Posted: December 6th, 2014

Case Study: Risk – Designing against Flood Damage;

Risk – Designing Flood Damage

Case Study: Risk – Designing against Flood Damage;

A community has a water treatment facility located on the floodplain of a river.  The construction of a levee to protect the facility during periods of flooding is under consideration. Data on the costs of construction of various levee heights and probabilities of the river being x feet above normal are shown in the following table. Also shown are the number of years the maximum level was x feet above normal. These values are determined from historical data. From these frequencies, the probabilities that the river will reach a particular level are calculated.
The damages expected if the river exceeds the height of the levee are also provided in the table. It is observed that the damages increase in relation to the amount by which the flood crest exceeds the levee height.

The community considers the MARR to be 12% and it is anticipated the plant will relocate away from the floodplain after 15 years. The community wants to select the alternative that minimizes its total expected costs.  What levee height would you recommend?

Feet (x)    Number of years river max. level was x ft. above normal    Probability of river being x ft. above normal    Loss if river level is x feet above levee ($)    Initial cost of building levee x ft. high ($)
0    24    0.48    0    0
5    12    0.24    1,000,000    1,000,000
10    8    0.16    1,500,000    2,100,000
15    3    0.06    2,000,000    3,300,000
20    2    0.04    3,000,000    4,500,000
25    1    0.02    4,000,000    5,500,000
Total = 50    Total = 1.00

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