ESTIMATING EXPECTED ANNUAL DAMAGE FOR LEVEE RETROFITS

The U.S. Army Corps of Engineers (USAGE) has instituted a new analysis methodology for estimating the expected annual damage (EAD) and resul ting economic benefits accruing to proposed flood damage-reduction pro jects Although the methodology is new, it still, in effect, uses expec ted probability to estimate the frequency of flooding and EAD. The Nat ional Research Council (NRC) in a review of USACE's study of the Ameri can River levees stated that the use of expected probability results i n significantly biased estimates of EAD. An alternative damage model t o that proposed by NRC is used to show that expected probability leads to an unbiased estimate of EAD. The damage model proposed requires th at an unbiased estimate of damage results when applied to many project s. A simulation study demonstrates that EAD estimated with expected pr obability is unbiased, whereas the NRC's recommended estimator is bias ed.