The paper provides the approach to providing a benefit cost analysis of energy and water alternatives to provide resilience to extreme events. The approach estimates the costs and returns of providing greater resilience of water and energy infrastructure. Extreme events are defined as high impact, low-frequency events such as, but not limited to, hurricanes, floods, storm surges and earthquakes. The provides justification for hardening water and energy infrastructure. Resilience is defined as “the ability to prepare for and to withstand an extreme event with little or no damage, or to recover more quickly from an extreme event.”
The approach can be summarized as follows. The approach requires the development of a baseline with which to compare alternatives. The baseline is used to evaluate the baseline’s resilience to hazards through the probability of the hazard(s), the likelihood of damage from that the hazard through a vulnerability analysis, and the consequence to calculate a cost of the damage. The approach then evaluates proposed mitigation alternatives that would improve the resilience of the system. Each alternative is evaluated based on probability of the hazard, probability of vulnerability and consequence to determine the reduced damage that each alternative presents. The approach includes any monetary and non-monetary benefits that can quantified for each of the alternatives. Non-quantifiable benefits are evaluated based on the relative importance of each alternative to the criteria used to determine how well the alternative meets the goals and objectives of the site/facility. Then, a life cycle cost analysis should be conducted for the baseline and alternatives. Finally, the results of the life cycle analysis should be presented in a decision matrix with cost, net present value, benefit/cost ratios, and any non-monetary criteria ranked to show how well the alternatives met the criteria, weighted with the decision maker’s weights and the results presented.