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Objective:
Develop a community-centered economic benefit-cost model and implement it in a software application that enables local decision makers to assess the benefits and costs of fire sprinkler installation.
Problem:
Since the introduction of the residential sprinkler standard, NFPA 13D, in 1975, residential sprinkler systems have proven themselves as life safety systems. While there is growing recognition of the enhanced ability of residential sprinkler systems to protect life and property from fires, it is estimated that less than 3 % of the one- and two-family homes in the United States have them installed. The problem facing communities is how to encourage and defend implementation of fire sprinkler technologies that are proven to be effective in reducing damages. It is a hard problem because many homeowners feel that sprinkler protection against an unlikely fire event will not have a significant economic payoff to them. Today most homeowners think of a fire in their house independently of what their neighbors do, although a fire striking any one house is dependent on what happens in a neighboring house. Thus a community perspective is not always taken. Local decision makers responsible for sprinkler provisions need help in evaluating recommendations that incorporate the benefits and costs to the community as a whole rather than only those accruing to the individual household. This model and implementing software will provide the tools local decision makers need to make and defend community-based sprinkler recommendations. Specifically, the model and software will address stakeholder-related issues associated with proposed code provisions mandating sprinkler use.
Background: In FY2007, the Office of Applied Economics (OAE) developed and documented a community-focused economic benefit-cost model of fire sprinkler system installation. This model is based, in part, on the consumer-focused benefit-cost model being developed in a USFA-funded report, Benefits and Costs of Residential Fire Sprinkler Systems. The new benefit-cost model is designed to apply to a community’s single-family detached residences. There are two new ideas in this research. First, the approach of examining the spillovers of benefits among households in a community context will be new. Second, the provision of a user-friendly, decision software product to facilitate the application of the benefit-cost model will be a new approach to the development of sprinkler recommendations. The model estimates net benefits using economic data tailored to specific, individual communities. Community-specific data is also used to determine the probability of fire, an important variable of the model. OAE also began work on a software application that will enable local decision makers to assess the benefits and costs of fire sprinkler installation. A Software Requirements document, describing the overall application functionality, was prepared by Chapman and Lavappa. OAE is the best place to do this work because of our unique expertise and experience. OAE economists and programmers on staff have done similar, successful models and software applications for other types of disaster protection. These tools have been adopted by EPA and DHS, and are widely used in the public and private sectors. OAE should do the work because it supports the NIST mission and particularly BFRL’s responsibilities under the American Competitiveness Initiative.
Approach:
The challenge is to develop tools to enable decision makers to compute acceptably accurate measurements of sprinkler benefits and costs, at the individual homeowner and community levels, within a reasonable time period, and at reasonable expense and effort. The release of a software application implementing the community-focused benefit cost model will be the culmination of this 4-year project.
In FY2008, software development will begin, and OAE economists will work with a stakeholder community to illustrate the community-focused economic benefit-cost model of fire sprinkler system installation. Lavappa, Chapman, and Butry will prepare a Software Specifications document, describing the benefit-cost calculations to be implemented in the software application. The key screens, data requirements and software logic will be designed. Stakeholder input will be used to develop realistic ranges of settings for user variables. Stakeholder input will also be used to determine the most useful results for the software application to report, such as the value a user would have to attribute to a life saved in order to have expected protection benefits cover protection costs. Butry and Chapman will collaborate with a community to develop a benefit-cost case illustration. Butry and Chapman will obtain data from this community and perform an initial set of benefit-cost calculations.
In FY2009, Butry and Chapman will revise the calculations based on additional community input and prepare a white paper illustrating the use of the benefit-cost model. This case illustration will also provide default values for the input variables in the software application. The benefit-cost model will be implemented in a software application that will be tested in FY2009 and released in FY2010. The software application will allow the user to input numerical values that define local housing characteristics and directly affect the benefit-cost model calculation. The FY2009-FY2010 efforts include testing, modification, and release of the completed application. A NISTIR will be produced that will document the benefit-cost model and the community case illustration, and that will also include a user’s guide to the software application. Progress will be monitored through continuous stakeholder feedback, Alpha and Beta reviewers of the software, and usage statistics from our registered software users. In FY2010, Chapman, Butry, and Lavappa will produce an article describing the methodology and software tool, submit it to WERB, and upon approval submit it to a suitable archival journal for publication.
Impact: Benefits from this research would accrue to individuals in the form of reduced property damages, deaths, and injuries; to communities in the form of reduced public expenses for fire protection, rescue, and support services; and to the sprinkler industry, which will be providing more goods and services. The market to be serviced is enormous, since 97 % of one- and two-family homes in the U.S. currently have no sprinklers.
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