Dam Failure in Benefit/Cost Analysis

Abstract
An important potential cost of dam building, the possibility of failure, is not now included in benefit/cost analyses. The probability of failure has been implicitly assumed to be zero, on the rational, e.g., that..well-built dams do not fail... The fact is, dams that were thought to be well-built fail with depressing regularity. To presume that the probability of failure is zero, because we ignore what it is precisely, is unconservative and possibly irresponsible. This note suggests an explicit procedure for incorporating the risk of failure in the economic evaluations of dams. Further details and supporting evidence are available from the writers.

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