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The issue of interest is as to whether it is possible to use the added value generated by the positive effect of having housing developments close to water to abate the negative effects that may arise in some of the same locations. This paper is based on a critical literature review together with expert interviews. It comments on the methodology of spatial benefit-cost analysis (benefit for price premium ‘generated’ by the amenity; costs for price discounts ‘generated’ by the risk) in relation to design of housing and hazard management mechanisms within the context of urban land use in contemporary Trondheim, Norway. The particular issue at stake concerns potential quick clay landslide hazard areas. Prior research suggests that the role of situation by a coast, lake or river should not be overlooked when assessing possibilities for financing general water related hazard abatement schemes. This is potentially a win-win-situation: safety enhancing public works could be financed based on the added value of new developments at the given location. The purported kind of innovative financial mechanism however requires close cooperation between private developers and local authorities – in other words, governance instead of government – as well as flexible legal codes. Unfortunately the study area to a great extent lacks such institutional possibilities due to an outmoded conceptualization of the role of government intervention.
