Planning for Resilience: Getting it Right
Transportation planners are increasingly concerned with resilience – the ability to prepare for, respond to, and recover from a disaster or other unanticipated change. In our own practice we work to expand resilient transportation plans to address disasters’ potential ripple effects on interdependent systems. In fact, the wider social and economic effects can greatly exceed the direct impacts to individual facilities as the consequences of a disaster spread across time and space, and from one infrastructure system (i.e., the electric grid) to the next (i.e., public transportation network.). While critical, many analysts dismiss these effects as too difficult to measure or too uncertain to assign value.
At the same time, we have observed that the emerging focus on resilience in transportation planning also ignores social equity concerns related to the resource deficits faced by low-income and minority populations. In this respect, the current debate around resilience resembles the environmental justice movement of the past two decades. Indeed, the geographic distribution of resilient infrastructure mirrors the often inequitable distribution of historic investment more broadly. Hurricane Katrina is an excellent example of this problem. First the hurricane hit New Orleans’ poor African-American residents the hardest, then the reconstruction benefited them the least.
In light of these ideas, EBP is actively incorporating interdependent systems and social equity into planners’ idea of resilience. In 2017, for example, EBP met with representatives of the World Bank and the Inter-America Development Bank to discuss resilience planning for developing countries. The presentation focused on methods of incorporating social equity into assessments of the economic impacts of investments in resilient infrastructure. We also praise the work that cities like Boston and Los Angeles have made in recognizing resilient investments as an opportunity to address racial inequities.
In addition to social equity, EBP’s analytic approach addresses the far-reaching indirect effects of unforeseen events. In our report Economic Impact of US-101 Closure report, for example, we evaluated the consequences of future landslides and roadway failures along Highway 101 in northern California. These included not only added travel costs, but also a loss in business activity to the tune of $400 million in annual output and as many as 4,000 jobs as tourism and other travel-dependent industries suffer.
What’s more, our work measures the wider economic benefits of resilience that are too often omitted from benefit-cost analysis. These benefits reflect the economic objectives of transportation in general: access to markets, labor, health care, education, and recreation. EBP has demonstrated national leadership in the evaluation of these benefits. In previous NCHRP research, for example, EBP has assessed methods for measuring the impacts of transportation projects on business productivity, labor market access, business agglomeration, intermodal connectivity, and reliability for deliveries in supply chain processes.
Understanding the wider system and economic benefits of resilient infrastructure is critical. However, the notion of threshold effects complicates the analysis of these phenomena. Often, the damages sustained in a disaster do not increase in linear lockstep with the severity of the catastrophe. Consider, for example, a hospital with emergency generators located 9 feet above sea level. In this case, 10 feet of flooding is far more than 10 times worse than 1 foot of flooding for the hospital. This is an example of a threshold effect.
Business operations experience a similar threshold effect. After a disaster, supply chain interruptions increase the cost of doing business up to a certain threshold at which the business’s supply chain becomes infeasible. At this point, a business may decide that the transactional cost of relocation is less painful than supply chain disruptions. As a result, the business simply leaves altogether. The region suffers.
Traditional project evaluation methods – particularly net present value – miss much of this nuance. By definition, benefit-cost studies assign dollar values to costs and benefits, then discount these impacts to present day dollars. While useful, this approach has several drawbacks. For one, heavy discounting can dramatically understate benefits that endure far into the future. Second, benefit-cost analysis often ignores tolerance thresholds for unacceptable outcomes. As a result, low probability events occurring in the distant future are heavily discounted in their impact valuation. Finally, benefit-cost analysis can also ignore the issue of social equity: who bears the costs and who reaps the benefits?
At EBP, we recognize the complexity of resilience and we integrate these concepts – social equity, interdependent systems, wider economic benefits, tolerance thresholds – into our practice (see project examples in the box below).
We also bring our expertise to professional associations and conferences. EBP’s Mark Sieber presented his highway infrastructure resilience work for the German Highway Research Institute to an American audience at the 2018 Transportation Resilience Innovations Summit and Exchange. Beyond the United States, EBP’s Markus Deublein presented at the 2018 International Transport Forum Summit, which included sessions on European resilience management, the risk of terrorist attacks on rail stations, and the resilience of roads to unforeseen disasters. Finally, Steve Fitzroy participated in the International Transport Forum Supply Chain Roundtable in Paris, which focused on the resilience of logistics and supply chain systems.
Our company’s approach to resilience is unique. Our projects study the economic importance of resilience in the face of hurricanes, landslides, sea level rise, and other threats. Our analytical framework incorporates the many factors that contribute to resilience, however difficult they may be to measure. Our methodology complements traditional benefit-cost analysis with a novel business case approach. In doing so, we create the insights necessary to build a more resilient future.
EBP Analysis addresses the Complexity of Resilience
Interdependent Systems: Still reeling from the effects of 2011’s Hurricane Irene, the Vermont Agency of Transportation commissioned our Economic Impact of Vermont System Preservation analysis, which assessed the benefits of Vermont’s planned highway, bridge, and rail improvements through 2040. The project considered these investments in resilience from a systems perspective, addressing vehicle operating costs, passenger travel times, environmental factors, and the long-term residual value in the system.
Wider Economic Benefits: In our Oregon Congestion and Resiliency Study, EBP analyzed possible disruptions to the state’s transportation system caused by congestion, natural disasters, and underinvestment at freight bottlenecks. The study also assessed the significant impacts of a major seismic event on small and medium-sized businesses in Western Oregon. In doing so, our analysis emphasized the wider economic benefits of a reliable and resilient freight network: accelerated business development, higher productivity, and continued competitiveness.
Tolerance Thresholds: Traditional benefit-cost analysis often struggles to account for high cost, low probability future events. In recognition of the increased frequency and severity of natural disasters, our airport practice considers certain future devastation scenarios intolerable. As a result, we estimate the present-day willingness to pay to avoid the possibility of their future occurrence. Our approach to measuring resilience goes beyond the usual risk-based implementation of benefit-cost analysis to also consider option values, risk-avoidance premiums, and discount rate adjustment to account for long term resilience and sustainability.
Additional information on how we are working to expand the way that resilience is being considered is available in our portfolio of resilience projects.