RAND Corporation publication: The Cost of Cost-Effectiveness

In the summer of 2022, I had the great privilege of working as a Summer Associate at the RAND Corporation in their Homeland Security Research Division. I was staffed on a team that was supporting the Federal Emergency Management Agency’s (FEMA) Hazard Mitigation Assistance (HMA) programs, specifically by exploring opportunities to make the application and evaluation processes more efficient as well as equitable for both applicants and FEMA. The report is titled, “The Cost of Cost-Effectiveness: Expanding Equity in Federal Emergency Management Agency Hazard Mitigation Assistance Grants.”

Concurrently with RAND’s research, FEMA leadership issued a policy memo on October 6, 2022 pertaining to the HMA programs Building Resilient Infrastructure and Communities (BRIC) and Flood Mitigation Assistance (FMA). Per the new policy, in Fiscal Year (FY) 2022 FEMA’s BRIC and FMA programs introduced:

...an alternative cost-effectiveness methodology that will modify the threshold for mitigation projects to be considered cost-effective under limited conditions. A mitigation project may be considered cost-effective if, when using the 7% discount rate, the BCR is at least 0.75 or greater, and if at the 3% discount rate the BCR is at least 1.0 or greater, and the mitigation activity benefits disadvantaged communities, addresses climate change impacts, has hard to quantify benefits, and/or is subject to higher costs due to the use of low carbon building materials or compliance with the Federal Flood Risk Management Standard.

If you’d like to discuss the report and/or FEMA policy change, please feel free to reach out!