income values. Therefore, it should not be assumed 

 that the value of land being used for agriculture in 

 an urban or urbanizing situation is the capitalized 

 value of agricultural returns or that any value higher 

 than that is due to speculation that a Federal pro- 

 ject will be constructed or lack of knowledge. On 

 the contrary, without-project land values in excess 

 of agricultural land values should be expected, re- 

 flecting the probability of future use as well as" ex- 

 isting and anticipated infrastructural investments. 



(3) Net income data. The net income (earned) 

 with a project may be estimated directly based on 

 an analysis of a specific land use with the project. 

 This approach would be used, for example, for 

 lands to be developed for recreation; the projected 

 recreation benefits would constitute the gross 

 income earned on the floodplain and would be 

 shown as a project benefit. 



(4) Encumbered title market value. Estimate the 

 market value of land with an encumbered title for 

 inclusion as a benefit in step 10 in situations in 

 which the floodplain is to be evacuated, no specific 

 public use is planned, and the land could be resold 

 with an encumbered title (which would ensure that 

 future uses would be consistent with Executive 

 Order 11988 — Floodplain Management, May 24, 

 1977). 



(b) Land use is same but more intense with pro- 

 ject. If land use is the same but more intense, as 

 when an activity's use of the floodplain is modified 

 as a result of the project, base determination of the 

 increase in income on increased land values or 

 direct computation of costs and revenues. 



(c) Evacuation plan. In the case of an evacuation 

 plan, changes in market value of properties adja- 

 cent to a restored floodplain may reflect recreation 

 or open-space benefits to occupants of those prop- 

 erties. Document such an NED benefit by empirical 

 evidence. Care must be taken to avoid double 

 counting of benefits. 



(d) Market value is lowered by flood hazard. If 

 the market value of existing structures and land is 

 lower because of the flood hazard, restoration of 

 the market value represents a quantification of oth- 

 erwise intangible benefits. In such cases, the bene- 

 fit is the difference between increased market value 

 and that portion of increased market value attribut- 

 able to reductions in flood damages. Careful atten- 

 tion should be given to ensuring that factors not re- 

 lated to the flood hazard are not included as pro- 

 ject benefits. 



(e) No projected increase in market value. Pro- 

 jected increase in the market value of land over the 

 project life with and without a plan should not be 

 used to measure flood hazard reduction benefits 

 because the current market value of land theoreti- 



cally captures the expected stream of income over 

 time. 



2.4.14 Evaluation procedure: Step 10 — 

 Compute NED benefits. 



At this point in the analysis, enough information 

 is available to compute NED benefits for structural 

 and nonstructural measures. Table 2.4.14 displays 

 the types of benefits claimable for three of the 

 major flood hazard reduction measures and the 

 steps in this procedure that provide the necessary 

 data. The table applies generally; specific cases 

 may vary. Discount and annualize all benefits at the 

 appropriate discount rate to the beginning of the 

 period of analysis. Benefits are categorized in the 

 following way: 



Table 2.4.14— Guide to Types of Benefits 



(a) Inundation reduction benefits. To the extent 

 that step 5 indicates that land use is the same with 

 and without the project, the benefit is the difference 

 in flood damages with and without the project (step 

 7), plus the reduction in floodproofing costs (step 

 8), plus the reduction in insurance overhead (step 

 8), plus the restoration of land values in certain cir- 

 cumstances (step 9). To the extent that step 5 indi- 

 cates a difference in land use for an evacuation 

 plan, the benefit is the reduction in externalized 



38 



