512 + $3,227,000 2 1 260 1 500 $5,344 1 1 1 1 2 = ′ + ′ − ′     = + −  = = + −  = = −  = = −  =      6. Calculate the total annualized future damages for the post-resilience action by adding together all of the annualized incremental damages for the different return periods: = $0 $0 $989 $6,534 $12,964 $5,344 $25,831Dar + + + + + = 7. Multiply the total annualized future damages after resilience measures have been implemented by the present value factor: = $25,831 13.801 $356,494DTr  = 8. Subtract the post-resilience total damages from the pre-resilience total damages under climate change conditions to yield the present value of the benefits associated with implementing the resilience measures: $620,741 $356,494 $264,247Benefits = − =

Qf Tf Interpolated Damages, Df Base Case Future Annualized Damages, Daf Qr Tr Damages, Dr (in current $) Resilient Future Annualized Damages, Dar Tc Damages (in Current $) Annualized Damages, Dac Qc (cfs) 9,000 33 $0 $0 9,000 33 0 $0 Max return period resulting in no damages Tcnd 50 $0 $0 9,000 9,979 50 $1,060,312 $5,270 9979 50 0 $0 Return period resulting in moderate damages Tcmod 100 $1,630,000 $8,150 10,505 10,505 62 $1,630,000 $5,207 10505 62 $0 $0 Return period resulting in maximum damages Tcmax 500 $3,227,000 $19,428 13,982 11,665 100 $2,162,793 $11,623 11665 100 $0 $0 Total Annualized Current Damages $27,578 13,982 260 $3,227,000 $16,584 13982 260 $0 $0 Project useful Life 265,5105LUP 500 $3,591,659 $6,294 15562 500 $0 $0 Discount Rate (%) 0$segamaDtneiliseRdezilaunnAlatoT879,44$segamaDerutuFdezilaunnAlatoT7i Present Value Coeff esaCesaBrofsegamaDerutuF108.31CVP $620,741 Future Damages with Adaptation $0 Present Value of Benefits Benefits $380,604 Current Damages for Base Case $380,604 Future Damages without Adaptation $620,741 Mitigation Project Initial Cost $0 Additional Damages for Base Case $240,137 Adaptation Project Benefits $620,741 Annual O&M Cost of Mitigation $0 $240,137 Adaptation Project Cost $0 oitaRtsoC-tifeneBnoitatpadA$0tsoClatoTtcejorP Current Pre-Resilience Conditions Future (Climate Change) Pre-Resilience Future (Climate Change) Post-Resilience Max. acceptable project cost to keep current conditions despite climate change Table 30. Summary of return period calculations for Study Level 1 and Study Level 2 analyses for example climate-adapted project.

Qf Tf Interpolated Damages, Df Base Case Future Annualized Damages, Daf Qr Tr Damages, Dr (in current $) Resilient Future Annualized Damages, Dar Tc Damages (in Current $) Annualized Damages, Dac Qc (cfs) 9,000 33 $0 $0 9,000 33 0 $0 Max return period resulting in no damages Tcnd 50 $0 $0 9,000 9,979 50 $1,060,312 $5,270 9979 50 0 $0 Return period resulting in moderate damages Tcmod 100 $1,630,000 $8,150 10,505 10,505 62 $1,630,000 $5,207 10505 62 $508,529 $989 Return period resulting in maximum damages Tcmax 500 $3,227,000 $19,428 13,982 11,665 100 $2,162,793 $11,623 11665 100 $1,630,000 $6,534 Total Annualized Current Damages $27,578 13,982 260 $3,227,000 $16,584 13982 260 $2,579,512 $12,964 Project useful Life 265,5105LUP 500 $3,591,659 $6,294 15562 500 $3,227,000 $5,344 Discount Rate (%) 138,52$segamaDtneiliseRdezilaunnAlatoT879,44$segamaDerutuFdezilaunnAlatoT7i Present Value Coeff esaCesaBrofsegamaDerutuF108.31CVP $620,741 Future Damages with Adaptation $356,494 Present Value of Benefits Benefits $380,604 Current Damages for Base Case $380,604 Future Damages without Adaptation $620,741 Mitigation Project Initial Cost $0 Additional Damages for Base Case $240,137 Adaptation Project Benefits $264,248 Annual O&M Cost of Mitigation $0 $240,137 Adaptation Project Cost $0 oitaRtsoC-tifeneBnoitatpadA0$tsoClatoTtcejorP Current Pre-Resilience Conditions Future (Climate Change) Pre-Resilience Future (Climate Change) Post-Resilience Max. acceptable project cost to keep current conditions despite climate change Table 31. The analysis assumes the climate adaptation project will return disaster damages under future climate conditions to those under current conditions.

Study Level 2 Climate Resilience Cost-Benefit Analysis 95 9. For the resilience measure to be cost-effective, the NPV of the benefits minus the costs must be greater than 0. So, a resilience measure with an overall cost of less than $264,247 would be considered cost-effective. 10. Another way of evaluating the results is to use a BCR. If the ratio of the benefits to the costs is greater than 1, the measure is considered to be cost-effective. For this example, assume the cost differential between installing multiple culverts and replacing in-kind is $191,000. Then $264,247/$191,000 = 1.38, and the measure is considered cost-effective. Evaluating the BCRs for the other two options, enlarging the culvert has a BCR of $264,247/$29,000 = 9.11 and the box or arch culvert has a BCR of $264,247/$381,000 = 0.69. Based on BCRs, enlarging the culvert may be the most desirable option. As with the Study Level 1 analysis, a sensitivity analysis was performed for Study Level 2 using a 3 percent discount rate. With the present value coefficient changing from 13.801 to 25.730, the present value of benefits associated with pre-adaptation conditions is $244,433. The results of the analysis are summarized in Table 32. The results suggest that regardless of the interest rate used, enlarging the culvert or replacing the existing culvert with multiple culverts will be cost-effective. Replacing the existing culvert with a box or arch culvert is cost-effective only when a 3 percent discount rate is used. Case Study FHWA HEC-17, Section 8.4, presents a HEC-17 Level 5 analysis of a “Gulf Coast 2: Airport Boulevard Culvert” that includes a CBA of various hazard mitigation options to make the culvert resilient to increased discharges caused by future climate and land use change. The applicable design standard for this culvert is to pass a 25-year flood with no less than 2 feet of freeboard measured from the roadway edge of pavement. The option analyzed was to increase the number of culvert cells from four to six. The climate projections were custom developed by a climate scientist specifically for the project. The benefit-cost approach used in the example is complex and relies on 1,000 Monte Carlo simulations for five climate scenarios for each adaptation option. The five scenarios are • Observed (Model Baseline) 1980–2009, • NOAA Average Baseline, • NOAA 90 Percent Upper Confidence Limit, • “Wetter” Narrative 2070–2099, and • “Drier” Narrative 2070–2099. The comparison analysis uses the Wetter Narrative 2070–2099 scenario. The results for this scenario using the HEC-17 method indicate the present value of costs is $1.7 million 7% Discount Rate 3% Discount Rate Current Damages for Base Case $380,604 $709,575 Future Damages for Base Case $620,741 $ 1,156,516 Allowable Project Cost for No Action $240,137 $446,940 Future Damages without Adaptation $620,741 Future Damages with Adaptation $356,494 $ 664,620 Allowable Project Cost for Adaptation $264,247 $491,896 $1,156,516 Table 32. Results of sensitivity analysis for example scenario using 7 percent and 3 percent discount rates.

96 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change—Guidebook and the present value of benefits is $12.7 million, yielding an NPV of $11.0 million and a BCR of 7.3. The data for the scenario were applied to a Study Level 2 analysis approach as described in this chapter: • The current condition discharges used in the Study Level 2 analysis were taken from Table 8.3 in HEC-17 for Observed 1980–2009 conditions (see Table 33). • The future discharges were taken from HEC-17, Table 3, for the Wetter Narrative 2070–2090 projection (see Table 34). • The current expected damages calculated for each return period were not available from HEC-17 and so were calculated to be consistent with the information provided in the HEC-17 case study. • Damages for future conditions were capped at the current damages under the 100-year dis- charge conditions. Tc Damages (in current $) Annualized Damages, Dac Qc Observed 1980–2009 w/ Future LU (ft3/s) Max return period resulting in no damages Tcnd 25 $0 $0 3,170 Return period resulting in moderate damages Tcmod 50 $15,500,000 $155,000 4,100 Return period resulting in maximum damages Tcmax 100 $17,000,000 $162,500 4,480 $317,500 Project Useful Life PUL 30 Discount Rate (%) i 7 Present Value Coeff PVC 12.409 Present Value of Benefits Benefits $3,939,871 Current Pre-Resilience Conditions Table 33. Summary of data for Airport Boulevard Study Level 2 existing conditions CBA. Future (Climate Change) Pre-Resilience Qf "Wetter” Narrative w/ Future LU 2070– 2099 (ft3/s) Tf Interpolated Damages, Df Base Case Future Annualized Damages, Daf Tfnd 3,170 $0 $0 Max return period resulting in no damages T’fnd 4,100 $15,500,000 Return period resulting in moderate damages Tfmod 4,480 $17,000,000 Return period resulting in maximum damages Tfmax 5,710 25 $17,000,000 7,050 50 $17,000,000 7,840 100 $17,000,000 Table 34. Summary of future conditions for Airport Boulevard Level 2 CBA.

Study Level 2 Climate Resilience Cost-Benefit Analysis 97 • Unlike HEC-17, which used 1,000 Monte Carlo simulations, the following Study Level 2 analysis used just one fixed scenario. • Based on the information for adaptation Option 1 (i.e., increasing four cells to six), the safe capacity of the culverts will increase from 3,170 cfs to 4,450 cfs. This information was used to estimate the post-adaptation damages, and damages for higher return periods were capped at the maximum pre-adaptation future conditions level. Table 33 shows the data used for the comparative Study Level 2 analysis. 1. To begin the analysis, calculate annualized damages (i.e., damage increment) for current conditions: D D D T T D D D D T T D D acmod cnd cmod cnd cmod acmod acmax cmod cmax cmod cmax acmax ac 2 1 1 $0 $15,500,000 2 1 25 1 50 $155,000 2 1 1 $15,500,000 $17,000,000 2 1 50 1 100 $162,500 $155,000 $162,500 $317,5000 = + −   = + −   = = + −   = + −   = = + =     2. Apply the present value coefficient to calculate the present value of total damages over the life of the culvert for current conditions (and hence the minimum benefits needed): $317,500 12.409 $3,939,871DTc = = 3. Assign discharges for future climate change conditions, as shown in Table 34 and Figure 31. Discharges for the “Wetter” narrative scenario were obtained from HEC-17, Table 8.3, for the 25-, 50-, and 100-year storms. Figure 31. Summary of return periods and associated flows for current and future conditions for Airport Boulevard Study Level 2 CBA. 25, 3,170 50, 4,100 100, 4,480 7, 3,170 11, 4,100 13, 4,480 25 , 5,710 50 , 7,050 100 , 7,840 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 001011 Q (c fs ) T (years) Current Future Future Mitigated

98 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change—Guidebook 4. Calculate the adjusted return periods for the future conditions (“Wetter” narrative) before implementing the Option 1 adaptation strategy: LogT Log Log T LogT Log Log T LogT Log Log T fint fint fnd fnd fnd fnd log 50 50 25 7,050 4,480 7,050 5,710 1.122 10 13.2 years log 25 25 13.2 5,710 4,100 5,710 4,480 1.035 10 10.9 years log 13.2 13.2 10.9 4,480 3,170 4,480 4,100 0.83 10 6.8 years 1 1 1.122 1.035 0.83 ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) = − − − − = = = ′ = − − − − = ′ = = = − − − − = = =    5. Interpolate the damage increments based on the calculated return periods: D D D D D D D D afnd afint afmod afint afmax af Tf T $0 + $15,500,000 2 1 6.8 1 10.9 $428,697 $15,500,000 + $17,000,000 2 1 10.9 1 13.2 $259,756 $17,700,000 + $17,000,000 2 1 13.2 1 25 $607,879 $17,700,000 + $17,000,000 2 1 25 1 50 $340,000 $17,700,000 + $17,000,000 2 1 50 1 100 $170,000 $428,697 $259,756 $607,879 $340,000 $170,000 $1,806,332 $1,806,332 12.409 = $22,414,774 $22,414,774 $3,939,871 $18,474,903 1 2 ′ = −  = = −  = = −  = = −  = = −  = = + + + + = = ∆ = − =       Table 35 and Figure 32 summarize the information calculated thus far for pre-adaptation damages. 6. According to HEC-17, the proposed Option 1 will increase the safe capacity of the culverts from 3,170 cfs to 4,450 cfs. This flow is assumed to reasonably have the same recurrence interval of 13.2 years as the 4,480 cfs flow. Again, maximum damages were capped at the maximum damages for existing conditions, and damages occurring after Option 1 is implemented for future climate conditions were calculated: $15,500,000 5,710 4,450 3,170 4,100 $17,000,000 $15,500,000 4,480 4,100 $16,802,632 D D rmod rmod ( )( )( )= + − − − − − = Table 36 and Figure 33 summarize damages calculated for after-adaptation conditions.

Study Level 2 Climate Resilience Cost-Benefit Analysis 99 Qf "Wetter” Narrative w/ Future LU 2070– 2099 (ft3/s) Tf Interpolated Damages, Df Base Case Future Annualized Damages, Daf Tfnd 3,170 7 $0 $0 Max return period resulting in no damages T’fnd 4,100 11 $15,500,000 $440,446 Return period resulting in moderate damages Tfmod 4,480 13 $17,000,000 $266,759 Return period resulting in maximum damages Tfmax 5,710 25 $17,000,000 $604,776 7,050 50 $17,000,000 $340,000 7,840 100 $17,000,000 $170,000 Future (Climate Change) Pre-Resilience Table 35. Updated summary of annualized damages for pre-adaptation future conditions for Airport Boulevard Study Level 2 CBA. 7 11 13 25 50 100 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Da m ag es ($ ) Peak Discharge (cfs) Current Future (interp) Figure 32. Peak discharges and associated damages for pre-adaptation future conditions for Airport Boulevard Study Level 2 CBA. 7. Calculate the future mitigated damage increments and find the total value of future damages after adaptation measures are implemented for future climate conditions: $0 $16,684,211 2 1 13.2 1 25 $298,293 $16,684,211 $17,000,000 2 1 25 1 50 $336,842 $17,700,000 $17,000,000 2 1 50 1 100 $170,000 $298,293 $336,842 $170,000 $805,135 $805,135 12.409 $9,990,920 $22,414,774 $9,990,920 $12,423,854 2 D D D D D D armod arint armax ar Tr T     ( ) ( ) ( ) = + − = = + − = = + − = = + + = = = ∆ = − =

100 Incorporating the Costs and Benefits of Adaptation Measures in Preparation for Extreme Weather Events and Climate Change—Guidebook Qf "Wetter" Narrative w/Future LU 2070– 2099 (ft3/s) Tf Inter- polated Damages, Df Base Case Future Annualized Damages, Daf Damages, Dr (in current $0) Resilient Future Annualized Damages, Dar Tfnd 3,170 7 $0 $0 4,480 13 0 $0 Max return period resulting in no damages Return period resulting in mod- erate damages Tfmod 4,480 13 $17,000,000 $266,759 7,050 50 $17,000,000 Return period resulting in max- imum damages Tfmax 5,710 25 $17,000,000 $604,776 7,840 100 $17,000,000 7,050 50 $17,000,000 $340,000 7,840 100 $17,000,000 $170,000 TrQr 25 $16,684,211 T’fnd 4,100 11 $15,500,000 $440,446 5,710 Future (Climate Change) Pre-Resilience Future Post-Resilience Option 1 Table 36. Summary of damages for future conditions after adaptation measures are implemented for Airport Boulevard Study Level 2 CBA. 7 11 13 25 50 100 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Da m ag es ($ ) Peak Discharge (cfs) Current Future (interp) Future Mitigated Figure 33. Peak discharges and associated damages after adaptation measures are implemented for Airport Boulevard Study Level 2 CBA.

Study Level 2 Climate Resilience Cost-Benefit Analysis 101 So, the NPV of the benefits associated with implementing the Option 1 adaptation project is $12,423,854. The NPV of the project is equal to the difference between the benefits and the costs, which in this case were $1,700,000, so NPV of the project is $10,723,854. The BCR is $12,423,854/$1,700,000, which equals 7.31. (Calculations presented in the Level 2 analysis use rounded values for the adjusted return intervals.) Using a spreadsheet to complete the calculations (which reduces rounding errors) yields an NPV of $10,936,962 and a BCR of 7.43. Table 37 compares the results of the Study Level 2 analysis method with the results in HEC-17. A comparison of the analysis results indicates that the simplified Study Level 2 analysis approach provides results within 3 percent of the NPV and less than 1 percent of the BCR found using the Monte Carlo method. These results indicate that the simplified Study Level 2 analysis approach can provide accurate estimates of NPV and BCR for transportation climate adaptation projects. Study Level 2 Analysis with Sea Level Rise The same Galveston scenario discussed in Chapter 7 was used as the basis for completing a Study Level 2 analysis for SLR. Additional points with recorded flood elevations between the current 50-, 100-, and 500-year tide elevations and their corresponding estimated equivalent recurrence intervals with SLR were incorporated into the analysis for future conditions without resilience/adaptation. The result was a revised estimate of $173,500 for a cost-effective adaptation project. Last, the damages associated with implementing an adaptation project that protects to the current 500-year level event was assumed, such that damages remained at $0 until the future sea level exceeded the current 500-year event, after which maximum damages were assumed to occur. The results are summarized in Table 38. The results indicate that the proposed project has an initial cost of $250,000 and annual O&M costs of $5,000, yielding a BCR of 0.72; it is therefore not cost-effective. HEC-17 Monte Carlo approach Level 2 Analysis (rounding) Level 2 Analysis (spreadsheet) Net Present Value of Project $11.0 million $10,723,854 $10,936,962 BCR 7.3 7.31 7.43 Table 37. Summary of results comparing a HEC-17 Monte Carlo simulation CBA approach with Study Level 2 analysis results for Airport Boulevard CBA.

Tf (Year) Tide El (ft) Interpolated Damages, Df Base Case Future Annualized Damages, Daf Tr (Year) Tide El (ft) Interpolated Damages, Dr Base Case Future Annualized Damages, Dar Tide El (ft) Damages (in Current $) Annualize d Damages, Dac Tc (Year) 18.35 10.12 $0 $0 18.35 10.12 $0 $0 Max return period resulting in no damages Trnd 10.12 $0 $0 50.00 29.32 11.34 $42,361 $432 29.32 11.34 $0 $0 Next level return period resulting in some damages Trnext 13.00 $100,000 $500 100.00 29.82 13.00 $100,000 $41 29.82 13.00 $0 $0 Return period resulting in maximum damages Trmax 17.76 $1,250,000 $5,400 500.00 66.34 15.51 $706,408 $7,443 66.34 15.51 $0 $0 Total Annualized Current Damages $5,900 145.69 17.76 $1,250,000 $8,031 145.69 17.76 $0 $0 Project Useful Life PUL 100 158.29 18.00 $1,307,983 $699 158.29 18.00 $1,250,000 $341 Discount Rate (%) i 7 Total Annualized Future Damages $16,646 Total Annualized Future Damages $341 Present Value Coefficient esaCesaBrofsegamaDerutuF962.41CVP $237,523 Future Damages for Base Case $4,873 Present Value of Benefits Benefits $84,189 Current Damages for Base Case $84,189 Current Damages for Base Case $237,523 Mitigation Project Initial Cost= $250,000 Additional Damages for Base Case $153,335 Additional Damages for Base Case $232,651 Annual O&M Cost of Mitigation= $5,000 643,123$533,351$ oitaRtsoC-tifeneBnoitatpadA643,123$=tsoClatoTtcejorP 0.72 Current Pre-Resilience Conditions Future (Sea Level Rise) Pre-Resilience Max. acceptable project cost to keep current conditions despite climate change Future Post-Mitigation Max. acceptable project cost to keep current conditions despite climate change Table 38. Study Level 2 analysis results for sea level rise example near Galveston, Texas.