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FLEMONT BANDA - s6010970

JULY 2014

Analysing Changing Risk and Planning Alternatives: A Case Study of a Small Island Country
1.0. Introduction
This case study relates to a small Caribbean island state located along the coast prone to different
natural hazards. A Spatial Decision Support System (SDSS) has been used to analyse the effect of risk
reduction planning alternatives on reducing the risk now and in the future. The analysis was based on
four scenarios and three alternatives per scenario for different time horizons as shown on table 3.1. The
analysis went through several phases, however for the purposes of this report only results from parts B,
C, D and E will be presented.
2.0 Analysis of current risks to different hazards (Part B)
The purpose of this part was to analyse the current situation in terms of hazard risks. This involved
calculating number of elements at risk exposed to each hazard type for different return periods,
calculating losses for each hazard type, integrating losses into annualized risk. Finally population and
economic risks were calculated. The results for this part were used in the analysis of possible risk
reduction alternatives.
3.0 Analysis of the effect of possible risk reduction alternatives (Part C)
In this phase of the analysis, focus was on the determination of risk after implementation of risk
reduction alternatives. In addition, risk reduction was annualized and the cost of implementing the risk
reduction alternatives, investment, and period of investment, maintenance and project time life time
were calculated. The results are shown in the table below.
Table 3.1: Risk reduction alternatives
Current Situation Alternative 1 Alternative 2 Alterative 3
Annualised Risk 379, 137.90 82, 112.90 149, 163.00 625, 478.20
Risk Reduction - 297, 025.00 229, 974.90 -246, 340.40
The annualized risk results indicate that alternative three has the highest annualized risk reduction,
implying relocating people may achieve the highest reduction in terms of risks.
Table 3.2: Computation of NPV and IRR for three alternatives
NPV at 5% Interest
NPV at 10%
interest rate
NPV at 20%
interest rate
Alternative 1 2, 416,714.25 390, 991.85 599, 380.95 12%
Alternative 2 1, 526, 088.00 2, 704, 825.73 2, 914, 019.93 3%
Alternative 3 26, 728, 954.96 20, 133, 350.88 13, 302, 187.04 -

4.0 Analysis of the changes for the different scenarios (Part D)
This analysis phase centered on determining the changes in land use for different scenarios in a number
of future years, 2020, 2030 and 2040 and explaining the trends and possible drivers. Further, the

changes in economic values, population and risks for different scenarios in the mentioned future years
were analyzed. The results of this phase of the analysis are presented below:
Land use change
Scenario 1:
Commercial, industry, parking lot, park land, quarry, residential, tourist resort land use types show an
increasing trend whereas agricultural field, animal farm, bare land, farm, forest natural, grassland,
orchard, shrubs, vineyard show a decreasing trend.
Scenario 2
For scenario two results show that commercial, parking lot, parkland, quarry, residential, tourist resort
have an increasing trend in their usage whereas agricultural fields, farm and orchard show a decreasing
The driving factors are population increase and changes in economic activities
The graph below show an increasing trend in terms of population change for various scenarios as
depicted by the curves.

Figure 4.1: Graph showing population change for various scenarios
Risk reduction
The results on risk reduction show that in all scenarios, the engineering alternative result into the
highest reduction of risks.
5.0 Evaluation of the best risk reduction alternatives (Part E)
The objective of this phase was to analyse the changes in risk reduction for different alternatives for
different scenarios in 2020, 2030 and 2040. Further, annualised risk for each combination of risk

reduction alternatives for the mentioned future years was calculated. The results of annualised risk
reduction for a combination of alternatives were used in the cost benefit analysis and the results have
been shown below.
Table 4.1: Cost Benefit Analysis of different scenarios based on different alternatives
Scenario : Possible
Future Trends
Alternative: Risk
Reduction Options
NPV (5%) IRR
Which one is
S1 Business as usual

A1 Engineering 8,367,093.28 29%
S1_A1 A2 Ecological 4,632,874.20 11%
A3 Relocation -20,317,822.80 -10%
S2 Risk informed

A1 Engineering $6,304,785.82 22%
S1_A1 A2 Ecological $3,471,350.37 9%
A3 Relocation ($20,480,591.84) -9%
S3 Worst case (rapid
growth + climate

A1 Engineering 13,939,478.48 33%
S1_A1 A2 Ecological 9,319,547.80 14%
A3 Relocation ($19,750,401.30) -7%
S4 Climate
resilience (informed
planning under
climate change)

A1 Engineering $10,758,860.05 26%
S1_A1 A2 Ecological $7,521,241.39 12%
A3 Relocation ($19,680,741.31) -7%

Overall, the best alternative is A1 Engineering solutions. A series of structural effort such as
removing soil in the landslide prone areas; construct storage basins to retain water from floods and
debris flow and also improving water channels to avoid inundation in prone areas. It is also possible
to set an early warning system instruments for hydrology hazard. The storage basin is usually
located at the toe of catchment area.

Across four alternatives per scenarios, still A1 Engineering solutions show the best financial return.
At 5% NPV it returns positive result where the IRR levels are two to six times much bigger than NPV.

Change proof risk reduction alternative probably A2 ecological solutions, in the longer terms the
benefit of ecological solution could accommodate extreme climate change. The benefit not merely
for disaster risk avoidance, but also in terms of environment benefit such as the
improvement of air quality, oxygen production, carbon dioxide fixation and water storage. The
potential drawback which may appear is that it needs long period for community to gain the
direct benefit. Compared to A1 alternative design into certain level, when they danger extent over
we should make a new adjustment. For instance, the community will gain the advantage in short
period, soon after the physical construction work finished. But on the other hand, the
construction will give the negative impacts to the environment, particularly in the changes of
landscape and losses in biodiversity.

Total Risk

Table 4.2: Total risk

Scenario : Possible Future Trends Total Risk
S1 Business as usual 6,846,328.26
S2 Risk informed planning 5,516,630.33
S3 Worst case (rapid growth + climate change) 10,873,484.69
S4 Climate resilience (informed planning under climate change) 8,849,037.66

Risk increased rapidly within Scenario 3, where rapid growth (uncontrolled) and climate change with
informed planning will result a high losses to the community.

Development shows the highest effort in Scenario 1, where the IRR return 29% (within A1

Driven by extreme climate change coastal hazard will accelerates if informed planning not included
in development planning. Therefore it is recommended that construction in location less than 20m
above sea level be prohibited. This will increase urban community resilience.