U.S. Geological Survey Techniques and Methods Series 11-C4
Natural hazards pose significant threats to the public safety and economic health of many communities throughout the world. Community leaders and decision-makers continually face the challenges of planning and allocating limited resources to invest in protecting their communities against catastrophic losses from natural-hazard events. Public efforts to assess community vulnerability and encourage loss-reduction measures through mitigation often focused on either aggregating site-specific estimates or adopting standards based upon broad assumptions about regional risks. The site-specific method usually provided the most accurate estimates, but was prohibitively expensive, whereas regional risk assessments were often too general to be of practical use. Policy makers lacked a systematic and quantitative method for conducting a regional-scale risk assessment of natural hazards. In response, Bernknopf and others developed the portfolio model, an intermediate-scale approach to assessing natural-hazard risks and mitigation policy alternatives.
The basis for the portfolio-model approach was inspired by financial portfolio theory, which prescribes a method of optimizing return on investment while reducing risk by diversifying investments in different security types. In this context, a security type represents a unique combination of features and hazard-risk level, while financial return is defined as the reduction in losses resulting from an investment in mitigation of chosen securities. Features are selected for mitigation and are modeled like investment portfolios. Earth-science and economic data for the features are combined and processed in order to analyze each of the portfolios, which are then used to evaluate the benefits of mitigating the risk in selected locations. Ultimately, the decision maker seeks to choose a portfolio representing a mitigation policy that maximizes the expected return-on-investment, while minimizing the uncertainty associated with that return-on-investment.
The portfolio model, now known as the Land-Use Portfolio Model (LUPM), provided the framework for the development of the Land-Use Portfolio Modeler, Version 1.0 software (LUPM v1.0). The software provides a geographic information system (GIS)-based modeling tool for evaluating alternative risk-reduction mitigation strategies for specific natural-hazard events. The modeler uses information about a specific natural-hazard event and the features exposed to that event within the targeted study region to derive a measure of a given mitigation strategy‘s effectiveness. Harnessing the spatial capabilities of a GIS enables the tool to provide a rich, interactive mapping environment in which users can create, analyze, visualize, and compare different natural-hazard mitigation scenarios.
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Taketa, R., Ng, P., and Hong, M., 2010, Land-Use Portfolio Modeler, Version 1.0: U.S. Geological Survey Techniques and Methods 11-C4, 54 p.
Risk Analysis Using LUPM v1.0
The LUPM Version 1.0 Application Framework
Using the LUPM v1.0 Packages to Evaluate Mitigation Scenarios
Appendixes A through E