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PAPERBACK + PDF your price: $37.50 add to cart PAPERBACK list:$32.00 Web:$28.80 add to cart PDF BOOK your price: $24.50 add to cart PDF CHAPTERS your price: $2.90 select Rights & Permissions Free Resources PDF EXECUTIVE SUMMARY Display this book on your site! Related Titles Elevation Data for Floodplain Mapping Integrating Multiscale Observations of U.S. Waters Other Related Titles Mapping the Zone: Improving Flood Map Accuracy (2009) Water Science and Technology Board (WSTB) Web Search Builder Use this book's key terms to search within this book, across our collection, or across the Web. Skim This Chapter Skim this chapter and use this chapter's key terms to search within this book. Reference Finder Paste in your own text to find books that relate to your topic. Page 79   E-mail  Facebook  Digg  Stumble  Twitter More The following HTML text is provided to enhance online readability. Many aspects of typography translate only awkwardly to HTML. Please use the page image as the authoritative form to ensure accuracy. 6 Benefits and Costs of Accurate Flood Mapping All societies have more needs and desires than resources to fulfill them. Benefit-cost analysis provides a framework to understand and balance the various requirements of society against available resources. If the benefits are greater than the costs, the project contributes positively to society. Benefit-cost analysis of maps and their underlying data suggests that increasing the accuracy of maps or portraying additional information yields positive net benefits (Bernknopf et al., 1988, 1990, 1993, 1997; Mileti et al., 1992; Olson and Olson, 2001; Halsing et al., 2004; NRC, 2006). These “value of information” studies show that the information itself has value, which increases with greater accuracy or comprehensiveness. Few studies have evaluated the net benefits of improved flood map accuracy. The most comprehensive assessment was undertaken by the Federal Emergency Management Agency (FEMA) in 1997 and updated in 2000. This chapter describes the benefits and costs of more accurate flood maps and summarizes the results of benefit-cost analyses carried out by FEMA and the State of North Carolina. The benefit-cost analyses focused on mapping, not related topics such as flood hazard mitigation. BENEFITS AND COSTS Most of the costs and some of the benefits of more accurate flood maps can be quantified, drawing on studies of floods and other kinds of hazards (e.g., Bernknopf et al., 1993; NRC, 2006). Direct costs (e.g., collection of elevation data) and indirect costs (e.g., implementation of required mitigation measures) are generally measurable using observed expenditures. Direct benefits (e.g., use of the data to estimate flood risk more accurately) are easier to measure than benefits that are non-market or temporal in nature.1 Improvements in models, data collection, or mapping methods generally yield incremental benefits (e.g., improved land use regulation). For flood map creation and accuracy improvement, most of the direct costs and some of the direct benefits are borne by the public sector; other costs and benefits are spread across society (Table 6.1). The direct costs to FEMA are a function of the level of effort required to carry out flood studies, evaluate the results, update and maintain the maps, and produce and distribute paper and digital products. The direct costs to users include the time and effort required to use the maps and request updates, as well as the monetary costs of complying with insurance and land use regulations. The benefits of more accurate flood maps accrue to individuals, communities, and society as a whole. Flood-related information is a public good—that is, a product or service that can be shared by many users simultaneously without detracting from its value to any one of them. Flood maps are used an estimated 30 million times each year by government agencies, FEMA contractors, lenders, insurance agents, land developers, realtors, community planners, property owners, and 1 Where market prices do not exist because the commodity (flood information) is not “traded,” non-market valuation is sometimes used to estimate benefits. Page 79 Front Matter (R1-R14) Summary (1-6) 1 Introduction (7-12) 2 Flood Mapping and Flood Insurance (13-24) 3 Elevation and Height Data (25-40) 4 Inland Flooding (41-66) 5 Coastal Flooding (67-78) 6 Benefits and Costs of Accurate Flood Mapping (79-88) 7 Mapping and Risk Communication: Moving to the Future (89-100) References (101-104) Appendixes (105-106) Appendix A: Methods for Estimating Base Flood Elevations in Approximate Studies (107-108) Appendix B: Biographical Sketches of Committee Members (109-112) Appendix C: Glossary (113-120) Appendix D: Acronyms and Abbreviations (121-122)

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Mapping the Zone: Improving Flood Map Accuracy 6 Benefits and Costs of Accurate Flood Mapping All societies have more needs and desires than resources to fulfill them. Benefit-cost analysis provides a framework to understand and balance the various requirements of society against available resources. If the benefits are greater than the costs, the project contributes positively to society. Benefit-cost analysis of maps and their underlying data suggests that increasing the accuracy of maps or portraying additional information yields positive net benefits (Bernknopf et al., 1988, 1990, 1993, 1997; Mileti et al., 1992; Olson and Olson, 2001; Halsing et al., 2004; NRC, 2006). These “value of information” studies show that the information itself has value, which increases with greater accuracy or comprehensiveness. Few studies have evaluated the net benefits of improved flood map accuracy. The most comprehensive assessment was undertaken by the Federal Emergency Management Agency (FEMA) in 1997 and updated in 2000. This chapter describes the benefits and costs of more accurate flood maps and summarizes the results of benefit-cost analyses carried out by FEMA and the State of North Carolina. The benefit-cost analyses focused on mapping, not related topics such as flood hazard mitigation. BENEFITS AND COSTS Most of the costs and some of the benefits of more accurate flood maps can be quantified, drawing on studies of floods and other kinds of hazards (e.g., Bernknopf et al., 1993; NRC, 2006). Direct costs (e.g., collection of elevation data) and indirect costs (e.g., implementation of required mitigation measures) are generally measurable using observed expenditures. Direct benefits (e.g., use of the data to estimate flood risk more accurately) are easier to measure than benefits that are non-market or temporal in nature.1 Improvements in models, data collection, or mapping methods generally yield incremental benefits (e.g., improved land use regulation). For flood map creation and accuracy improvement, most of the direct costs and some of the direct benefits are borne by the public sector; other costs and benefits are spread across society (Table 6.1). The direct costs to FEMA are a function of the level of effort required to carry out flood studies, evaluate the results, update and maintain the maps, and produce and distribute paper and digital products. The direct costs to users include the time and effort required to use the maps and request updates, as well as the monetary costs of complying with insurance and land use regulations. The benefits of more accurate flood maps accrue to individuals, communities, and society as a whole. Flood-related information is a public good—that is, a product or service that can be shared by many users simultaneously without detracting from its value to any one of them. Flood maps are used an estimated 30 million times each year by government agencies, FEMA contractors, lenders, insurance agents, land developers, realtors, community planners, property owners, and 1 Where market prices do not exist because the commodity (flood information) is not “traded,” non-market valuation is sometimes used to estimate benefits.

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Mapping the Zone: Improving Flood Map Accuracy TABLE 6.1 Benefits and Costs of Improved Map Accuracy Category Impact Benefits Costs Land use: floodplain regulations Reduced loss of life Able to target higher-risk areas Able to identify evacuation needs   Reduced loss of property Able to target higher-risk areas Lower-risk areas less restricted Building restrictions match risk Less time and money spent on contesting maps Eventual payback on freeboard costs Wise floodplain investment, including infrastructure Increased construction costs Loss of land to development Need to update regulations and inform the public of changes Reduced loss of business Fewer business interruptions Fewer public service interruptions Increased construction costs Preservation of natural functions of floodplains Natural storm water management Improved water quality Increased ecological diversity Loss of land to development Insurance Rates Structures insured at appropriate levels More consistent insurance ratings through better information about risk Rates may increase for some Coverage More insurance purchased because of improved understanding of risk   Property values   Lower (or no) devaluations because of better information on risk Change in practices that have led to devaluations   Emergency services Resource deployment More efficient allocation in planning and response   SOURCE: Compiled from FEMA (1997) and NRC (2006). others for insurance purposes, land management, mitigation, risk assessment, and disaster response.2 Because these uses are not mutually exclusive, it is appropriate to sum the benefits, as is done in conventional benefit-cost analyses (e.g., NRC, 2006). Several categories of benefits emerge from benefit-cost analyses of flood maps (FEMA, 1997; NCFMP, 2008) and work on flood and seismic hazards (Bernknopf et al., 1993; Chivers and Flores, 2002; NRC, 2006). Most of these benefit categories arise from improvements in both horizontal accuracy (i.e., proper depiction of the floodplain boundary) and vertical accuracy (i.e., proper assessment of risk), although the nature and level of benefits may differ for each type of accuracy. These benefit categories and their associated costs are summarized in Table 6.1 and described below. Land Use More accurate flood maps provide a more reliable measure of risk and enable floodplain managers to better target land use regulations. Owners of properties that were incorrectly designated within the floodplain benefit by having building restrictions lifted or lessened, which will lower future construction costs, eliminate mandatory retrofitting, and enable the land to be used in more ways. Adding building and land use restrictions to properties that should have been designated within the floodplain can lead to measures to protect equipment, inventories, and personal possessions. Although up-front costs are higher, developing and using land commensurate with the true risk will reduce future losses of life, property, and business. A benefit-cost analysis of National Flood Insurance Program (NFIP) building standards in coastal areas found that the benefits of freeboard exceed the construction costs by 3 to 7 percent (Jones et al., 2006). Another possible benefit of more accurate maps is that fewer individuals will contest floodplain boundaries and levels of risk, saving time and money. Greater trust in the maps could also lead to more, but wiser, investment. Finally, management of floodplains to preserve important natural functions (e.g., slowing storm water runoff, buffering water quality) benefits the entire community. Although some work has been done on valuing 2 Presentation to the committee by Paul Rooney, FEMA, on August 20, 2007.

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Mapping the Zone: Improving Flood Map Accuracy these beneficial functions (e.g., CDWR, 2005), many are still unquantified. Insurance Better estimates of flood risk enable structures to be insured at appropriate levels, which benefits both individuals and the nation. Those for whom flood insurance is not mandatory will not be required to purchase it, while those who need or want it can purchase the right amount (e.g., Box 6.1). Two problems remain. First is the problem of those who need but do not carry flood insurance (e.g., owners of mortgage-free properties in the floodplain). Nationwide about half of the single-family homes in Special Flood Hazard Areas (SFHAs) are insured, although market penetration in the areas hit by the 2008 Midwest flood was less than 10 percent (coastal areas have higher participation) (Maurstad, 2008). Greater accuracy may lead to improved understanding of flood risk and ultimately to more widespread insurance coverage. In addition, insurance rates and coverage will be more accurate and consistent because the risk ratings will be more accurate and consistent. Second is the problem of moral hazard wherein the availability of flood insurance encourages people to build in places they might not otherwise. Accurate pricing of insurance premiums, relative to risk, may reduce this problem. Property Values Numerous studies have analyzed the impacts of flooding, coastal storms, and the NFIP on property values (e.g., Montz and Tobin, 1988; Holoway and Burby, 1990; Chivers and Flores, 2002; Bin and Polasky, 2004; Hallstrom and Smith, 2005; Smith et al., 2006), although additional information is needed to connect property values and map accuracy. The impacts of more accurate maps on property values are both location specific and hard to measure. In cases where buildings in the floodplain are devalued relative to buildings in areas with lower flood risk, more accurate floodplain boundaries could either increase or decrease property values. An adverse impact could be lessened because the risk will be better understood and property values could be assessed at appropriate levels. More accurate maps may also be less costly to use because there will BOX 6.1 Impact of Improved Flood Maps on Insurance More accurate flood maps can increase or decrease insurance premiums of individual property owners, as the following examples from two counties in New Jersey illustrate. In Monmouth County, more accurate flood maps created using lidar (light detection and ranging) elevation data resulted in an additional 3,680 structures being redesignated as within the floodplain. The property owners with mortgages are now required to pay for flood insurance, causing financial hardship for some (e.g., people living on a fixed income). Passaic County flood maps were updated to include flood mitigation measures installed along Molly Ann’s Brook by the U.S. Army Corp of Engineers. The more accurate maps had the opposite effect of the revised Monmouth County maps, removing 56 homes and 6 commercial buildings from the floodplain designation and relieving many homeowners of the mandatory requirement for flood insurance. SOURCE: S. Kempf, 2008, Community flood maps: A tale of two NJ cities, Association of State Floodplain Managers Newsletter, May. be fewer questions about the accuracy or interpretation of the map in mortgage determinations. Temporal Considerations The accuracy of flood maps changes with time and so do the benefits and costs. Costs are highest at the outset when flood-related data are being collected, modeled, and analyzed (Bernknopf et al., 1993; FEMA, 1997). The more detailed the flood study method, the greater are the data, modeling, and analysis demands, and the higher are the initial costs (Table 2.1). Costs can decrease significantly when maps exist and require only updates or reanalysis. Maps created using state-of-the-art techniques and the most current information provide the best possible representation of flood hazard, at least for a short time. These accurate maps provide the immediate benefit of enabling society to better prepare for and respond to future flooding. Thereafter, development and changes in hydrology and hydraulics will degrade map accuracy, while mapping updates and incorporation of knowledge from previous flood events will increase map

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Mapping the Zone: Improving Flood Map Accuracy accuracy. The accumulation of information from flood events has intermediate and long-term benefits. Post-flood inspections yield information needed to improve models and update the maps. For example, inundation maps of the June 2006 floods in New York are being used to update Flood Insurance Rate Maps created in 1985. Knowledge about how the built environment responds to floods and coastal surges leads to improved building design and safer siting and thus to reduced future damage, social losses, and the need for federal disaster assistance. Similarly, experience responding to floods leads to more robust plans for emergency services and thus minimizes future loss of life and property. The information gained also contributes to society’s underlying knowledge base across multiple disciplines. FEMA BENEFIT-COST ANALYSES In 1997, FEMA analyzed the incremental costs and benefits of modernizing its Flood Hazard Mapping Program (FEMA, 1997). The analysis considered all costs, including costs for flood data updates, map maintenance, new mapping, conversion to new standards, and customer service. It also calculated three benefits that could be quantified with reliable data: Reduced damage to new residential properties, Reduced damage to new non-residential structures, and Reduced costs of map reviews. The first two were calculated by determining the annual damage that would be prevented by designing new construction using more accurate flood data and subtracting the increased construction costs for complying with NFIP requirements (up to 5 percent). The third was based on estimates of the time saved by using improved maps and digital products for mortgage and permit applications and flood insurance policy ratings. The study found incremental benefits of $1.75 billion and incremental costs of $848 million over a 50-year period, for a benefit-cost ratio of 2.1. In 2000, FEMA repeated the analysis, modifying the projected number of new structures in SFHAs and factoring in survey responses on flood map inventory needs from all mapped communities (the original analysis considered only 10 percent of mapped communities; FEMA, 2000). The updated analysis yielded incremental benefits of $1.33 billion and incremental costs of $799 million, for a benefit-cost ratio of 1.7. The analysis also estimated how the new construction benefit would change over time. The benefits to new construction are greatest in areas that are unstudied or studied through approximate methods because no flood elevation data are available to site new buildings. As more flood elevation data become available through map modernization, the benefits for new construction decline. FEMA estimated that factoring in this declining benefit decreases the benefit-cost ratio to 1.5. FEMA’s Office of Inspector General audited its cost estimate for the Map Modernization Program in 2000 (OIG, 2000). It found that FEMA’s methodology was sound and no major costs were overlooked, but that the estimate could be significantly in error because costs were not always verified or drawn from reliable sources, some assumptions (e.g., cost of flood studies) have a major effect on cost, and cost savings from partnerships and technological innovation (e.g., use of lidar) were not considered. FEMA agreed with most of the findings and outlined steps for improving future cost estimates in the report’s appendix. The revised costs have not yet been incorporated in a benefit-cost analysis. NORTH CAROLINA CASE STUDY Many benefits and costs are too varied to assess generically—case studies are required to understand them at the local level, where implementation occurs. The North Carolina Floodplain Mapping Program (NCFMP) determined the costs and three benefits of more accurate maps in three different physiographic regions in North Carolina and also examined the costs and benefits of different flood study methods for the entire state (NCFMP, 2008). The communities chosen represent the typical level of development within three physiographic regions: Pasquotank County in the coastal region, Mecklenburg County in the piedmont region, and the city of Asheville in Buncombe County within the mountain region (see Chapter 1, “Case Studies”). Geospatial data necessary to complete the assessment (e.g., parcel boundaries attributed with zoning, building value, and construction date; digital flood hazard information) were available for each of

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Mapping the Zone: Improving Flood Map Accuracy TABLE 6.2 Profile of Case Study Areas Area Populationa Number of Buildingsb Percentage of Buildingsb Number of Insurance Policiesb Percentage of Policiesb Percentage of Buildings Insured Inside the SFHA Outside the SFHA Inside the SFHA Outside the SFHA Inside the SFHA Outside the SFHA Inside the SFHA Outside the SFHA Inside the SFHA Outside the SFHA Pasquotank 39,951 5,652 8,309 40 60 979 279 78 22 17.3 3.4 Mecklenburg 827,445 22,091 178,614 11 89 1,765 1,267 58 42 8.0 0.7 Asheville 69,045 1,307 23,711 5 95 269 83 76 24 20.6 0.4 aIn 2006 for Pasquotank and Mecklenburg Counties; in 2003 for Asheville. bDetermined using FIRMs effective prior to creation of the North Carolina Floodplain Mapping Program. Not all the buildings located outside the SFHA are in a delineated floodplain and are in areas covered by the FIRMs. SOURCE: NCFMP (2008). the counties or municipality. Building, population, and insurance information for the study areas is summarized in Table 6.2. The percentages of homes in the SFHA carrying flood insurance are low, given that anyone with a federally backed mortgage is required to carry insurance, but they are generally consistent with national averages for riverine areas, which range from 10 to 25 percent.3 Both the national and the North Carolina percentages reflect the unwillingness of floodplain residents to obtain insurance, perhaps because of their lack of trust in the maps or their lack of understanding of what the maps portray. More credible maps might encourage individuals to take action to minimize their risk, such as carrying flood insurance or elevating their buildings. The NCFMP selected three types of benefits for analysis, based on the availability of geospatially referenced map data: Expected annual flood losses avoided to new buildings and infrastructure through accurate identification of flood elevations and/or areal extent of the floodplain. Expected additional annual flood insurance premiums to be collected by the NFIP for properties newly designated within the SFHA on more accurate maps. This is a benefit because Congress intended the NFIP to be funded through collection of premiums. Expected annual flood insurance premium savings to policy holders who, as a result of more accurate maps, are placed in lower-rate zones or removed from the mandatory insurance requirements of the NFIP. To calculate the incremental benefits of more accurate maps, the NCFMP compared Q3 flood data4 digitized from Flood Insurance Rate Maps (FIRMs) with data from new digital FIRMs (DFIRMs) produced using detailed study, limited detailed study North Carolina, and redelineation methods (Table 6.3). The limited detailed study method used by North Carolina is different from the limited detailed study method used nationally (see “North Carolina Flood Mapping Case Study” in Chapter 4). The DFIRMs contain better flood hazard information than the old FIRMs, including Identification of new SFHAs or more accurate portrayal of existing SFHAs, Determination of base flood elevations (BFEs) where none existed, and Updates of existing BFEs using revised hydrologic and/or hydraulic analyses. The areal differences in the SFHAs and other flood insurance rate zones in the old FIRMs were compared with the SFHAs and other zones in the new DFIRMs using a geographic information system (GIS). Then the buildings in each of the zones were counted to determine the number of parcels that changed hazard designation as a result of the remapping. This change 3 Personal communication from Mary Jo Vrem, FEMA, on July 14, 2008. 4 Q3 data are digital representations of certain flood data on paper FIRMs, such as 1 percent and 0.2 percent annual chance floodplain boundaries and flood insurance zone designations.

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Mapping the Zone: Improving Flood Map Accuracy TABLE 6.3 Distribution of Flood Study Methods in the Case Study Areas Study Method Linear Study Miles Asheville Mecklenburg Pasquotank Limited detailed study North Carolina 27 0 40 Redelineation 56 0 81 Detailed study 27 569 40 SOURCE: NCFMP (2008). analysis was performed for five different types of buildings: single-family residential, two- to four-family homes, other residential, nonresidential, and mobile homes. For example, some single-family residential parcels identified as outside the SFHA (Zone B, C, or X; see Box 2.1) on old FIRMs were found to be within the SFHA (e.g., Zone AE, AO) on the new DFIRMs. The new DFIRMs provide base flood elevations, while many older FIRMs do not. The losses avoided for each building were calculated as a percentage of the current value of the building. This percentage was based on FEMA assumptions for potential property damage to structures in zones without BFEs (FEMA, 1989). The study calculated the losses avoided to structures that would be built at or above the BFE on vacant parcels zoned for homes or buildings in and outside the SFHA. Depth-damage relationships used in risk assessments (e.g., HAZUS [Hazards US]; see Chapter 7) were not explored. Changes in flood hazard zones as a result of better mapping affect insurance premiums. To calculate the incremental benefits of flood insurance premiums better matching risk, the NCFMP quantified the difference in annual flood insurance premiums for each property based on its location relative to the SFHA on the old FIRM and the new DFIRM. Benefit 1. Flood Losses Avoided for New Buildings and Infrastructure The development of vacant parcels (buildout) that are zoned for building cannot be predicted each year. Therefore, the case study estimated future flood damage avoided to new or improved buildings by assuming that 20 percent, 40 percent, and 60 percent of vacant parcels zoned for building were to have structures constructed in compliance with NFIP floodplain management regulations (i.e., with the lowest floor at or above the new BFEs). Using population growth from U.S. census projections for the state (Census Bureau, 2005) as a proxy for the rate of development, the 20 percent buildout scenario could be realized between 2020 and 2025. For the 20 percent buildout scenario in Pasquotank County, an estimated $354,000 in annual flood losses could be avoided, including $284,000 by building the lowest floor at or above the new BFEs, $65,000 by more accurately determining BFEs, and $5,000 by using updated detailed studies for siting and design of structures. Annual flood losses and related disaster assistance expenditures avoided for public infrastructure and buildings were estimated based on payouts for flooding and hurricane disasters between 1993 and 2005. The study found that $1.32 of flood losses have occurred to public infrastructure for every $1.00 of flood losses to insured buildings. The NCFMP evaluated average annual disaster-related expenditures to repair or reconstruct public infrastructure (e.g., roads, bridges, wastewater facilities, public buildings, public utilities) compared to average annual flood insurance claims throughout the state. It assumed that the same ratio could be expected for flood losses avoided by implementing minimum NFIP floodplain management regulations based on reliable flood hazard data. In Pasquotank County, the calculated benefit of flood damages avoided for new infrastructure was $465,000. This resulted in the total benefits from structural and infrastructure loss avoidance of $819,000. These benefits would double and triple with the 40 percent and 60 percent buildout scenarios, respectively. Analyses of Mecklenburg County and Asheville yielded similar results, although the financial benefit

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Mapping the Zone: Improving Flood Map Accuracy TABLE 6.4 Annual Flood Losses Avoided for Buildings Sited Using Different Study Methods Percent Buildout Area Benefits (thousand dollars per year) Limited Detailed Study North Carolina Redelineation Detailed Study Infrastructure Total 20 Pasquotank 53 130 171 53 819   Mecklenburg NA NA 21,920 NA 21,920   Asheville 287 312 220 287 595 40 Pasquotank 106 260 824 106 1,638   Mecklenburg NA NA 43,830 NA 43,830   Asheville 674 624 440 674 1,190 60 Pasquotank 158 390 1,236 158 2,457   Mecklenburg NA NA 65,750 NA 65,750   Asheville 861 936 660 861 1,785 NOTE: NA = not applicable. SOURCE: NCFMP (2008). of more accurate flood maps is significantly greater in Mecklenburg County (Table 6.4), which has higher population and building values than the other case study areas. Overall, the study found that benefits were greatest in areas that previously had no defined BFEs. Benefits 2 and 3. Flood Insurance Better Matching Risk Better mapping enables more accurate determination of the need for flood insurance and the means of rating risk. The new DFIRMs increased the number of buildings designated within Special Flood Hazard Areas by 807 (NCFMP, 2008). The increase in number of property owners who must purchase flood insurance benefits the NFIP, which would collect additional premiums of $935,600 in the three case study areas. The expected annual increase in premiums reflects the actual market penetration for each county or municipality (see Table 6.2), with an expected growth in the number of insurance policies of 4 percent due to increased enforcement of mandatory purchase requirements, public awareness, and/or confidence in the map products. The number of policies in force for North Carolina increased by 4 percent between 2006 and 2007. Of the property newly designated within the SFHA, 491 buildings now have BFE data where none previously existed. The BFE data allow a finer discrimination of flood insurance rate zones, lowering premiums for owners of buildings with BFEs that are lower as a result of updated studies (505 buildings). Properties with new or lowered BFEs would have lower premiums that would result in annual savings for their owners of $498,000. The NCFMP study estimated that policyholders whose properties are no longer identified as being within the SFHA but continue to carry flood insurance because reduced (preferred) rates are available would save $642,900 in premiums annually in the three study areas. However, property owners who had been paying Zone A insurance premiums but cancel their flood policies as a result of the new information expose themselves to financial risk and the government to emergency payments. Recent studies carried out as part of the five-year evaluation of the NFIP recommend that owners of property located between the 100-year and 500-year floodplains be required to carry flood insurance (Galloway et al., 2006; Wetmore et al., 2006). Under the 20 percent buildout scenario, premiums to the NFIP are estimated to increase by $112,100 and policy holders would save $607,900 annually in the three case study areas (NCFMP, 2008). Benefits of Different Mapping Approaches To determine which flood study method yields the greatest net benefits, the NCFMP examined four methods: approximate studies using the National Elevation Dataset (APPROX-NED), limited detailed studies, detailed studies (see Table 2.1), and a combination of methods used by North Carolina. The analysis showed that use of APPROX-NED, the only method

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Mapping the Zone: Improving Flood Map Accuracy TABLE 6.5 Estimated Benefits and Costs of Flood Study Methods Study Methoda Unit Cost per Mile Total Discounted Benefitsb (million dollars) Total Discounted Costsb (million dollars) Benefit-Cost Ratio APPROX-NED study $1,423 $335.42 $391.40 0.86 Limited detailed study, North Carolina method $1,908 $582.32 $404.59 1.44 Detailed study $6,539 $922.13 $519.22 1.78 Combination, North Carolina method $2,419 $933.21 $417.23 2.24 aThe APPROX-NED study is assumed to have 20% of the flood damage losses avoided by the detailed study, and the limited detailed study North Carolina method to have 60% of the flood damage losses avoided by the detailed study. bA 7% annual discount rate was used to transform gains and losses occurring in different time periods to a common unit of measurement in accordance with OMB (1992). SOURCE: NCFMP (2008). that does not yield a base flood elevation, resulted in net costs to the state and that the other methods produced net benefits (Table 6.5; NCFMP, 2008). The net benefit of statewide mapping would have been $173 million using all limited detailed studies and $398 million using all detailed studies. However, when the decision on which method to use was based on factors such as demographics, development plans, quality of existing data, flood history, and the nature of the terrain—the approach followed by the state—the net benefits were $511 million. Statewide Benefit-Cost Analysis The NCFMP followed the FEMA (1997) benefit-cost methodology to determine the net benefits of more accurate maps for North Carolina (NCFMP, 2008). Benefits were determined by extrapolating the results of the three case studies to the entire state and calculating additional savings from fewer flood-related business interruptions, reduced costs of map reviews (including mandatory flood insurance purchase determinations by lenders as part of the mortgage lending process, flood insurance policy ratings when a policy is sold, and building permits by local officials), and use of the data by multiple agencies. Engineering and mapping costs and the increased cost of construction for new buildings located in previously unmapped or undermapped areas were quantified and other cost estimates were taken from FEMA (1997). For 2000 through 2050, the NCFMP found a benefit-cost ratio of 2.3. This is comparable to FEMA’s (1997) assessment of 2.1 for map modernization. CONCLUSIONS The potential benefits (and beneficiaries) of more accurate flood maps are numerous. By far the greatest benefit calculated was avoided losses to planned new buildings (FEMA, 1997; NCFMP, 2008) and avoided repairs to infrastructure (FEMA, 1997) through more accurate identification of flood elevations and the areal extent of the floodplain. Only detailed studies and most limited detailed studies provide base flood elevations. In North Carolina, detailed and limited detailed studies rely on lidar data, rather than the U.S. Geological Survey’s National Elevation Dataset. Lidar surveys cost $27 million for the entire state, yet the benefits of carrying out detailed and limited detailed studies outweigh these costs. This is significant because the analysis in Chapter 3 showed the importance of high-resolution, high-accuracy terrain data such as lidar in the accuracy of flood maps. The NCFMP (2008) study is the first detailed analysis of the economic benefits of improved flood map accuracy in a digital environment. One of its key contributions is demonstration of a method to realistically assess the value of modernized mapping programs and to choose the type of flood study method. Although the analysis focused on areas subject to riverine flooding, the method would also work for areas subject to coastal flooding. Both the FEMA (1997) and the NCFMP (2008) studies calculate a benefit-cost ratio of more than 2, but the exact economic benefits are unknown because of uncertainties in the assumptions, variations in costs and benefits across the country, and the difficulty

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Mapping the Zone: Improving Flood Map Accuracy of quantifying some kinds of benefits. Nevertheless, because all of the costs but only some of the benefits were considered, the results are likely the right order of magnitude, suggesting that more accurate maps produce net benefits for the nation. Finding. Significant flood losses could be avoided by replacing maps that contain inaccurate spatial definitions and that lack base flood elevations with maps that accurately define the spatial extent of the SFHA and provide base flood elevations. The marginal benefits derived from these more accurate maps exceed the marginal costs of their preparation. Determination of base flood elevations produces the greatest increment of benefits. Finding. No single approach to map preparation is appropriate for all circumstances. The benefits and costs of each method are risk and vulnerability dependent. Recommendation. The flood study method should be determined based on the accuracy of the topographic data in the county or watershed under study and the current and future risk to those in the mapped area.

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