Disasters as a Necessary Part of Benefit-Cost Analyses

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Science  16 Sep 1977:
Vol. 197, Issue 4309, pp. 1160-1162
DOI: 10.1126/science.197.4309.1160


Benefit-cost analyses for water projects generally have not included the expected costs (residual risk) of low-probability disasters such as dam failures, impoundment-induced earthquakes, and landslides. Analysis of the history of these types of events demonstrates that dam failures are not uncommon and that the probability of a reservoir-triggered earth-quake increases with increasing reservoir depth. Because the expected costs from such events can be significant and risk is project-specific, estimates should be made for each project. The cost of expected damage from a "high-risk" project in an urban area could be comparable to project benefits.