Ecosystem Service Values in Benefit-Cost Analysis of Flood Mitigation Projects

Abstract

In this thesis, I have presented ways to expand the stream of benefits and costs towards improving intergenerational equity of projects that impact floodplain ecosystems. I propose the use of ecosystem service values for project analysis. Additionally, I submit two methods of increasing intergenerational equity. I suggest the use of relative pricing and quasi-hyperbolic discount rates. Adjustments to standard benefit cost practices are necessary in ecologically complex transactions in which decisions can irreversibly damage irreplaceable and unique environmental resources. Failing to incorporate these factors into the benefit cost analysis leads to transaction costs. Ultimately, future generations inherit the cost of decisions that neglect ecologically complex systems. Addressing transaction costs requires the planner to mind ecological scenarios and economic values for ecosystem services. Relative pricing and quasi-hyperbolic discounting are tools that can assist the planner in this effort. It is possible that these tools will become more relevant to the planning profession if ecological and intergenerational considerations continue to pervade the analysis of projects.