Economic Analysis of Selected Adaptation Options to Flooding

27 August 2013
Ms. Jaimie Kim Bayani Arias, Assistant Professor, Department of Economics, UPLB College of Economics and Management

LOS BAÑOS, Philippines – Flooding has been one of the major concerns in lakeshore communities like those of the municipalities in the Province of Laguna. This problem has become more pronounced because of more intense typhoons and heavier rains brought about by climate change. In this regard, two adaptation options—Early Warning Systems (EWS) and building modification—that will minimize the impacts of climate change hazards were proven to be more economically feasible.

Assistant Professor Jaimie Kim B. Arias of the College of Economics and Management of the University of the Philippines Los Baños (UPLB) piloted an economic analysis of the different adaptation options that surfaced from pre-conducted community engagement and collaboration in the the Sta. Cruz River Watershed. The site includes the municipalities of Sta. Cruz, Victoria, and Pila and parts of Pagsanjan and Calauan, as the study site for their project. According to Prof. Arias, some of these lakeshore municipalities experience long-term flooding that could last for four months. The said watershed is also home to the top three most vulnerable barangays in Laguna, based on the vulnerability assessment and mapping conducted by Engr. Vicente Ballaran Jr. of the UPLB College of Engineering and Agro-Industrial Technology.

Prof. Arias noted that there are many projects that respond to climate change hazards but due to limited resources, these projects compete for scarce funding. Economic analysis, therefore, is a valuable tool to help local government units (LGUs) choose which project or adaptation option to implement. In this particular study, Prof. Arias mentioned that an adaptation option can be implemented if the aggregate benefit exceeds the aggregate cost and can improve society’s welfare.

In line with this, two sets of adaptation options were identified depending on the scope of implementation. For the lakeshore municipalities in the Sta. Cruz River Watershed, the adaptation option that was subjected to economic analysis was EWS. In order to measure the efficiency of EWS, Prof. Arias employed economic tools like benefit cost analysis (BCA) for assessment and contingent valuation method (CVM) for benefit valuation.

On the other hand, for areas exposed to long-term flooding like the lakeshore barangays of Sta. Cruz, specific adaptation options were considered and assessed through cost effectiveness analysis and ‘synthetic approach’ to direct damage cost estimation. These adaptation options were: (1) evacuation, (2) relocation, and (3) building modification.

Five hundred households in the Sta. Cruz River Watershed participated in Prof. Arias’ study. Results showed that EWS is a viable adaptation option that LGUs can implement for the study site. It was further revealed in the study that to address the long-term inundation along the lakeshore barangays of Sta. Cruz, building modification seems to be more cost-effective than building an evacuation center or relocating affected households.

This study, which focuses on the problem of flooding, impact valuation, and identification of adaptation options, is part of a three-year, multi-country project titled “Building Capacity to Adapt to Climate Change in Southeast Asia” conducted by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) and UPLB and funded by the International Development Research Centre (IDRC) of Canada. This study also emphasizes the advantages of using economic analysis as foundation for local government decision-making.

Prof. Arias presented the results of this study during the Agriculture and Development Seminar Series (ADSS) of SEARCA held on 27 August 2013 at Drilon Hall. (Mark Vincent P. Aranas)

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