Housing Resiliency - Cost-Benefit Analysis
Assessing the costs and losses avoided for affordable housing flood adaptation
INTRODUCTION
The “Housing Resiliency and a Sustainable South Florida” initiative explores the impacts of sea level rise, storm surge, and flooding on existing and future multifamily affordable housing. A component of this analysis examines the cost-effectiveness of flood adaptation measures in Miami-Dade County on affordable housing developments. In such an analysis, it is important to weigh competing priorities: maintaining affordability while shielding buildings from impacts of flood inundation. The cost-benefit analysis presented here examines the cost-effectiveness and feasibility of various adaptation strategies that mitigate flooding alongside an understanding of the cost implications of such measures on housing affordability.
The University of Miami’s Office of Civic and Community Engagement developed this cost-benefit analysis in collaboration with Arcadis , a global engineering consultancy with particular expertise in coastal resilience, and Landolf Rhode-Barbarigos, Assistant Professor in the Department of Civil, Architectural and Environmental Engineering at the University of Miami's College of Engineering.
The analysis considers three key questions
- What is the cost effectiveness of various adaption strategies that mitigate flooding for affordable housing buildings?
- How do unique characteristics of affordable housing impact cost effectiveness or feasibility?
- What are the potential costs of flood mitigation and what are the potential implications of these costs on housing affordability?
APPROACH
Representative Building Analysis
We undertook extensive research to evaluate the physical characteristics of multifamily affordable housing developments in Miami. Our findings revealed four predominant types of buildings, or ‘typologies,’ that represented most of the multifamily affordable buildings in Miami.
DUPLEX: A building with 2 living units
GARDEN-STYLE BUILDING: 1 to 3-story apartment building in a garden-like setting
MID-RISE BUILDING: A multi-story building with an elevator, typically in an urban area
HIGH-RISE BUILDING: A building with 7 or more floors and at least 1 elevator
Once we had identified and cataloged the primary typologies, we examined the elevations and flood vulnerability within the seven neighborhood study areas with high concentrations of affordable housing: Miami Gardens, Liberty City, Little Haiti, Allapattah, Overtown, Little Havana, and South Dade.
Typologies by Neighborhood
Garden Style - 79%
Mid-Rise - 16%
Duplex - 5%
Garden-Style - 32%
High-Rise - 26%
Duplex - 24%
Mid-Rise - 18%
Garden Style - 46%
High-Rise - 36%
Garden Style - 36%
Mid-Rise - 30%
High-Rise - 28%
Duplex 8%
Garden-Style - 70%
Duplex - 30%
Garden Style - 37.5%
High-Rise - 37.5%
Duplex - 25%
Garden-Style - 55%
Mid-Rise - 22.5%
High-Rise - 22.5%
ADAPTATION STRATEGIES
The four adaptation strategies informed an analysis that was applied to 13 representative buildings selected based on prevalent typologies in each neighborhood. These representative buildings contributed to the creation of a model that could be considered and applied to comparable circumstances. While critical system protection (e.g., elevating building mechanical equipment above the ground floor to protect from water inundation) was an adaptation strategy that was initially considered, the costs were too variable to produce analytic consistency.
Therefore, the analysis explored the cost-effectiveness of adapting each building using three possible strategies: dry flood-proofing, wet flood-proofing, and elevating the building. The adaptation strategy selection was conducted based on the modeled flood depths, applying standards and assumptions that are aligned with federally accepted methodologies, such as those required for Federal Emergency Management Agency (FEMA) pre-disaster mitigation funding applications.
Dry Flood-Proofing
Measures that prevent water from entering the building
Dry Flood-Proofing: Duplex Relative cost $ Rendering created by P. Caponi and L. Rhode-Barbarigos
Dry Flood-Proofing: Garden-Style Relative cost $ Rendering created by P. Caponi and L. Rhode-Barbarigos
Dry Flood-Proofing: Mid-Rise Relative cost $ Rendering created by P. Caponi and L. Rhode-Barbarigos
Dry Flood-Proofing: High-Rise Relative cost $ Rendering created by P. Caponi and L. Rhode-Barbarigos
Wet Flood-Proofing
Alterations that allow water flow in and out of the building
Wet Flood-Proofing: Duplex Relative cost $$ Rendering created by P. Caponi and L. Rhode-Barbarigos
Wet Flood-Proofing: Garden-Style Relative cost $$ Rendering created by P. Caponi and L. Rhode-Barbarigos
Wet Flood-Proofing: Mid-Rise Relative cost $$ Rendering created by P. Caponi and L. Rhode-Barbarigos
Wet Flood-Proofing: High-Rise Relative cost $$ Rendering created by P. Caponi and L. Rhode-Barbarigos
Elevation
Rising the lowest floor only or the building structure
Elevation: Duplex Relative cost $$$ Rendering created by P. Caponi and L. Rhode-Barbarigos
Elevation: Garden-Style Relative cost $$$ Rendering created by P. Caponi and L. Rhode-Barbarigos
As noted, a representative multifamily affordable housing building for each typology in every neighborhood study area was selected to serve as a proxy for the modeling exercise. This strategy enabled us to create a standard template and criteria that could populate the model in different locations and different risk conditions. The following characteristics were compiled for each representative building:
- Typology
- Ground Elevation
- Elevation of First Floor
- Building Footprint
- # of floors
- # of units
- Building and contents replacement values
- Calculated value per unit
- Occupied housing units
- People per unit
- % of employed residents
METHODOLOGY
The cost-benefit methodology calculates the impacts of specified adaptation strategies for the different building types. This three-step analysis (below) allowed us to compare the estimated cost of each adaptation method to the potential losses avoided over 40 years. These projected losses are due to 4 probabilistic flood events. The losses we assessed were building damages and impacts to residents.
Calculate Benefits
The losses avoided (also referred to as “benefits”) result from adapting the structure to withstand climate risk. These benefits were estimated for each building typology to allow for financial savings comparison by building type.
Calculate Costs
The cost estimates for the proposed adaptation interventions were calculated using values from scientific literature, and peer-reviewed reports and exclude operation and maintenance costs. Values were updated using the Consumer Price Index and adjusted for each building and flood scenario taking into account the projected flood depth and its physical characteristics.
Compare
Next, the losses avoided were compared to the cost of implementing different adaptation strategies, with special consideration given to the longevity of the intervention over time.
Other considerations: Additional elements, such as potential insurance savings derived from implemented adaptation measures at the building level and larger-scale neighborhood protection strategies under discussion, were assessed in our analysis.
Benefit estimates - Quantify benefits by assessing losses avoided for the three alternative adaptation strategies (dry flood-proofing, wet flood-proofing and elevation
The benefits assessed include building damages avoided as well as three resident impacts: Displacement and relocation costs; treatment for mental stress & anxiety; and lost productivity (e.g. absence from work related to flood event).
Direct physical damages
The building value was calculated with commonly accepted building and content replacement calculations for such analyses. The damage function employed in such assessments translates the magnitude of an extreme event to quantifiable building damage. Additionally, tax assessor and local real estate transaction data was used to generate an average market value for a representative home within each neighborhood.
Displacement and Relocation Costs
These costs consider disrupted tenancy due to an extreme weather event that renders a structure unusable. The potential length of displacement was calculated based on aggregating data from past statistical events. For the purposes of this sample analysis, it was assumed that all units were renter occupied.
Relocation costs are typically calculated only for floors of buildings that are expected to be directly impacted by floodwaters. We assumed a more conservative significant flood damage scenario, where the entire structure would be required to evacuate, and all residents will be displaced during that time.
- Consideration was given for low-income families that cannot afford to relocate or don’t have available funds for rental deposits, and may move into overcrowded conditions with family, friends, or even to a homeless shelter.
Treatment for mental stress/anxiety
Natural disasters have been shown to reduce access to health, social, and economic resources, which can lead to psychological distress (Hobfoil)1. Research indicates that individuals who experience significant stressors, such as property damage or displacement, are more likely to experience symptoms of mental illness, Post- Traumatic Stress Disorder (PTSD), and higher levels of stress and anxiety after a disaster (Rhodes)2. As mental health issues increase after a disaster, it is expected that mental health treatment costs will also increase.
Mental health treatment costs were measured using three factors: prevalence, course, and cost. Prevalence is the percentage of people who experience mental health problems after a disaster event; course is the rate at which mental health symptoms reduce or increase over time; and cost is the price of treatment to those who seek it.
Lost productivity
Mental stress and anxiety have significant impacts on the ability to secure and maintain employment. Historical data indicate that mental health issues increase after a disaster, leading to lost productivity due to mental illness that can result in a meaningful impact to economic productivity post-disaster. In a survey of 19 world countries by the World Health Organization, individuals in the US suffering with mental illness faced a 25% reduction in earnings.
Our assessment of lost productivity was based upon an average hourly rate calculated with average income data sources that was determined to be representative of the study area. This rate was then applied to the number of employed workers in a representative building to value building-wide productivity losses as a result of a flooding event.
Annualizing losses
Annualized losses avoided were calculated with consideration of projected sea level rise-enhanced storm surge heights for 2020, 2040, and 2060 based on the Southeast Florida Regional Climate Change Compact’s Unified Sea Level Rise Projection (2019). Annualized losses over the project’s lifespan will be calculated by interpolating between losses avoided in 2020, 2040, and 2060 to determine the net present value of losses avoided.
CALCULATIONS
Below is an example of a possible flood scenario and suggested building adaptation solutions.
