2019 – Towards Consistency in Unit Cost Rates for Economic Consequences

D Stephens

Estimation of the potential economic consequences of dam failure is becoming an issue of increasing importance in the Australian dams industry. As a result of the ongoing investment in dam safety upgrades, societal risk profiles for many dams are generally reducing. Additionally, there is evidence of the potential magnitude of economic and financial costs from recent overseas dam incidents. Whilst there is a well established framework for estimation of economic consequences, based on concepts of direct/indirect and tangible/intangible damages, there is a dearth of recent literature on the application of modern unit cost rates for various asset classes. This is particularly important in cases where direct, tangible damages are an important component of economic consequences.

Currently, unit cost rates used to estimate direct tangible economic consequences in Australia are typically taken from older sources such as the floodplain Rapid Assessment Method (RAM). The appropriate cost rates are then factored by CPI to represent ‘current day’ estimates of these costs. However, since the time when the RAM was first developed, there have been changes to the categorisations used to identify economic assets such as businesses in common databases such as the census. Additionally, there have been a number of large, recent flood events in Australia which provide very useful data to assist in deriving updated unit cost estimates.

This paper presents proposed unit rates for damaged and destroyed residential and commercial structures (including stage-damage curves) consistent with the Australian Bureau of Statistics categorisations used in the census data, agricultural land and assets such as roads. These rates have been derived based on a range of sources. The purpose of producing these unit rates is to promote ease-of-use and consistency, especially for large consequence assessment studies where numerous assets are impacted. A case study is presented showing the application of these unit cost rates and highlighting the variability in direct, tangible damages in different circumstances