For the Instructor

These student materials complement the Coastal Processes, Hazards and Society Instructor Materials. If you would like your students to have access to the student materials, we suggest you either point them at the Student Version which omits the framing pages with information designed for faculty (and this box). Or you can download these pages in several formats that you can include in your course website or local Learning Managment System. Learn more about using, modifying, and sharing InTeGrate teaching materials.

Initial Publication Date: December 8, 2016

Assessing Costs and Benefits

How can stakeholders' choose among these strategies?

One of the most frequently used methods for determining which strategies communities should use to prepare for sea level rise is cost-benefit analysis. Cost-benefit analysis is a systematic approach to decision making that compares alternatives based on their ratio of benefits to costs. For example, imagine a community is choosing between managed retreat and beach nourishment/restoration as options for protecting a coastal development from sea level rise and other coastal hazards over the next ten years. For the managed retreat option, relocating homes and businesses further inland and converting coastal areas to parkland is expected to cost $4 billion, but the associated reduction in vulnerability and increased tourism from the new parks is expected to bring $6 billion in benefits over the next ten years. The ratio of benefits to costs for the managed retreat option would therefore be 6/4, or 1.5. For the beach nourishment/restoration option, adding millions of tons of sand to the beach is expected to cost $2 billion over ten years but will also bring $4 billion in benefits by reducing vulnerability and improving the recreational value of area beaches, for a benefit to cost ratio of 4/2, or 2. Because the ratio of benefits to costs for the next ten years is higher for the beach nourishment/restoration option (2) than for the managed retreat option (1.5), cost-benefit analysis suggests that, at least for the next decade, beach nourishment/restoration is the better strategy for protecting the community.

	Managed Retreat ×	Beach Nourishment/Restoration ×
Total Costs	$4 billion	$2 billion
Total Benefits	$6 billion	$4 billion
Benefits/Cost Ratio	1.5	2.0

Figure 12.11: Table comparing costs and benefits for hypothetical decision between managed retreat and beach nourishment/restoration. In this simplified analysis, beach restoration/nourishment has a higher benefits/costs ratio, and is, therefore, the better choice.

Credit: Left: Wolf House and Building Movers CC BY-SA 3.0 US Image downloaded from Wikipedia Right: Beach Restoration Device: Author: SCEhardt: Public domain, downloaded from Wikipedia