Cost-Benefit Analysis of the Wuxikou Integrated Flood Management Project Considering the Effects of Flood Risk Reduction and Resettlement

Abstract

Abstract Evaluation of the economic costs and benefits of flood disaster risk management projects is crucial. However, current cost-benefit analyses (CBA) often lack reliable estimates of the expected loss reduction from flood control measures and ignore quantitative assessments of resettlement. To address these limitations, this study incorporated a probabilistic risk analysis method and quantitative resettlement benefits assessment into the CBA framework, using the Wuxikou Integrated Flood Management Project (WIFMP) in Jiangxi Province, China, as a case study. The direct economic benefits of flood control were estimated by integrating hydrological statistics, numerical flood inundation simulation, and quantitative damage analysis with exposure and vulnerability data. Furthermore, the resettlement benefits were quantified by measuring the annual income growth of migrants based on assumptions about household employment. Our analysis shows that the total WIFMP investment is RMB 3546.1 million yuan (USD 1 = RMB 6.976 yuan), including loan principal and interest of 244.4 million yuan, and operations and maintenance of 605.5 million yuan at 2020 prices. Annual project benefits are estimated at 351.3 million yuan in flood risk reduction, 155.7–191.9 million yuan from increased resettlement income, and 42.7 million yuan in power and water revenues. Considering the costs and benefits across the entire project lifecycle, the internal rate of return ranges from 13.7 to 14.2%, and the net present value ranges from 31.8 to 352.6 billion yuan. Through improved benefit estimation methodology, this research enables a more reliable and holistic evaluation of costs and benefits for flood risk management projects. It provides insights for policymakers and practitioners involved in similar projects, contributing to more informed decision making and better allocation of resources in flood disaster risk management.