Assignment 2: LASA 2—
Sometimes one’s
choices may involve catastrophic decisions and bear great risk and yet there
can be no clear answer. For example, if a person gets a divorce, shutters a
plant, sells a losing investment, or closes their business, will he or she be
better off? The = following case incorporates nearly all of the material you
have covered this far and presents an example of one such choice where nearly
all of the alternatives have a significant downside risk.
Review the= following
information from the article “A Cost-Benefit Analysis of= the New Orleans Flood
Protection System” by Stéphane Hallegatte (2005):
· Hallegatte, an environmentalist, assigns a
probability (p) of a Katrina-like hurricane o= f 1/130 in his cost-benefit
analysis for flood protection. However, the levees that protect New Orleans
also put other regions at greater risk. You ma y assume the frequency of other
floods is greater than Katrina-like events (Vastag & Rein, 2011).
· The new levees that were built in response to
Katrina cost approximately fourteen billion dollars (in 2010). This is in
addition to the direct costs of Katrina (eighty-one billion dollars in 2005).
· 50 percent of New Orleans is at or below sea
level.
· A 100-year event means that there is a 63 percent chance that such an
event will occur within a 100-year period.
· The following are the interested (anchored and/or
biased) constituencies:
o
Residents of New Orleans—both
those that can move and those who cannot move
o
Residents of the
surrounding floodplains at risk from New Orleans levees
o
The Mayor of New
Orleans
o
The federal
government—specifically taxpayers and the Federal Emergency Management Agency
(FEMA)
Assume that the
availability heuristics makes people more risk aver= se (populations drop, at
least in the short term). Consider how this would affect the local economy.
You are an analyst at
FEMA and are= in charge of developing a recommendation for both the state and
the local = governments on whether or not to redevelop New Orleans.
Write a report with
your recommendation. Address the following in your report:
Part A
· Analyze the economics of New Orleans in light
of the above parameters and develop your own Cost-Benefit Analysis (CBA) for
rebuilding.
· Evaluate the value of the CBA for each
constituency and integrate these estimates into a scenario model and/or
decision tree. Analyze the results.
· Clearly each of these constituencies may both
overlap and be prey to a variety of group dynamics internally. For one of these
options, discuss the decision pitfalls to which they may be susceptible and
make a recommendation on how to alleviate these pressures.
· Starting with your CBA, estimate the relevant
expected utility for the interested constituencies.
Note: You need not have absolute amounts but
your relevant utilities should be proportional to one another.
Hint: If you assume that your total CBA for New Orleans is fixed for each constituency (do not forget the overlaps), then each constituency will have a piece of the utility pie.
Hint: If you assume that your total CBA for New Orleans is fixed for each constituency (do not forget the overlaps), then each constituency will have a piece of the utility pie.
Part B
· Make a case for or against rebuilding the city
of New Orleans. This should be an executive summary; be concise and brief.
Include exhibits.
=
· Whether you are for or against, discuss how social heuristics could be used to your advantage,
both ethically and unethically, in making your case. You may choose to fill the
role of one of the constituents, if you prefer.
Write an 6-7-page
report in Word format. Apply APA standards to citation= of sources. Use proper
spelling and grammar throughout, and keep the text legible and = balanced with
visuals. Use the following file naming convention: LastnameFirstInitial_M6_A2.doc.
By Sunday, April 5,
2014, deliver your
assignment to the M6: Assignment 2 Dropbox.
Hallegatte, S. (2006).
A cost-benefit analysis of the New Orleans flood protection system.Center for
Environmental Sciences and Policy. Stanford University. Retrieved from
http://hal.cirad.fr/docs/00/16/46/28/PDF= /Hallegatte_NewOrleans_CBA9.pdf
http://hal.cirad.fr/docs/00/16/46/28/PDF= /Hallegatte_NewOrleans_CBA9.pdf
Vas= tag, B., &
Rein, L. (2011, May 11).
In Louisiana, a choice between two = floods. TheWashington Post. Retrieved from
= ttp://www.washingtonpost.com/national/in-louisiana -a-choice-between-two-
floods/2011/05/11/AFrjFotG_story.html
= ttp://www.washingtonpost.com/national/in-louisiana -a-choice-between-two-
floods/2011/05/11/AFrjFotG_story.html
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