RIETI - Quantitative Analysis of Dynamic Inconsistencies in Disaster Prevention Infrastructure Improvement: An example of coastal levee improvement in the city of Rikuzentakata

Cost-benefit analysis (CBA) is considered as an effective means to avoid the government's failures of public projects. However, once CBA becomes mandatory and residents expect a public project to be established based upon it, there is the potential for a dynamic inconsistency problem to arise. Taking as an example the coastal levee improvement policy in the city of Rikuzentakata in Japan, the present study clarifies the mechanism behind the dynamic inconsistency problem that is attributable to mandatory CBA and also discusses quantitatively the influence of the dynamic inconsistency problem on social welfare. In addition, through examining the quantitative result, we indicate that, in the projects where the improvement cost increases gradually with the scale, the inefficiency of the dynamic inconsistency problem is incurred on a larger scale.