Cost-Benefit Analysis of Separation Distances - a utility-based approach to risk management decision-making

Abstract: Decision-making in risk management reflects a normative choice of approach. This dissertation is concerned with the possibility of putting the decision in focus by employing an optimum decision criterion within a utility-based approach. The dissertation describes a cost-benefit analysis of separation distance, a risk-reducing measure used in land use planning in the vicinity of hazardous installations and transport routes for dangerous goods. Calculations were performed employing general (i.e. average) data and the results are presented as a function of distance. The results showed that recommendations on separation distances exceeding 20 to 40 metres are difficult to motivate from an economic point of view. The issue of uncertainty was given particular consideration, and a sensitivity analysis and an explicit uncertainty analysis were performed. For a number of activities it might be necessary to employ local data and perform a specific cost-benefit analysis. The methodology for this is outlined. Based on the uncertainty analysis it was concluded that it is unlikely that a separation distance exceeding 120 metres could be motivated from an economic point of view. The findings indicate an overestimate in current recommendations from authorities.