Benefit-Cost Analysis

Benefit-Cost Analysis (BCA) is a method that determines the future risk reduction benefits of a hazard mitigation project and compares those benefits to its costs.

The result is a Benefit-Cost Ratio (BCR). A project is considered cost-effective when the BCR is 1.0 or greater.

Applicants and subapplicants must use FEMA-approved methodologies and tools — such as the BCA Toolkit — to demonstrate the cost-effectiveness of their projects.

NEW:
1. New FEMA Policy Aid for Streamlined Approaches to the Benefit-Cost Analysis of Hazard Mitigation Assistance (HMA) Projects.
2. Policy aid for guidance navigating the discount rate change.
3. Updated guidance for completing a cost-effectiveness narrative for projects less than $1 million for all HMA programs.
4. New YouTube video that explains the discount rate and streamlined cost-effectiveness changes.

There are two paths for complying with FEMA’s cost-effectiveness requirement:

FEMA does not see, collect, or store any data you enter into the BCA Toolkit unless the file is submitted as part of a Hazard Mitigation Assistance (HMA) or Public Assistance (PA) project application. All information you enter into the BCA Toolkit is stored in the Microsoft Excel file on your machine or server and not on FEMA’s website or server.

The BCA Toolkit uses a Leaflet Application Programming Interface (API) for property address lookup and standardization. The Leaflet API may use your IP address for geolocation purposes but does not collect any personal information. FEMA does not endorse any non-federal government entities or products.