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Benefit-cost Analysis of the Waffle: Initial Assessment

Listed author(s):
  • Bangsund, Dean A.
  • DeVuyst, Eric A.
  • Leistritz, F. Larry

An option to mitigating flood damages in the Red River Basin is the concept of using hundreds or thousands of ‘micro-basin’ storage areas comprised of roads and adjacent lands to retain a sufficient volume of water over a reasonable period in the spring to lower the flood crest heights on streams and rivers throughout the basin. This concept has been referred to as the Waffle. The present value of costs and benefits of implementing, maintaining, and operating the Waffle were estimated for a 50-year period. Costs included land enrollment expenses, landowner payments, infrastructure modifications and installations, and maintenance and administrative overhead. Data relating river crest heights with probability of flood occurrence and expected damages to residential and commercial properties and public infrastructure provided the basis for estimating benefits of the Waffle. The relationships between river crest heights and flood damages were adjusted for future population change and change in the value of real property over the 50-year period. Benefits were derived from changes in crest heights and flood event probabilities due to the Waffle influencing the expected river crest heights for various flood events, and reflected the difference between flood damage with and without the Waffle in four urban areas in the Basin. The analysis used numerous scenarios that reflected different expectations in Waffle size, cost, water storage capacity, crest height reductions, and future population. The combination of those situations produced 108 separate estimates of the net benefits of the Waffle. Net benefits were positive in 106 of the 108 scenarios evaluated. The magnitude of net benefits over the 50-year period were substantial: 85 percent of the scenarios evaluated resulted in over $300 million in net benefits and nearly half of the combinations had net benefits in excess of $500 million. The results from two alternative analyses showed that the Waffle produced substantial net benefits when only used for relatively large floods (greater than 100-year events) and also revealed that the Waffle is not economically sensitive to the inclusion or absence of high-frequency flood damages from Fargo/Moorhead. Overall, the economic feasibility of the Waffle, given the limited scope of benefits included in the study, was almost entirely determined by mitigated flood damages from Fargo/Moorhead. Without mitigated flood damages from Fargo/Moorhead, results from this study suggest the Waffle would only be economically in a limited number of situations (11 of 108 possibilities) if implemented on a basin-wide scale. Recent improvements and additions to structural flood protection in Wahpeton/Breckenridge and Grand Forks/East Grand Forks eliminate the potential to mitigate flood damages from all but the largest flood events. The positive results from this study suggest that dedicating additional resources to solving or answering many of the remaining issues with the Waffle would be justified.

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Paper provided by North Dakota State University, Department of Agribusiness and Applied Economics in its series Agribusiness & Applied Economics Report with number 42216.

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Date of creation: Jul 2008
Handle: RePEc:ags:nddaae:42216
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