Resilience valuation
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Recognising the intangible benefits of investing in resilient infrastructure
Investment in resilient infrastructure has many benefits. Intangible benefits are often harder to measure so can be overlooked when considering the costs and benefits of an investment. The intangible benefits of resilient infrastructure can include continuity and connectedness of disaster affected communities, and other social, economic and environmental benefits. For example, resilient infrastructure can result in continuity of telecommunications, road networks and other essential services. These types of benefits can make a huge difference to the resilience and speed of recovery of communities following a disaster.
Supporting investment in resilient infrastructure
A key challenge to date has been the lack of an available tool to capture and value the intangible benefits of resilient infrastructure investment for a community. A tool that enables the full extent of the complex and unique disaster effects and challenges communities face to be valued, would greatly benefit effective investment decision-making.
Through the Queensland Betterment Fund, Queensland had already successfully demonstrated that upfront investment in stronger, more disaster resilient infrastructure creates stronger and more resilient communities. The ‘avoided reconstruction costs*’ had been calculated for betterment projects re-impacted by disasters, to demonstrate that Betterment investment saves money for all levels of government in future disasters. However, the full cost to communities that we begin to consider through recognition of the intangible benefits for these betterment projects, had not yet been captured or valued, and there was no suitable tool available to complete this calculation that meets all the needs identified.
To address the challenge of capturing and valuing intangible benefits, the Queensland Reconstruction Authority (QRA), as a member of the Resilient Futures Investment Roundtable has partnered with the International Institute for Sustainable Development to undertake a pilot project to customise the Sustainable Asset Valuation initiative Tool.
Note: *Avoided costs are estimates only, based on data provided by councils on impacts or likely impacts, and calculated on eligible reconstruction costs under Category B of the DRFA/NDRRA at the time of project approval.
About the SAVi Tool Pilot Project
The pilot project for the Sustainable Asset Valuation initiative Tool (known as the SAVi Tool) considers the value of intangible benefits and has been tested on the Queensland Betterment Program case studies. Being able to generate evidence-based results through the use of the SAVi Tool enables resilience practitioners to strengthen business cases for investing in resilient infrastructure.
The SAVi Tool is an Excel based cost-benefit analysis that enables consideration of otherwise intangible benefits by using 15 indicators, such as road disruption, market access for crops, fruit and livestock, and mental health, to explore the full benefits of the investment.
QRA has used the SAVi Tool to retrospectively analyse a sample of road infrastructure betterment projects. The aim of the pilot project is to test the considerations against projects with known success, and further explore the intangible benefits to provide a more holistic view of community benefits from investments in resilient infrastructure.
Technical Report
The technical report for the SAVi Tool Pilot Project outlines the initial development of the tool and includes a detailed breakdown of the indicators, and summary of processes undertaken throughout the project. The Technical Report is available on the International Institute for Sustainable Development (IISD) website at:
(External link to the International Institute for Sustainable Development (IISD) website at: https://www.iisd.org/system/files/2023-04/savi-queensland-australia-road-infrastructure.pdf)
Next steps for the SAVi Tool Pilot Project
The SAVi Tool has the potential application to support decision makers to prioritise future investments in resilient infrastructure and to advocate for increased investment in resilience programs, such as Betterment, and for embedding resilience in all infrastructure decision-making, beyond disaster-related infrastructure reconstruction.
QRA will continue to contribute as a member of the Resilient Futures Investment Roundtable, a space for leaders and practitioners from private, public, research and not-for-profit organisations to come together to share knowledge, experience and expertise to improve the way decisions are made about resilience investment – with a mission to increase investment in resilience-building projects to protect Australian communities and allow them to thrive in an uncertain future. This forum provides an opportunity for QRA to explore different methodologies to inform the way investments in resilient infrastructure are valued.
QRA will continue to work with stakeholders to further test and refine the SAVi Tool and explore opportunities for others to use this tool or aspects of it in their work.
Disclaimer
Analyses are based on estimations only for the purpose of testing the SAVi Tool developed for QRA by IISD. The SAVi Tool is a pilot project using qualitative and quantitative data available. As more data becomes available, the SAVi Tool will be improved and refined over time.
Contact
Practitioners interested in learning more about the SAVi Tool can contact QRA via email to:
policy@qra.qld.gov.au
Definitions
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Term |
Definition |
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Tangible benefits |
Tangible benefits can be measured in financial terms, e.g., access to crop, meat and fish markets, and the cost of fuel spared by direct access to services.
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Intangible benefits |
Intangible benefits cannot be easily quantified directly in economic terms, but still have a significant social, economic, and environmental benefits, e.g., the cost of mental health, pollution, greenhouse gas emissions and the impact on the environment. |
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Net Present Value (NPV) |
The Net Present Value (NPV) is the difference between the present value of benefits and the present value of costs. When the NPV is positive it means the investment will generate positive returns. |
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Internal Rate of Return (IRR) |
The Internal Rate of Return (IRR) is an indicator that can be used to determine whether there is a profitable return on investment. The higher the projected IRR is on a project, the greater it exceeds the cost of capital. |
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Benefit Cost Ratio (BCR) |
The Benefit Cost Ratio (BCR) shows the relationship (ratio) between the costs and benefits of a project or investment. A BCR greater than 1 means the project generates more benefits than costs. |