Costs of natural hazards are at historically high levels, and show an increasing trend, which is expected, because wages and inflation go up every year, but estimates are almost meaningless. When estimated damage gets high-profile media claims, like in New York City after tropical storm Sandy, the costs unsurprisingly match those and even allow for a generous overrun.
Damage estimates are more guessing than science and that, along with competing political constituencies, prevents realistic precautions - New York environmentalists object to common-sense improvements regardless of the damage estimates and real lives lost. But if people trusted damage estimates, they could make informed decisions about cost versus risk and not have to try and calibrate how far enough opposing estimates are.
An international group led by Heidi Kreibich of the German Research Centre for Geosciences (GFZ) has suggested an integrated cost assessment in risk management and a new cost assessment cycle.
"Cost-benefit analyses that exclude certain cost categories lead to sub-optimal decisions," Kreibich explains. "The cost assessment cycle involves the continuous monitoring of costs associated with natural hazards risk management, thus enabling the early detection of inefficient risk mitigation strategies."
A close link between the cost assessment cycle and the risk management cycle may lead to an improved assessment of the real costs and as such to a stable basis for an improved decision making in risk management.