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From Risk to Resilience #1: The Cost-Benefit Analysis Methodology

Authors: Reinhard Mechler; The Risk to Resilience Study Team

This paper addresses Cost-Benefit Analyses (CBA) and their roles in Disaster Risk Reduction (DRR). It outlines the different steps, opportunities, and key constraints of using CBA for disaster risk management, and is the foundation for the three applications in the working paper series (From Risk to Resilience WP4, WP5, and WP7). It is important while conducting CBA to acknowledge the complexity of assessing risks, especially risks induced by climate change. This paper also highlights the importance of CBA as a process, not just an outcome; it is important to keep the process transparent as sometimes this process is more valuable in decision making than the CBA itself. Shared Learning Dialogues are a good way to keep the process transparent and utilize it to inform project implementation and keep all stakeholders involved. This paper concludes that CBA is a useful tool as long as it is participatory and helps mainstream DRR among a diversity of stakeholders who then plan interventions together.

Citation: Mechler, R., & The Risk to Resilience Study Team. (2008). The cost-benefit analysis methodology (Risk to Resilience Working Paper No. 1). M. Moench, E. Caspari, & A. Pokhrel (Eds.). Kathmandu, Nepal: Institute for Social and Environmental Transition-Boulder, Institute for Social and Environmental Transition-Nepal, & Provention Consortium.

Funded by: UK Department for International Development (DfID); National Oceanic and Atmospheric Association (NOAA); Canadian International Development Research Centre (IDRC).