Mitigation measures must be cost-effective. FEMA considers mitigation measures to be cost-effective if any of the following criteria are met:

• The cost for the mitigation measure is within 15% of the total eligible repair cost (prior to any insurance reductions) of the facility or facilities for which the mitigation measure applies
• The mitigation measure is specifically listed in Public Assistance Program and Policy Guide Appendix J: Cost-Effective Hazard Mitigation Measures, AND the cost of the mitigation measures does not exceed 100% of the eligible repair cost (prior to any insurance reductions) of the facility or facilities for which the mitigation measure applies
• The Recipient or Applicant demonstration through an acceptable benefit-cost analysis methodology that the measure is cost-effective. FEMA's benefit-cost analysis software provides appropriate benefit-cost analysis methodologies

Many mitigation measures that do not meet the first two requirements above prove to be cost-effective based on a benefit-cost analysis. If the mitigation measure is not cost-effective based on the first two criteria, FEMA, Recipient, and Applicant will work together to develop a benefit-cost analysis to determine whether it is cost-effective.