ABSTRACT
Governments and water planning agencies in most countries recognise the need for some form of economic evaluation before deciding to construct a flood-alleviation scheme or to devise some form of non-structural alternative. The use of economic evaluation stems fundamentally from the need to gauge the returns the community or individuals receive from flood alleviation and land drainage in relation to the costs incurred. When evaluating flood alleviation or land drainage schemes for government grant decisions, or from other community perspectives, economic analysis should be used, not financial appraisal. Economic theory would predict that the disruption to industrial production caused by flooding would immediately and automatically be compensated for elsewhere as firms there, competing for the markets, seize the opportunity to increase their production. A more sophisticated aim of economic evaluation than simply ensuring that the benefits exceed the costs involves selecting the level of community investment in flood alleviation and agricultural drainage which shows the greatest economic return.
