Using Benefit-Cost Review in Mitigation Planning (State and Local Mitigation Planning How-To Guide Number Five; FEMA 386-5 / May 2007)

The Disaster Mitigation Act of 2000 (DMA 2000) provides an opportunity for States, Tribal governments, and local jurisdictions to significantly reduce their vulnerability to natural hazards. It also allows them to streamline the receipt and use of Federal disaster assistance through pre-disaster hazard mitigation planning. DMA 2000 places new emphasis on State, Tribal, and local mitigation planning by requiring these entities to develop and submit mitigation plans as a condition of receiving various types of pre- and post-disaster assistance (such as the Pre-Disaster Mitigation [PDM] program and the Hazard Mitigation Grant Program [HMGP]) under the Stafford Act. On February 26, 2002, the Department of Homeland Security's Federal Emergency Management Agency (FEMA) published an Interim Final Rule (the Rule) to implement the mitigation planning requirements of DMA 2000. The Rule outlines the requirements for State, Tribal and local mitigation plans. FEMA has developed a series of guides, called the Mitigation Planning "How-To" Guides, to provide State, Tribal, and local governments with easy-to-understand information needed to initiate and maintain a hazard mitigation planning process and meet the requirements of the Rule. The first four How-To Guides are known as the "core four" guides. They provide the basic instructions for preparing a natural hazard mitigation plan. They are: Getting Started: Building Support for Mitigation Planning (FEMA 386-1); Understanding Your Risks: Identifying Hazards and Estimating Losses (FEMA 386-2); Developing the Mitigation Plan: Identifying Mitigation Actions and Implementation Strategies (FEMA 386-3); Bringing the Plan to Life: Implementing the Hazard Mitigation Plan (FEMA 386-4); This How-To Guide, Using Benefit-Cost Review in Mitigation Planning (FEMA 386-5), supplements FEMA 386-3 and focuses on guidance for using Benefit-Cost Review when prioritizing mitigation actions in a hazard mitigation plan. The purpose of a mitigation plan is to reduce the community's vulnerability to hazards. After assessing its risks, a community may consider many mitigation options. However, due to monetary as well as other limitations, it is often impossible to implement all mitigation actions. Hence, the Planning Team needs to select the most cost-effective actions for implementation first, not only to use resources efficiently, but to make a realistic start toward mitigating risks. The Rule supports the principle of cost-effectiveness by requiring hazard mitigation plans to have an action plan that includes a prioritization process that demonstrates a special emphasis on maximization of benefits over costs. The requirement states: The mitigation strategy section shall include] an action plan describing how the actions identified in section (c)(3)(ii) will be prioritized, implemented, and administered by the local jurisdiction. Prioritization shall include a special emphasis on the extent to which benefits are maximized according to a cost benefit review of the proposed projects and their associated costs. [§201.6(c)(3)(iii)] The purpose of this guide is to help local jurisdictions understand how to apply the concepts of Benefit-Cost Review to the prioritization of mitigation actions, and thereby meet the requirement of the Rule.