Assessing security measures reducing terrorist risk: inverse ex post cost-benefit and cost-effectiveness analyses of Norwegian airports and seaports

Abstract

When the risks of unwanted events and the impacts of countermeasures are well-known, an economic assessment would compare the costs of the measures with the benefits of reduced risk. For evaluating countermeasures against terrorist attacks this is, however, not straight-forward. Both the baseline risk of terrorist attacks and the possible risk-reducing impacts of the security measures adopted are largely unknown. A possible approach to the economic assessment in such cases is to adopt inverse ex post economic analyses. Inverse ex post analysis in our case will be an assessment of already implemented security measures at Norwegian airports/seaports, trying to inversely estimate implicit benefits for estimated terror risks and risk changes due to the implemented measures. Such implicit benefits might be measured as implicit costs of lives saved or, more generally, as an implicit value of what is protected in airports and in seaports. Our analysis indicates that for justifying the costs of the implemented security measures, it implies huge cost per life saved and a quite enormous valuation of what the measures protect. A low estimated baseline risk of terror attacks explains to a large degree these findings. Nevertheless, even if fatalities represent a major societal cost of terrorist attacks, there are other potential costs regarding infrastructure, that to a large degree have been disregarded in our analyses. If all potential societal costs could be included, this would justify a higher level of security spending, but not necessarily the levels that our estimates indicate.