Rethinking Benefit-Cost Analysis


New Ways to Get to High Ground
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In “New Ways to Get to High Ground” (Issues, Winter 2022), Jennifer Helgeson and Jia Li make a persuasive case for augmenting benefit-cost analysis (BCA) with multidisciplinary approaches when conducting resilience planning under climate change. Among other correctives, they suggest the need for nonmonetary data and the use of narratives as a way for community members to articulate key values. These are appropriate suggestions, but we can go further.

Climate risks are imposed on an already complex social landscape, populated by groups with distinct strengths and vulnerabilities, including differences in their sensitivity to environmental stressors and their access to information and resources. The basis for such differences may track the familiar cleavages of income and ethnicity, but many more specific factors may be at work in shaping vulnerability and resilience, which can best be identified through collaborative inquiry.

Disaster planning in New Orleans before Hurricane Katrina offers a case in point. Few provisions were made for evacuating residents without cars. As David Eisenman and colleagues have documented, lack of transportation prevented many poorer residents from leaving. Other residents with cars felt unable to leave because of economic constraints (insufficient money to pay for meals and lodging, fear of job loss), social constraints (responsibility for extended kin networks), or countervailing risks (health problems, fear of looting if they abandoned their homes).

Many more specific factors may be at work in shaping vulnerability and resilience, which can best be identified through collaborative inquiry.

Awareness of such risk factors, drawing on both quantitative and qualitative data, could have improved the response to Hurricane Katrina. Here an ethnographic approach is particularly valuable. It brings together a cultural account—capturing people’s own interpretations of their circumstances—with a delineation of local social systems, including the relations based on affinity, place, and power that shape people’s lives. Such multidimensional accounts provide a better basis for constructing risk pathways, showing how climate change stressors interact with local socioenvironmental conditions to affect individuals and communities.

Helgeson and Li noted some of the familiar weaknesses of BCA, including the indifference to both equity and the complex character of community resilience. Combining a collaborative approach with ethnographic inquiry can compensate at least partially for these weaknesses. Since BCA presumes that all benefits and costs can be monetized, losses of the rich will almost always outweigh losses of the poor. In contrast, an ethnographic account is well suited to a capabilities approach, in which losses of both rich and poor can be assessed on a common scale, the capacity to maintain a good life (the proper measure of resilience). The flood-driven loss of a modest car may be far more devastating for a poor family than the loss of a luxury car for a rich one. The poor family may lack the capacity to replace the car, and as a result lose access to employment, lose income, and fail to meet kin obligations. The rich family faces an inconvenience, which assets and insurance will soon make good.

Research Professor of Anthropology

University of Maryland, College Park

As our world changes, socially and climatologically, having tools at hand that are better able to support decisionmaking that reflects those changes is necessary. Jennifer Helgeson and Jia Li do an excellent job laying out the need for benefit-cost analysis (BCA) to evolve.

As a resilience specialist, I appreciated the explicit mention of needing capacity for considering co-benefits and multiple objectives within BCAs. Climate change adaptation can provide an opportunity for communities to proactively think about what they want, from amenities to industries to social justice. To support innovative and transformative adaptation, we need tools just as flexible and multifaceted. Related, Helgeson and Li’s point that equity and justice issues are either ignored or exacerbated by BCAs is critical. Reliance on “standard tools” that emphasize previously made investments is a clear example of systematically maintained inequities and injustices.

I also appreciated their acknowledgement of narratives and storytelling in decision-making. Researchers have been showing data on climate change for over a century, but the reality is that storytelling and emotional connection are how we see and process the world around us. Recognizing the need for BCAs to both accept inputs from these stories and enhance the ability to tell stories is a powerful reminder.

Reliance on “standard tools” that emphasize previously made investments is a clear example of systematically maintained inequities and injustices.

However, I think Helgeson and Li missed providing some important context: that is, the practical aspects of operationalizing BCAs, particularly at the local level. They highlighted the need for more data collection—overall and at the front end of a BCA being conducted. But they do not specify who would do this work, and I think it should be acknowledged that BCAs in their current form are already complex, challenging, and out of reach for most average to small municipalities. I have been working with communities to see if they could use the “plug-and-play” BCA tools that exist and have found that the input data requirements are still an almost insurmountable barrier. Without the time my team dedicated to helping them, it seems unlikely that those BCAs would have occurred. The TurboTax analogy the authors cite was well taken, but the difference is that with TurboTax the input data arrive in the mail, with labeled boxes that can be referenced to identify what data need to be entered and when.

Given this gap, I think an essential next step is building capacity so that more versatile BCAs do not become another source of inequity, where only communities with means can pursue them. The climate and weather enterprise has been building workforce capacity around resilience, focusing on stand-alone resilience positions, and integrating resilience into the skill sets of other professionals. I think BCAs require similar efforts. This includes helping groups in the private sector that support the public sector (e.g., engineering firms) and the referenced boundary spanners understand and develop practical skills for enhanced BCAs. The tools and supporting materials around enhanced BCAs also need to improve so they can be integrated into municipal and state officials’ tool kits without requiring an inordinate amount of time or money.

Coastal Climate Resilience Specialist

Mississippi State University Extension Service and Sea Grant

Cite this Article

“Rethinking Benefit-Cost Analysis.” Issues in Science and Technology 38, no. 3 (Spring 2022).

Vol. XXXVIII, No. 3, Spring 2022