1. Economic Issues in Risk Analysis: Do Strategic Analysis &Planning Michael R. Greenberg, Bloustein School, November 2008

2. Context Proponent of Risk Analysis Risk assessment Risk management, which includes economic analyses

3. Two economic issues that need to be addressed (1) Strategic assessment of potential disasters (2) Lifecycle cost assessment ( briefly summarize)

4. Strategic assessment of disasters U.S. does not systematically analyze vulnerabilities and economic implications of disasters failed to protect engineered systems inadequate land use-planning or design to reduce risk

5. Inadequate planning for evacuation or relocation Failure to understand implications of different levels and staging of restoration Failure to provide resources that build resiliency into systems or mitigate against economic consequences

6. Attributes for Economic Preparedness Measure costs & benefits (Direct, indirect and induced impacts) Geographical scale (Local, regional, multi county, state, national, international) Temporal (aftermath, intermediate, long- term)

7. Attributes (2) Ability to measure policy consequences (investments in mitigative measures upgrading bridges, dams, electric power substations) Investments in resiliency (education, alternative production methods, use alternative resources) Impact on disadvantaged (poor, second language, immobile)

8. Tools Input output Econometric Computable general equilibrium Regional economic models (REMI)

9. Key Data Needs Estimate of resiliency spatial unevenness of vulnerability and responsiveness insurance

10. Be proactive with our existing tools Local scale use Hazus to produce estimates of worst disasters for 5 years State use CGE or econometric model to prepare plausible state estimates Feds use REMI to develop national estimates Prepare briefings for Congress and Executive branches. Stop being passive as if we have no capacity for strategic planning.

11. References M. Greenberg, M. Lahr, and N. Mantell. Understanding the economic costs and benefits of catastrophes and their aftermath: a review and suggestions for the US federal government. Risk Analysis. 27 (1), 2007, 83- 96.

12. M. Greenberg, H. Mayer, and D. Lewis, Life-cycle cost in a highly uncertain economic environment: the case of managing the U.S. Department of Energy’s nuclear waste legacy, Federal Facilities Environmental Journal, Spring, 2004, 67-82.