Ex post analysis of flood control: benefit-cost analysis and the value of information

Two analytical tools which aid decision making flood control design, ex post benefit‐cost analysis and the ex post value of information, are presented for the case study of Rushford, Minnesota. The ex post analysis is conducted using a coincident frequency analysis which provides a more accurate description of discharge rates and flood levels. The ex post benefit‐cost analysis shows that the Corps of Engineers substantially underestimated the value of potential property damage. The ex post value of information model provides an analysis of the project sensitivity to stream discharge. In addition, the optimum project size is determined under risk of project destruction. The results illustrate that net benefits are sensitive to changes in discharge information but less sensitive to project size and the risk of project destruction. This leads us to recommend more sensitivity analyses on information structures, project size, and the probability of project destruction in ex ante benefit‐cost analysis.